The price tag is evolving. It wasn't long ago that potential buyers had only to contemplate a single figure on a price tag-Mattress $799. But increasingly consumers are being presented with 'partitioned' prices.
Look at your monthly cable bill, where you might see a service fee plus a set-top box rental charge and a charge for the remote.
Do partitioned prices help the consumer make an informed decision or just add to his or her confusion? Do partitioned prices increase demand? Is an online grocer better off presenting a customer with a bill that says $96, delivery included; or a price that says Groceries $88, Delivery $8?
In a recent working paper titled "The Framing Effect of Price Format," HBS associate professor Luc Wathieu and coauthor Marco Bertini of the London Business School attempt to understand the consumer psychology behind partitioned prices and give marketing strategists data on when such exploded prices work best.
We asked Wathieu to discuss his research.
External Source - For the complete article click here
Source - Harvard Business School Working Knowledge
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