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> Show your costs to boost sales for honest products
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> I find using decimals places (like 16.1% and 21.1%) in human experiments pretty irritating. It feels like false precision. Whether you say 21.1%, 21%, or 20%, you still have a single number. You could make an argument that decimal places like 21.147258% add clutter, but without an actual measure of uncertainty, all you're doing is reporting a summary of the data in the sample with different amounts of arbitrary rou…
21.1% is implying a different confidence interval than 21%. At least to me.
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It's kind of lazy of you to disclose the Backpack and Chicken Soup cases in a declarative way. You present no references, no drill-down on whether all other effects were equal in these cases. For example, did chicken soup sales continue for an extended period of time and were not driven by other factors such as "a cold going around" or low temperatures? Trust is certainly a factor in consumer behavior, but it nowhere…
It's also equally lazy for you to demand such an in depth and thorough argument and sources when you can pop into a search browser and do some fact checking yourself. No one owes you anything. This is a discussion board, not a dissertation defense.
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Wouldn't that be illegal?
Outright lies would be, but hollywood accounting is a thing even when the relationship is adversarial. For example set up two companies, company 1 purchases the ingredients for cheap, does some minor amount of work on them, and sells them to company 2 for way too much money. Company 2 then turns them into soup and makes 0 profit. Cost breakdown on the soup makes it look like the ingredients were really expensive, but…
Across borders, it would be a huge violation of transfer pricing laws and result in huge penalties. But the marketing part of it would still be legal.
What you've described is actually pretty similar to how Coke/Pepsi is sold: Company 1 (Coke/Pepsi) makes the syrup, which they sell for inflated prices to Company 2 (the bottler/distributor), which then sells it to a store (Company 3) for a less-inflated wholesale price, and the store usually sells it at very small markup as a loss-leader.
The article is interesting and all, but the fact that I had to wade through 3 separate "subscribe to our newsletter!" sections before even getting to the start of the real content is ridiculous. I counted a total of 6 different places where the user is asked to sign up for something or take some sort of action. Good lord.
Roughly every half screen of scrolling, the content formatting changes dramatically (and clearly some of it was subscription info, which is not how I want to start reading), and then I was at the end of the page... I'd failed to identify the "body" of the article and so closed that tab.
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TBH, I've consistently found that "average people" have a better intuitive understanding of costs/profit than the average engineer. That may sound strange, at least it does to me, but I've noticed it for as long as I've been in this profession.
How has this manifested itself? Where do you see that engineers tend to go wrong?
I guess what I've noticed is that although if you pressed them, engineers (across a range of fields) understand that businesses need to generate a healthy profit to stay afloat, they still seem to be uncomfortable with the idea of "profit" at all. And they seem to be surprised when you bring up the question of "how will you make money from that?" Whereas the "general public" tends to think of it with an approach of "make as much money from it as you can because it might not last."
I know that's not a very good description but it's the best I can do at the moment.
"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and what they actually do are 2 very different things. The conversion rate of actual behavior needs to be tested for this to mean something useful.
Is there an official name for this sort of effect? I've been looking for something to call this. For example, we've had this effect at work when trying to organize social outings; people say they're interested in some activity X (e.g. hiking, board games, etc.), but then the day of that event comes and nobody shows up. The bar is very low to say you're interested in something, but doing actually takes effort.
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Chicken Nood Soup bowls for $4.95? Don't they usually sell for a buck at the grocery store? Unless it's a high end brand.
Most of the cost was labor, according to the picture in the article. I don't know which dining hall or cafe the "canteen" they're referring to is, but much of the food sold on Harvard's campus is produced by unionized dining hall staff with decent pay, hours, and benefits, which affects the costs.
That can't be true in all cases.
There are a few hypothetical exceptions discussed, but the authors were surprised to see that in all the cases they looked at, it seemed to help. > Extremely high profit margins (>55%) could trigger a negative reaction, although this was not tested. Likewise, suspiciously low margins (e.g. negative or very low) could negatively impact the effect of trust that drives increased sales.
that seems like the important thing to test to be able to make such a broad statement.
"People said they were 14.2% more likely to buy this chocolate bar when they were shown the version with a cost breakdown." What people say they would do and what they actually do are 2 very different things. The conversion rate of actual behavior needs to be tested for this to mean something useful.
Author of the summary here: You are right regarding the chocolate bar experiment. That's why the researchers ran multiple experiments, some of which measured actual behavior: - People were 16.1% more likely to bid for a gift card for an Everlane backpack (vs a J.Crew one) when they saw cost information about it - Sales of chicken noodle soup bowls ($4.95) in Harvard’s campus canteen increased 21.1% when costs were di…
What sales decreased in relation to this? Would overall sales increase if all food items had costs listed? Or would people gravitate to the meals with the lowest margins, figuring them to be relative bargains?
It's really not simple to draw a conclusion from the limited data set here.