When offered the possibility of 33% off a
product or the same product with 33% more quantity, which would you
choose?
The Economist sums up the results of a new study published in the
Journal of Marketing, which reveals that most consumers view these
options as essentially the same proposition, but they are not. The
discount is by far the better deal. The Economist says, most
shoppers don’t realize that a “50% increase in quantity is the same
as a 33% discount in price.”
In one part of the study, the University of Minnesota’s Carlson
School of Management, asked undergraduate students to evaluate two
deals on loose coffee beans, one with 33% more beans for free and
the other at 33% off the price. The students viewed the offers as
equal.
The initial price is $10 for 10 oz. of coffee beans or $1 per oz. An
extra 33% more free beans would bring the total up to 13.3 oz. for
$10. That $10 divided by 13.3 oz. give us a unit price of $0.75 per
oz. With a 33% discount off the initial offer, though, the
proposition becomes $6.67 for 10 oz., for a unit price of $0.67 per
oz.
In another marketing experiment involving hand lotion in an actual
store, researchers sold 73% more when it came in a bonus pack than
when it was priced at a discount with the same exact unit price. Caveat
Emptor and go for the discount.