But how will competitors respond to such an aggressive price cut, in the absence of additional information? The chances are high that competitors will perceive the price action as an attack and as an attempt to steal market share

Premium pricers shy away from special offers: They are hesitant to offer promotions and special offers. If the promotions they offer are too frequent or too steep, these instruments can endanger the premium price position.

Attempts to win over customers through lower prices don’t work. These effects also explain why discounts on no-name products or weaker brands also fail to work: customers associate the reduced price with lower quality or with low prestige.

What are the possible explanations for selecting the middle option in this case? Here are four hypotheses: Uncertainty: Customers don’t have a good estimate of their monthly usage, so they fall back on the “magic of the middle.” Quality expectations: The customer thinks: “If the basic fee is so low, the service probably isn’t all that good.” Peace

Think “simple yet robust”: A company must strip down a product to the bare essentials, but without making it too primitive or rendering it dysfunctional. 2. Develop locally: The company must develop the product in emerging markets ; that is the only way to guarantee that it meets the customer requirements in the ultra-low price segment. 3. Lock in

But fitness studios are a special case, and the study found another effect. After making a payment, the customers want to “earn it back” and visit the studio on a regular basis. The frequency of visits starts to decline, though, the further the most recent payment recedes into the past. By encouraging monthly payment s, the studio restores the cust

Multi-person pricing means setting a price for groups of people. The total price will vary by the number of people. Travel agents make offers which allow partners or children to travel at reduced prices or for free. Airlines sometimes will let a second guest or a partner fly at half-price or free. Some restaurants will charge half-price for a dish

Inflation is also a gigantic redistribution mechanism. Inflation allows the quick, the clever, and the debtors to take advantage of the slow, the naïve, and the creditors.

Campbell’s Soup which said “Limit of 12 per person.” The other group was confronted with a display sign which read “No Limit per Person.” Shoppers in the first group bought seven cans on average, and the shoppers in the latter group only half as many. At play here is not only an anchor effect—the sign suggests that buying 12 cans is normal—but also