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| Joined: | Mon Nov 21st, 2005 |
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That's an example of smart, effective marketing, according to Jean-Pierre Dube, a professor of marketing at the University of Chicago's Booth School of Business.
"You're essentially giving the person a deal, but not discounting the price of the main product," he said. "Very often the extra thing is less costly than the discount the firm would have had to make in order to get you to buy the original item."
It's not a new phenomenon. But it is being used to great effect during the current recession, he said.
"People tend to have a perception of 'free' that exceeds the true value of the product," he said. "The mere fact that you're getting something for free makes you happy."
Pricing at cost is profitable for anyone so long as cost is accurately known; it is a competitive pricing scheme having no other connection to the consumer besides affordability (not "value").
If the cost/price is too high then certainly the value/price (even lower) is unsustainable.
Cost/price (the lowest affordable price for the seller) is the most competitive price; again assuming that the cost is accurately known.
Supposed “monetary” geniuses spend a lot of time and effort psychoanalyzing their potential victims (customers) so as to squeeze out every last drop of “value” (price) while their power is also expended in eliminating competition. That is why any words expressing a principled (cost principle) approach to economy inspires venom from the “experts” as competition for accurate marketing is mislabeled as “monetary crankism” or other such negative press – false propaganda.
A very good example is the following well thought out competition in monetary knowledge (often demonized by supposed monetary “experts”):
http://www.perfecteconomy.com/pg-parable-of-perfect-economy.html