Science on Tap: Rajesh Bagchi Asks, “What’s the Better Deal?”

Rajesh Bagchi tallied up audience responses on a whiteboard while talking about consumer decisions.

With the approach of the holidays and the gift-buying season, Science on Tap hosted Virginia Tech marketing professor Dr. Rajesh Bagchi so that he could share his research through his talk, “What’s the Better Deal? The Science of Purchasing Decisions.”

“If it seems like it’s too good a deal, it probably is,” Bagchi told his audience November 26 at the River Mill Bar and Grill in downtown Blacksburg. To start his talk, he passed out a set of questions that asked participants to make decisions about purchases. He tallied audience responses as he discussed consumer decision-making.

With $6.2 billion worth of online Black Friday purchases in the background, Bagchi talked about some of the elements that affect us as we buy. Partition pricing is one effective ploy; $25 plus $4 shipping seems like a better deal to buyers than $29, even though the total is the same.

The order in which information is provided also affects our decisions, Bagchi said. When price is the first thing we see, we focus on price; when quantity is the first thing we see, we focus on that.

Color also is used by marketers, with red an indicator of aggression. Studies show that a red background or even just a red line across the top of the screen in an online auction results in higher bids.

Even temperature affects purchases: as temperature rises, auction bids also rise, but prices that are agreed upon through negotiation drop.

Bagchi also provided some “insider information” about loyalty programs, through which companies promise perks to customers in proportion to their expenditures.

“Fewer than a quarter of the people involved in loyalty programs redeem their points,” he said. “But companies want you to–they want you to be happy, because it’s cheaper to keep you as a customer than to recruit new customers.”

Bagchi also addressed artificial intelligence, a topic driving some of his new research.”How will AI change the way we process information?” he asked. “It removes our ability to counter-argue. And we are already allowing digital devices to affect our emotions.”

Bagchi provided some take-home advice about making purchases: “I think you should ask yourself, ‘Does it make me happy?’ I’d rather spend an hour with my family than spend an hour analyzing every tiny detail of a purchase.”

The next Science on Tap event will be at 5:30 p.m. Monday, January 28, at the River Mill and will feature Sihui Ma from Virginia Tech’s department of human nutrition, foods and exercise. Ma will talk about fermented foods. Science on Tap will take place on the fourth Monday of each month at the River Mill during spring semester. Hope we’ll see you there!

By Kendall Daniels, Center for Communicating Science student intern

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