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Study: Consumers easily fooled by discounts, freebies

July 2, 2012

Math is hard; just ask the numerous shoppers who struggled with fractions in a study recently completed at the University of Minnesota's Carlson School of Management. It found, according to the economist.com, that most consumers can't see that a 50-percent increase in quantity is the same as a 33-percent discount in price. They assume that the former is a better value. For example, the researchers sold 73 percent more hand lotion when it was offered in a bonus pack than when it had the equivalent discount.

In another experiment, the researchers offered students two deals on loose coffee beans: 33 percent free or 33 percent off the price. The discount is by far the better proposition, but the student shoppers viewed them as equivalent.

Another way for retailers to use these false consumer perceptions to their advantage is to offer double discounting. For example, shoppers are more likely to see a better bargain in a product that has been cut by 20 percent and then again by 25 percent over the equivalent, one-off, 40 percent reduction.

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