Do I really know why I bought this?

Few months back my cousin was getting married and family members were at jewelery store in Santacruz west, shopping for some wedding jewelry. This is our official jewelry store, most of the jewelry our family has bought comes from this store. This store owner showed 5 – 6 different necklace designs which family didn’t like and then the next design he showed was just what everyone was looking for. All members got stuck to the design and eventually it was finalized.

Non-Economic Factors influecing buy and sell decision

To Buy or not to Buy - that is the question

My aunt was waiting for final billing, owner got some tea for everyone and we started talking.

Owner: “design you chose is doing very well amongst customers, its latest design and I have sold same design to many customers recently”

Aunty: “if that was the case – why didn’t you show us this design first?”

Owner: “If I had shown you this design first, chances are you would have not liked it”

What happened here has some interesting aspect which influences our decision making. We understand physical world and know its limitation. I cannot lift a stone, which is more then 60kgs; I cannot jump from a ladder which is more then 10 feet high; I cannot eat more then 8-10 rotis;

But we know very little about limitations of our mental capacity. When we make decision of buying and selling there are many hidden factors which influence our decision making. You decide to buy some item to trade, thinking it is a good deal and you will make money in trading. But other then economics and business knowledge there are many non-economic factors that influence decision. Every act of buying or selling is influenced by many mental factors, many of them we never care to think about.

Lets talk about one such factor which influences our buying or selling action.

Lets say traders from Mumbai Diamond market decide to organize a tour of Hong kong, 100 traders signed up for tour. At Hong Kong airport there is a camera man who gives you traditional dress & clicks your picture and tries to sell picture back to you. His offer is:

Case 1

Option A) Only digital copy – 10 Hong Kong dollars

Option B) Only print copy – 15 Hong Kong dollars

Option C)digital & Print copy – 15 Hong Kong dollars

Chances are : 40 people select option ‘A’, zero select option ‘B’ and 60 select Option ‘C’

Now lets say if this offer was presented differently and there were only two options:

Case 2

Option x) digital – 10 Hong Kong dollars

Option y) print & digital – 15 Hong Kong dollars

Now chances are less people want option y. Now 75 people select option x (digital) and only 25 people select option y (digital + print)

What happens here is: in first case when people see price of option B & option C being same. All of sudden Option C looks like a good deal. Just by adding one not so cool offer(B) for same price makes the other offer(C) look more like a deal.

A product which was 1 lakh rupees for last few weeks is today available for 65 thousand looks like a bargain. If this same product would have come in front of your eyes today for the first time for 65 thousand you may not have got so excited. Background Knowledge of past few weeks influences your decision making.

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