Heterogeneity of Price in Similar Items
Identification
Sell more by making consumers think less—or at least think more efficiently. According to Kim, Novemsky, and Dar (2012), among identical items, perceived similarity increases if a small difference—in their study, a 3% increase in price in one gum pack versus another identical gum pack—is introduced. More gum packs were chosen in trials where there were marginal differences in price, while in trials where the gum was priced identically, participants elected to choose neither more often. Kim and colleagues (2012) believe that this is because that small feature highlights the similarity between items for the consumer. The researchers also emphasized the importance of utilizing quantitative differences. Thus, if stocking similar items, retailers will sell more in general when they mark prices differently.
Example
Dad is deciding between the blue scooter or the red scooter. He hesitates, wracking his brain—how can he possibly know which one the kids will like? Bringing home the wrong color will result in a tantrum. Maybe, he decides, it’s better to not buy one at all, and move along to the sports gear or the figurines. Rewind to a slightly alternate universe: Dad is deciding between the two scooters. Which one should he pick? He notices that the red is $10.30 while the blue is $10. Huh. His anxiety is interrupted. He grabs the red scooter. You know, they’re almost the same—but this one is cheaper!
Solution
This tactic is pretty harmless. It goes without saying—if the items are the same, choose the less expensive option! But only if you really want what you're buying.