Question

Consider how the psychology of pricing affects you. Describe a recent instance where you were influenced by eight biases in pricing tactic (such as a two-for-one offer, coupon, and so on) to make a purchase.

What was the company trying to achieve?

Did the tactic hurt or help the company overall?

Discuss price adjustment considerations and legal and ethical considerations.

Answer 1

I had recently made a 2 for 1 purchase of a grocery item from Walmart. This was an offer that was too good to be refused. Not only was the pricing still too competitive for some of the competition, offering two products for the price of one allowed the company the ability to be able to attract a wider number of customers. I can say that I couldn't resist the price offering, therefore,m what the company wanted to achieve can be considered to be successfully achieved.

Essentially, we can say that the company was trying to follow not just the discounted purchase but actually keeping the product at that pricing had allowed them the ability to destroy the competition and we call this predatory pricing.

This is a personal opinion but i can say that this will hurt the company's reputation if it is continued for long. Not only does predatory pricing provide the problems of unethical behaviour by the company on the grounds of not allowing a fair competition, essentially destroying the market could result in even more unprecedented results which might affect the company negatively in the long run.

The pricing was legally appropriate but ethically unjustifiable. This pricing model does not allow healthy competition which is the right of all the companies present in the market and therefore, may result in creating a monopoly which then violates the policies if set by the law.