Marketing researchers Rajesh Bagchi and Derick Davis conducted a series of three studies looking at the influence that order, size and calculation effects have on decision making.
The resulting analysis showed that when an offer was easy to calculate people rated that offer as better value and were more likely to trial it when it was presented in the order ‘price-first item-second’. This was true regardless of whether the packages were small ones ($30 for 60 hours) or large ($300 for 600 hours).
However when an offer was more difficult to calculate and the package offered was large then the reverse was true. People were more likely to prefer and trial the ‘58 hours for $289.50’ offer compared to the ‘$289.50 for 58 hours’ offer. Interestingly this reversal effect didn’t occur in the small package condition.
In summary, Bagchi and Davis’s findings contribute further to the idea that when offered a choice people will typically anchor on the first piece of information presented to them and adjust (sometimes insufficiently) for the second piece of information that follows. Furthermore this effect is amplified the more difficult it becomes to calculate the offer, leading to different evaluations and preferences for what are essentially the same things.
In their concluding remarks the authors offer a practical and potentially useful lesson for those of us in business whether we are managers, consultants, marketers or salespeople. To think that clients and customers judge larger packages and offers as a better deal irrespective of how the price order is presented is a misconception.
Imagine for example that you are putting together a proposal for a client to supply a range of consultancy services over a period of time. Imagine further that your proposal is quite complex involving multiple people delivering a variety of services at different rates. In such situations the results of these studies suggest it would be particularly important to lead with a ‘price-first item-second’ approach especially in the early stages of your proposal.
However for businesses whose offers are much easier to calculate or where offers involve smaller numbers of units or products then the results suggest it will be more effective to present your offer in terms of ‘item first – price second’.
As a result there will be certain situations in your influence attempts when what currently comes first, maybe should go second.
Are you interested in getting better at persuading others to see your view? Then read Robert Cialdini's books Yes!: 50 Scientifically Proven Ways to be Persuasive and Influence: The Psychology of Persuasion.