An image of a discount shop

Unconscious Reference Points in Decision Making

For the “Things that make you go hmmmmmm” category: Jonah Berger has a section in his book Contagious: Why Things Catch On on setting reference prices in marketing messages. He talks about several examples that many in HF will already be familiar with.

  • A $50 discount reads bigger than a 20% discount, regardless of what the actual numbers are.
  • People are more likely to drive out of their way to get a $40 item instead of a $50 item than they are to drive for a $200 item rather than a $220, even though they are saving twice as much. It just doesn’t seem that way.

But there was one example I hadn’t heard before, so I thought I would share it with you, in case you haven’t either. Saying something is “On Sale” for $50 sells more than saying something is “For Sale” at $50. Even when you don’t present any reference price at all. This makes some intuitive sense because we guess a reference price for the first one that is greater than 50, whereas we don’t for the second one. But the difference is even more subtle, so it surprises me a little. He cites his sources, which are from good marketing journals.

Image credit: “Drogheda – Fair Deal Discount Store” by William Murphy used under CC BY-SA 2.0

One thought on “Unconscious Reference Points in Decision Making”

  1. I wonder if these findings could be replicated with resources other than money. For example, could we find the same results if we were decreasing the amount of time a task took?

Leave a Reply

Your email address will not be published. Required fields are marked *