Experiment 1: Reference Pricing

a. Place the two products together. Place a sign on one with a low price. Place a sign on the other with a high price (about 50 percent higher will do). Ask your research participants to evaluate the quality of each of the items and to tell which one they would probably purchase.

b. Reverse the signs and ask other research partici- pants to evaluate the quality of each of the items and to tell which one they would probably pur- chase.

c. Place the two products together again. This time place a sign on one with a moderate price. Place a sign on the other that is only a little higher (less than 10 percent higher). Again, ask research par- ticipants to evaluate the quality of each of the items and to tell which one they would probably purchase.

d. Reverse the signs and ask other research partici- pants to evaluate the quality of each of the items and to tell which one they would probably pur- chase.

The purpose of this miniproject is to help you become familiar with how consumers respond to different prices by conducting a series of pricing experiments. For this project, you should first select a product cate- gory that students such as yourself normally purchase. It should be a moderately expensive purchase such as athletic shoes, a bookcase, or a piece of luggage. You should next obtain two photographs of items in this product category or, if possible, two actual items. The two items should not appear to be substantially different in quality or in price. Note: You will need to recruit separate research partici- pants for each of the activities listed in the next section.