Invisible consumption driver
The business market is like the battlefield. But, in this battlefield, there is no gunpowder smoke. Businesses compete with each other. They use many measures to stimulate consumption and outcompete competitors. There is a typical phenomenon from our daily life, rationalization smoke. What is rationalization? Rationalization related to the reasonableness of a price for a given product and the price depends on the comparative value of the product. Then a business can capitalize on the competitive advantage to stimulate consumption. The measure is to make smoke. What is smoke? The purpose of this strategy is to interfere with consumers’ judgments about value. Rationalization smoke may make the consumer feel that a product is cheaper and cost-effective, and ensure that merchants can earn profits and increase sales. I think an appropriate level of creating smoke will promote market prosperity, stimulate producers’ enthusiasm and meet consumers’ demand. So how do businesses make smoke? Let’s consider a specific example. We visit a restaurant to order 3 dishes, suppose restaurant A and B are in the same level, and we order the same 3 dishes in each restaurant. In restaurant A, each dish costs $8, and in restaurant B, each dish costs $10, but the boss in restaurant B says that if you order 2 dishes then you will only pay another $5 to get the third dish. Which one will you choose? A or B? We need to pay $25 in restaurant B and $24 in restaurant A. I guess many of you may choose B. B is more expensive than A. Why is this so? Consumers may prefer to purchase the third dish by paying an additional $5. Restaurant B convinces consumers that they are receiving good value, this restaurant uses a simple measure to make smoke. So, in the restaurant market, Restaurant B may earns more profits and be more competitive. Another example is when an estate opens, businesses always have a variety of promotion strategies. For...
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