Dive Into a New Product Category

In his talk “Research Findings You Can Utilize” at the New England Mail Order Association conference held earlier this year in Cambridge, Mass., Simester offered some methods consumers use to gauge price.

1. Price familiarity. Customers know the prices of items they purchase frequently, and they’ll respond to changes in price for those items, buying more when the price goes down or complaining vocally if the price goes up, said Simester. Merchants gain pricing flexibility on products with which customers have difficulty becoming familiar (e.g., those that vary among retailers by design, quality or size).