••• pricing research
Study: 'Add-ons' feel less expensive
Shoppers are up to one-third more likely to shell out for a premium option when the extra cost is expressed as an add-on, as opposed to a higher overall price, according to research from the University of British Columbia (UBC) Sauder School of Business that examined the effect of add-on pricing on product upgrades.
For example, consider two plane tickets – one for $200 with a two-hour layover and one for a direct flight for $50 more. Consumers perceive $250 as expensive because the number is higher than the base price of $200, whereas $50 as an add-on price seems inexpensive. “When you see ‘$50 more’ as an add-on price, it’s a smaller number than the total and we focus on that smaller number,” said study co-author and UBC Sauder professor Dale Griffin. “Mathematically, the prices are the same, and on consideration we can see that, but intuitively add-on prices just feel less expensive.” (The study, “When ‘more’ seems like less: differential price framing increases the choice share of higher-priced options,” was published in the Journal of Marketing Research.
This effect applied whether participants were being asked to donate to a local food bank, buy a computer monitor or order breakfast. Researchers also observed it when reminding consumers of the final price of their purchase, suggesting that the shift in preference does not occur because of deception or confusion but rather because of how people justify their purchase decisions. Notably, the effect only occurs with pricing, not with other kinds of product upgrades.
••• employment research
Mobile groups transform youth job searches
The mobile phone could be a powerful tool for curbing youth unemployment, finds new research from the University of Maryland’s Robert H. Smith School of Business. Researchers used a mobile app to connect job-seeking youth aged 15 to 24 to motivate each other to keep searching until they landed a job. The success was staggering.
Compared to traditional career counseling alone, turning to a peer group on a social network improved the chances that youths took an apprentice position, pursued higher secondary school or participated in a year-long volunteer program by 98%.
The researchers developed a peer career counseling intervention on the WhatsApp platform that was tested as a field experiment for the German Federal Employment Agency. Those who connected through the mobile peer group (10-15 members with similar ages and career goals) had significantly increased chances of finding employment and much better attitudes toward career choice, career maturity and career search intensity than those who just participated in traditional counseling sessions.
Mobile peer support groups may work well because they are accessible 24/7, right when users need the advice or extra encouragement most. Plus, they eliminate the limitations of geography, letting far-flung people connect with peers they can identify with.