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The 11 Ways That Consumers Are Hopeless at Math July 8, 2012

Posted by tkcollier in Economy & Business, Life.
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You walk into a Starbucks and see two deals for a cup of coffee. The first deal offers 33% extra coffee. The second takes 33% off the regular price. What’s the better deal?

“They’re about equal!” you’d say, if you’re like the students who participated in a new study published in the Journal of Marketing. And you’d be wrong. The deals appear to be equivalent, but in fact, a 33% discount is the same as a 50 percent increase in quantity. Math time: Let’s say the standard coffee is $1 for 3 quarts ($0.33 per quart). The first deal gets you 4 quarts for $1 ($0.25 per quart) and the second gets you 3 quarts for 66 cents ($.22 per quart).

The upshot: Getting something extra “for free” feels better than getting the same for less. The applications of this simple fact are huge. Selling cereal? Don’t talk up the discount. Talk how much bigger the box is! Selling a car? Skip the MPG conversion. Talk about all the extra miles

via Business – Derek Thompson – The 11 Ways That Consumers Are Hopeless at Math – The Atlantic.

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