1. Economics in Daily Life----Consumer Surplus and Sales Strategies

4. Consumer Surplus (CS) An economic measure of consumer satisfaction
Difference between what consumers are willing to pay for a good or service relative to its market price

5. CS is actually…… CS occurs when……
consumers are willing to pay more for a given good than the current market price
CS is actually……
the psychological feeling but not the actual
payment to consumers

6. This concept was introduced by Alfred Marshall, a British economist
Introduced to remind how the
producers latch on consumers
Producers usually provide
discounts to attract the consumers
The more the CS that can be provided to consumers, the more they want to buy.

7. Sales Strategy---Psychological Pricing
Based on the theory that certain prices have a psychological impact
Retail prices are often expressed
as “odd prices ”
Consumers tend to perceive odd prices
as being significantly lower than they actually are
Tending round to the next lowest monetary unit

8. ?

9. Sales Strategy---Price Skimming
A pricing strategy in which a seller sets a relatively high price for a product or service at first , then lowers the price over time
To recover its sunk costs quickly before competition steps in and lowers the market price

10. Sales Strategy---Price Skimming
Examples:
new models of smart phones,
new sport shoes

11. Sales Strategy---Tie-in-Sale
A marketing arrangement in which a supplier of an in-demand good or service sells it on the basis that the buyers also buy a certain amount of another products

12. Sales Strategy---Tie-in-Sale
Example:
Games given along with the game
consoles consumer purchased

14. Sales Strategy---Penetration pricing
A marketing strategy used by firms to attract customers to a new product or service
Practice of offering a low price for a new product or service during its initial offering
Attract customers away from competitors

15. Sales Strategy---Penetration pricing
Reason why this strategy is adopted……
Customers will buy and become aware of the new product due to its lower price in the marketplace relative to its rivals
Firm can have a larger market share and thus can expand its scale

16. Conclusion Consumer Surplus (CS) Sale Strategies
MENTAL SATISFACTION of consumers only
DOES NOT equal to the actual gain
Sale Strategies
sellers will apply different sale strategies in order to capture a part
of consumer surplus
We should consider the actual value of the products before the purchase instead of buying on impulse or simply attracted by the discounts provided !!!