Consumer behaviour is a tricky thing to understand but then so are the simple mistakes that businesses often make with their pricing.
Last year, I visited a food retailer (who will remain unnamed) that had snacks at £2.20 for one box or £2.00 for two (you may need to read that again, it isn't a typo!). Surely, the price was wrong? If you have read my blog post on What is Decoy Pricing you may believe it's a very clever strategy to make the purchase of 2 or more boxes so irresistible that the consumer will buy them. After all, the theory of Decoy pricing suggests that the consumer stops comparing 'shall I buy the snacks or not' and switches to 'shall I buy 1 or 2 boxes'. The main doubt I had was that this retailer had often advertised offers such as '25% off' on the shelves but the checkout systems didn't reflect the discount so it could be a foolish pricing error.
Recently, I came across another pricing situation that's slightly different. A different retailer was offering a meal deal for £3 consisting of any sandwich, drink and side. It was just before 1 pm and all that was left of the sandwiches were the heavily discounted 'must be eaten today'. 'This got me thinking:
Had people stopped buying the meal deal because they didn't see the value in it with discounted sandwiches?
Although the discounted sandwiches + drink (and possibly a side) were in some cases cheaper than the meal deal, why are they still remaining?
It seems that the idea of one price for everything is so simple and attractive that we prefer to go with that option. Who wants to stand there calculating the price individually nowadays or be lazy but take the risk of buying a discounted sandwich and still end up paying more than the bundled deal? The bundled deal solution is much more attractive when we are talking a few pennies or pounds.
In conclusion, I believe the first retailer was using decoy pricing while the bundled offerings of the second retailer made sense - although if they want to sell off food that expires very soon then a different pricing strategy for these items should be considered. What are your thoughts?
The opinions in these blog posts are those of marketing expert and book author Darren Hignett.