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Crossing the Efficiency Frontier: A Framework for Understanding Consumers’ Responses to Bargains

In: New Directions in Behavioral Pricing

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  • Aner Sela

Abstract

Consumers frequently face potential opportunities, such as products on sale, loyalty programs, rebate offers, and other promotions. Opportunities are a powerful driver of action, and consumers often spend much time and effort to obtain them — sometimes more than seems justifiable by the magnitude of the saving (Blattberg and Neslin 1989; Darke and Dahl 2003; Schindler 1989; Thaler 1985). However, the mere fact that a marketing offer is presented as a potential bargain is often not enough to make consumers see the offer as representing above-normal value for them. In fact, people are usually quite selective in pursuing purported bargains and often forgo them regardless of their resource limitations. Despite the allure of apparent bargains, consumers’ perceptions of idiosyncratic value remain elusive…

Suggested Citation

  • Aner Sela, 2024. "Crossing the Efficiency Frontier: A Framework for Understanding Consumers’ Responses to Bargains," World Scientific Book Chapters, in: Chezy Ofir (ed.), New Directions in Behavioral Pricing, chapter 7, pages 167-181, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811292231_0007
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    Keywords

    New Currencies; Loyalty Program Miles as a Virtual Currency; Uncertainty in Value; Choice of Payment Mode; Loyalty Program Management; Affective Price Evaluations; Pain of Paying ; Metacognitive Experience In Price Evaluation; The Ease-of-Recall Pricing Effect; The Ease-of-Computation Effect; Hedonic Price Evaluations; Price Fairness; Dual Entitlement; Communicating Price Changes; Communicating Price Differences; Internal Reference Price; Gain–Loss Asymmetry; Price Thresholds; Processing Price Information; Framing Price Changes; Framing Price Differences; Buyers' Purchase Goals; Round Versus Sharp (Odd) Prices; Price Promotion Information Processing; Ease of Computing Price Differences; Size of Right Digit Endings; Absolute Versus Relative Price Differences; Communicating Price Differences; Effects on Quality Inferences And Internal Reference Prices; Post-Promotion Price Expectations; Perceived Fairness of Price Promotions; Pay-What-You-Want (PWYW); Social Preferences; Models of Finitely Repeated Games with Incomplete Information; Signaling; Self-Signaling; Social Signaling; Social Preferences; Partitioned Pricing; Bargains; Efficiency Frontier;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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