Sales Promotion Research

According to the research study done by Akshay R. Rao, Carlson School of Business, University of Minnesota, a consumer prefers a bonus extra quantity promotion of a product, rather than a price discount for the same quantity. A 100 gm  coffee pack with 80 p.c. extra quantity is preferable rather than a 100 gm coffee pack at a price discount of 30 p.c.. Essentially, this occurs because of the ‘base value neglect’ when dealing with percentages. Adding of percentages as if they are whole numbers is also erroneous. A store offering 20 per cent off Diwali sale and another 25 per cent off Diwali sweets is not offering a total discount of 45 per cent. If suppose the base value is 100, 20 p.c. off reduces the price to Rs. 80. Another 25 p.c. of the base of value of 80 is Rs. 20, reducing the price further to Rs. 60. It means overall discount of 40 percent.

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