Nudge

I get a lot of questions about pricing.  Should I start with our most expensive item first? Should I use precise prices instead of rounded ones when negotiating? Should I name competitors when comparing prices? Today, with pricing expert Dr Markus Husemann-Kopetzky we work through eight different psychological pricing tips in just 24 minutes. ---  Listen to the bonus episode: https://nudge.kit.com/a737588e58  Markus’ book: https://amzn.to/46Hetcg  Unlock the Nudge Vaults: https://www.nudgepodcast.com/vaults Join 10,634 readers of my newsletter: https://www.nudgepodcast.com/mailing-list  Connect on LinkedIn: https://www.linkedin.com/in/phill-agnew/  --- Today’s sources: Bertini, M., & Wathieu, L. (2008). Research note—Attention arousal through price partitioning. Marketing Science, 27(2), 236–246. Bolton, L. E., Warlop, L., & Alba, J. W. (2003). Consumer perceptions of price (un)fairness. Journal of Consumer Research, 29(4), 474–491. Janiszewski, C., & Uy, D. (2008). Precision of the anchor influences the amount of adjustment. Psychological Science, 19(2), 121–127. Kim, H. M., & Kramer, T. (2006). The moderating effects of need for cognition and cognitive effort on responses to multi‐dimensional prices. Journal of Marketing Research. Krishnan, B. C., Biswas, A., & Netemeyer, R. G. (2006). Semantic cues in reference price advertisements: The moderating role of cue concreteness. Journal of Retailing, 82(2), 95–104. Suk, K., Lee, J., & Lichtenstein, D. R. (2012). The influence of price presentation order on consumer choice. Journal of Marketing Research, 49(5), 708–717. Thomas, M., Simon, D. H., & Kadiyali, V. (2010). The price precision effect: Evidence from laboratory and market data. Marketing Science, 29(1), 175–190. Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124–1131. Wansink, B., Kent, R. J., & Hoch, S. J. (1998). An anchoring and adjustment model of purchase quantity decisions. Journal of Marketing Research, 35(1), 71–81.

Most restaurants have a major problem.  Paying the bill.  Give the bill too early, and the customer feels rushed. Too late, and they feel ignored.  To solve this problem (and many more), Will Guidara turned to behavioural science.  And his solution helped his restaurant become the world’s best. ---  Listen to the bonus episode: ⁠https://nudge.kit.com/aeea58886f⁠  Will’s book Unreasonable Hospitality: ⁠https://amzn.to/4tPrMl8⁠  Will’s new book The Field Guide: ⁠https://amzn.to/3Orq1u0⁠  Will’s newsletter, Pre-Meal: ⁠https://www.unreasonablehospitality.com/premeal⁠ Unlock the Nudge Vaults: ⁠https://www.nudgepodcast.com/vaults⁠ Join 10,728 readers of my newsletter: ⁠https://www.nudgepodcast.com/mailing-list ⁠ Connect on LinkedIn: ⁠https://www.linkedin.com/in/phill-agnew/⁠ --- Today’s sources: Kahneman, D., Fredrickson, B. L., Schreiber, C. A., & Redelmeier, D. A. (1993). When more pain is preferred to less: Adding a better end. Psychological Science, 4(6), 401–405.  Shotton, R. (2023). The illusion of choice: 16½ psychological biases that influence what we buy. Harriman House. Strohmetz, D. B., Rind, B., Fisher, R., & Lynn, M. (2002). Sweetening the till: The use of candy to increase restaurant tipping. Journal of Applied Social Psychology, 32(2), 300–309.

In 2015, the media became obsessed with one man’s attempts to grow tea in the Scottish Highlands.  The BBC profiled him on the One Show. Radio reporters flocked to interview him. Even the Chinese national news agency reported his work.  Tam O’Braan (as he was then known) was the first to ever sell Scottish tea, and the press went wild.  Fornum and Mason bought his leaves. The Dorchester created a new Scottish tea-tasting menu. Barack Obama reportedly tried his tea, and the Queen loved it. Tam’s business started bringing in hundreds of thousands of pounds. But soon his lies began to unravel. Today, with Jaega Wise, we tell the story of the Scottish tea scandal. We explain how Tam O’Brann fooled the world and the psychology behind why so many customers believed him. --- Listen to the BBC Food Program’s show on the scandal: https://www.bbc.co.uk/programmes/m002mn01 Learn more about Jaega: https://www.jaegawise.com/  Unlock the Nudge Vaults: https://www.nudgepodcast.com/vaults Join 10,828 readers of my newsletter: https://www.nudgepodcast.com/mailing-list  Connect on LinkedIn: https://www.linkedin.com/in/phill-agnew/  --- Today’s sources:  Koschate-Fischer, N., Diamantopoulos, A., & Oldenkotte, K. (2012). Are consumers really willing to pay more for a favorable country image? A study of country-of-origin effects on willingness to pay. Journal of International Marketing, 20(1), 19–41. Langer, E. J., Blank, A., & Chanowitz, B. (1978). The mindlessness of ostensibly thoughtful action: The role of “placebic” information in interpersonal interaction. Journal of Personality and Social Psychology, 36(6), 635–642. Mackie, D. M., Worth, L. T., & Asuncion, A. G. (1990). Processing of persuasive in-group messages. Journal of Personality and Social Psychology, 58(5), 812–822. Maier, L., Schreier, M., Baccarella, C. V., & Voigt, K.-I. (2023). University knowledge inside: How and when university–industry collaborations make new products more attractive to consumers. Journal of Marketing. Peterson, R. A., Kim, Y., & Jeong, J. (2019). Out-of-stock, sold out, or unavailable? Framing a product outage in online retailing. Journal of Marketing Theory and Practice.

Will Guidara is the co-founder and restaurateur behind the world’s best restaurant.  But Will’s not a standard restaurateur. He didn’t just focus on creating the best food.  He used psychology and behavioural science to build the best experience.  Listen to learn how his restaurant became #1 by using anchoring, reciprocity and many more psych principles. ---  Listen to the bonus episode: https://nudge.kit.com/aeea58886f  Will’s book Unreasonable Hospitality: https://amzn.to/4tPrMl8  Will’s new book The Field Guide: https://amzn.to/3Orq1u0  Will’s newsletter, Pre-Meal: https://www.unreasonablehospitality.com/premeal Unlock the Nudge Vaults: https://www.nudgepodcast.com/vaults Join 10,728 readers of my newsletter: https://www.nudgepodcast.com/mailing-list  Connect on LinkedIn: https://www.linkedin.com/in/phill-agnew/ --- Today’s sources: Mukherjee, A., Smith, R. J., & Burton, S. (2021). The effect of positive anticipatory utility on product pre-order evaluations and choices. Journal of the Academy of Marketing Science, 51, 551–569. Pariyadath, V., & Eagleman, D. M. (2007). The effect of predictability on subjective duration. PLOS ONE, 2(11), e1264.

Do nine-ending prices really work?  Will £9.99 sell more than £10.00? Can it be used for high-quality products? What about hedonic products? Can it be used on speed limits?  For years this debate has raged on. But today on Nudge, I speak with pricing expert Dr Markus Husemann-Kopetzky to settle the argument. ---  Markus’ book: https://amzn.to/46Hetcg  Unlock the Nudge Vaults: https://www.nudgepodcast.com/vaults Join 10,534 readers of my newsletter: https://www.nudgepodcast.com/mailing-list  Connect on LinkedIn: https://www.linkedin.com/in/phill-agnew/  --- Today’s sources:  Gendall, P. (1998). Estimating the effect of odd pricing. Journal of Product & Brand Management, 7(5), 421–432. Husemann-Kopetzky, M. (2018). Handbook on the psychology of pricing: 100+ effects on persuasion and influence every entrepreneur, marketer and pricing manager needs to know. Independently published. ITN Archive. (2022, November 28). “I will not accept that it’s a highly dangerous road” (1988) [Video]. YouTube. Kim, J., Novemsky, N., & Dhar, R. (2013). Adding small differences can increase similarity and choice. Psychological Science, 24(2), 176–182. Nunes, J. C., & Park, C. W. (2003). Incommensurate resources: Not just more of the same. Journal of Marketing Research, 40(1), 26–38. Rubinstein, A., & Yee, V. (2020). The left-digit bias: When and why are consumers penny wise and pound foolish? Journal of Marketing Research, 57(3), 467–485. Schindler, R. M., & Kibarian, T. M. (1996). Increased consumer sales response through use of 99-ending prices. Journal of Retailing, 72(2), 187–199. Shotton, R. (2018). The choice factory: 25 behavioural biases that influence what we buy. Harriman House. Suwelack, T., Hogreve, J., & Hoyer, W. D. (2011). Understanding money-back guarantees: Cognitive, affective, and behavioral effects. Journal of Retailing, 87(4), 462–478. Wadhwa, M., & Zhang, K. (2015). This number just feels right: The impact of roundedness of price numbers on product evaluations. Journal of Consumer Research, 41