DAVID BABU PGP/33/222 HIMANSHU AGGARWAL PGP/33/323

RACHIT SACHDEVA PGP/33/345 SHUBHAM ROY PGP/33/354

8th August 2018

1
 REFERENCE
DEPENDENCE &
ANCHORING

2
1.1

Definition

Individuals’ preferences between given options vary

systematically according to what is perceived to be
the reference point—that is, the status quo, or the
customary or normal state of affairs[1]

Some Examples

1 2

If you think I am crazy, you

Silver medal winners are more Companies tend to have market should see the guy across
disappointed than bronze medal values significantly diverging from their
winners because of difference intrinsic value due to the reference the hall
references for both the athletes point of other companies in the industry

[1] Bateman, A. Munro, B. Rhodes, C. Starmer, R. Sugden; A test of the theory of reference-dependent preferences; Quarterly Journal of Economics, 112 (1997), pp. 479-505
3
1.2

xx

Source: 3 Idiots
4
1.2

Definition

Anchoring is a particular form of

priming effect whereby initial
exposure to a number serves as a
reference point and influences
subsequent judgments about
value. The process usually occurs
without our awareness (Tversky &
Kahneman, 1974).

Some Examples

1 2 3

“Big Price Drops” campaigns by Price anchors are used in menus at Purchase quantity limits on customers
supermarkets restaurants and in coffee shops to provoke sales

Source: Tversky & Kahneman, 1974 [1] Anecdotal

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RESEARCH
DESIGN

6
2.1

Products Survey 1 Survey 2

Toothpaste

USB Drive
Asked the respondents to provide
us with estimated costs for each
Iron
of the five products
Provided the respondents with
the price of a similar product,
with the difference of one or two
features, and then asked for the
costs for each of the five
products again

Tea

Washing Powder

Source: Refer Appendix for the detailed questionnaire

7
2.2

Products Survey 1 Survey 2

Toothpaste

USB Drive

Added a inferior alternative, &

Asked the respondents to chose
then asked the respondents to
Iron between two alternatives
chose

Tea

Washing Powder

Source: Refer Appendix for the detailed questionnaire

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RESULTS

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3.1

Price of Herbal Colgate Absolute Price With Anchor

142 182

Price of Himalayan
Herbal product is 200

Price of 32 GB SanDisk pen drive Absolute Price With Anchor

740 800

Price of Sony 32 GB
pen drive is 1,000

Source: Internal Survey [1] Anecdotal

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3.2

Price of steamed iron Absolute Price With Anchor

1,350 1,100

Price of steam Bajaj

1,000 Watt iron is
1,200

Price of Tata Tea Gold Absolute Price With Anchor

200 360

Price of Brooke Bond

premium is 400

Source: Internal Survey [1] Anecdotal

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3.3

Price of Surf excel matic Absolute Price With Anchor

232 454

Price of Ariel front

load is 550

Source: Internal Survey [1] Anecdotal

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CONCLUSION

13
4.1

1 Price anchor had an impact on the

respondents

Source credibility plays a role in

2 anchoring, some respondents checked
about our information

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APPENDIX

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5

Products Survey 1 Survey 2

What should be the price of Colgate herbal 300 Price of Himalayan 300 gram is Rs 200, what
Toothpaste grams? should be price of Colgate herbal?

What should be the price of a 32 GB Sandisk USB Price of 32 GB Sony USB is Rs 1,000, what should
USB Drive drive? be price of the 32 GB Sandisk USB?

What should be the price of a steam Phillips1000 Price of Bajaj steamed 1000 Watt iron is Rs 1,200,
Iron Watt iron? what is the price of steam Phillips 1000 Watt iron

Price of Brooke Bond premium tea 1 kg is Rs 400,

Tea What should be the price of 1 kg Tata tea Gold?
what is the price of Tata tea Gold is

What should be the price of 1 kg Surf Excel matic Price of 1 kg Arial front load is Rs 550, what should
Washing Powder (premium product) be the price of Surf Excel matic

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