A.equalB.doubleC.subjectD.dealE.remarkablyF.supposedlyG.drawH.assumeI.exploitJ.arithmeticK.foxWhenretailerswanttotemptcustomerstobuyingaparticularproductthey

Question

A. equal     B. double     C. subject      D. deal     E. remarkably

F. supposedly  G. draw    H. assume    I. exploit    J. arithmetic    K. fox

When retailers want to tempt customers to buying a particular product they typically offer it at a discount. According to a new study to be published in the Journal of Marketing they are missing something.

A team of researchers led by Akshay Rao of the University of Minnesota's Carlson School of Management looked at consumers' attitudes to discounting. Shoppers they found much prefer getting something extra free to getting something cheaper. The main reason is that most people are useless at __41__.

Consumers often struggle to realize for example that a 50% increase in quantity is the same as a 33% discount in price. They overwhelmingly __42__ the former is better value. In an experiment the researchers sold 73% more hand lotion when it was offered in a bonus pack than when it carried an equivalent discount.

This numerical blind spot remains even when the __43__ clearly favours the discounted product. In another experiment this time on his undergraduates Mr. Rao offered two options of loose coffee beans: 33% extra free or 33% off the price. The discount is by far the better proposition but the __44__ clever students viewed them as equivalent.

Studies have shown other ways in which retailers can __45__consumers' innumeracy. One is to confuse them with __46__ discounting. People are more likely to see a bargain in a product that has been reduced by 20% and then by an additional 25% than one which has been __47__ to an equivalent one-off 40% reduction.

Marketing types can __48__ lessons beyond just pricing says Mr. Rao. When advertising a new car's efficiency for example it is more convincing to talk about the number of extra miles per gallon it does rather than the equivalent percentage fall in fuel consumption.

There may be lessons for regulators too. Even well-educated shoppers are easy to __49__. Sending everyone back to school for maths refresher-courses seems out of the question. But more __50__displayed unit prices in shops and advertisements would be a great help.

Answer 1

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