Shopping, Advertising & Consumer Choice: Checkpoint 1

Quick checkpoint - five questions on advertising, brands, charm pricing, decoys and loyalty programmes.

Question 1 of 5 What did Lee Benham's 1972 study of eyeglasses find?

Advertising bans lowered prices Prices were higher in states that banned advertising Advertising had no effect Eyeglasses were free where advertised

Informative advertising helped customers find cheaper sellers.

Question 2 of 5 Research found that pharmacists are more likely than other shoppers to buy which painkillers?

The most expensive brands Cheaper store brands with the same ingredients Imported brands only None at all

This suggests much extra spending on some brands comes from lack of information.

Question 3 of 5 What is the left-digit effect?

People pay most attention to the first digit of a price People always round prices up Prices are read from right to left Only luxury goods use odd prices

A price of 3.99 can feel closer to 3 than to 4.

Question 4 of 5 How does a decoy option work?

It is the most popular choice It is clearly worse than a target option, making the target look like a better deal It is always the cheapest It is a free gift

The decoy works by changing comparisons, even if few people choose it.

Question 5 of 5 How do loyalty programmes benefit businesses?

They create switching costs and provide customer data They always lose money They lower all prices permanently They are required by law

Customers close to a reward are less likely to shop elsewhere.

← Back to Shrinkflation Next lesson → Why Shops Hold Sales

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