Price anchors affect consumers' buying and selling
Say you're looking for a new sofa. What's a good price? $800, $1,000, $1,500, or more? Or, say you're trying to sell that goofy crystal bowl you got for a wedding present. You go to eBay and you're asked for a starting price. What it is worth? In either scenario, what is your price anchor?
In an article published in the December 2004 issue of the Journal of Consumer Research, researchers summarize four studies that examined the effect of these anchors on consumers. The authors, Itamar Simonson of Stanford University and Aimee Drolet of UCLA, found that although the circumstances between buying and selling differ, the impacts remain the same.
"In this research, we contrast the manner in which consumers decide on their buying and selling prices," the authors write. "In particular, once sellers decide they want to sell an item (e.g., an unwanted gift), the market price becomes the primary driver of the minimum asking price. Conversely, because buyers typically have multiple options from which to choose (e.g., buy a different product or brand or go to another store), the subjective value of a considered option is expected to be a key determinant of their willingness-to-pay."
In their conclusion, the authors suggest that their results indicate that marketers may want to reconsider how passive they are in setting prices for goods. "These findings suggest that, instead of relying on a more passive approach of estimating the value of a product to target consumers and setting the price accordingly, marketers can adopt a more active role based on an analysis of the factors that affect consumers' price judgments."
Source: Eurekalert & othersLast reviewed: By John M. Grohol, Psy.D. on 21 Feb 2009
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