Magazine article The Wilson Quarterly

Feel the Pain. (Economics, Labor & Business)

Magazine article The Wilson Quarterly

Feel the Pain. (Economics, Labor & Business)

Article excerpt

"Pricing and the Psychology of Consumption" by John Gourville and Dilip Soman, in Harvard Business Review (Sept. 2002), 60 Harvard Way, Boston, Mass. 02163.

What's the last thing the Amalgamated Sprocket Company wants its customers to think about? The price of its sprockets, of course. But Amalgamated and many other companies may be making a big mistake.

The reason is elementary, say Gourville and Soman: "A customer who doesn't use a product is unlikely to buy that product again." And the more a consumer remains aware of what he paid for a product, the more likely he is to use it.

When the two professors--Gourville at Harvard Business School, Soman at the School of Business and Management at the Hong Kong University of Science and Technology--studied ticket sales at a Shakespeare theater festival, they found that people who bought tickets to individual plays bad a no-show rate of less than one percent. …

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