Distortion of Incentive from Discounted Product
Have you even buy the discounted product even though you dont really want it? When people is offered by a discounted product, there is a possibility people turn from their desired one to the discounted one. So, price reduction can distort people's behavior. Discounting product is always attracting.
To buy the sales product or not depend on three rules including how deep of intend people place on the desired one, how much price get reduced, and how you feel about the discounted product. This rule is true under the assumption that those commodity should be in the same group. You cannot compare coffee with pencil but it is not about a completed substitute (just nearby). For the first one, if you would very much like to buy an orange cake - you dream of it you intentionally do many things for it, you will eventually buy it even though the price chocolate cake is reduced, for example, 10%. This rule will be true but you sometimes hesitate with chocolate cake due to the normal attraction of discounted product. For the latter case, it is not so much serious about your desired item. You would like to buy it but you do not dream of it or it is not too much necessary. It can be orange cake, chocolate cake, or muffin. You can be tolerant if you do not consume it. When you face with a huge reduction in price, you discard your desired item and choose the new one. In this case, it is what marketing person expect when he or she launch the new campaign.
For the last rule, it is possible that you buy some discounted commodity because it is discounted or cheap in the case that you dont want to but in this kind of product. You see a huge reduction in price, you think it is worth buying. However, if it is not discounted, you will not buy it for sure. It is the scenario that you go to the shopping mall and notice the announce of 80% discount for leather bag. Even though you have your own bag which made from fabric, in the next day you may use leather bag for sure.
For mathematical expression,
Dicision to buy discounted one offered = how deep you intend to buy + how much it is discount + how much you are attracted.
W = G1 + G2 + G3 , G1 is weighted for 0.5, G2 is weighted for 0.4, G3 is weight for 0.1
Reason for weight : normally, people have their own choice. When you go somewhere to buy something, you can think about the image you are walk to shop, talk to sales assistant, and carry your plastig bag containing your desired one. Thus, G1 or first rule is recieve the most big part. If you 100% intend to buy, G1 will be 0.5 or almost 0.5 while it will be 0 if you dont image of product in your mind. For G2, it is that you know what do you want roughly, it is not specific but you can tell what's type of product. G2 will be 0.4 or almost 0.4 if the new offered one is discounted by only small amount - it is not impressively attracting while it will be 0 or almost 0 if it is reduced very much. For G3, if you dont know what you would like to buy and you face the product with little discount or if you know what you want the most, G3 will be 0.1 or almost 0.1. but G3 will be 0 if you dont know what you would like to buy (face accidentally) but there is a very huge discount.
So, If W is 1 or almost 1, you will buy your desired one. You dont look at the new offered one.
If W is 0 or almost 0, you will buy the discounted one. You turn from your desired one to new offered one.
* Note: for all of G value, it is different to each people. We weight it differently. 10% reduction is huge for someone but it may be considered to be little to another one. it is about feeling.
1. You talk to your friend for more than two weeks that you want to buy new shirt. You go to the shopping mall. However, trouser is reduced by 15%.
How people make a decision ?
In this case, you know what you would like to buy and you intentionally want to buy. So, G1 will be 0.5
For discounted product, supposed you feel 15% reduction is little, then G2 will be 0.4
For G3, trouser is not your type. You know to want to but shirt. Then, G3 will 0.1
Then W = 1 , you dont buy the offered one.
2. You accidentally go to shopping mall and face 90% reduction. you feel 90% is huge
G1 will be zero because you cannot image what you want.
G2 will be 0 due to hugh amount
G3 will be 0.04 because you really want to buy but it is reduced very much. (it may be a little positive if that product is very unneccessary). The most G3 >> you would not like to want discounted one.
So, W=0.4, it is far away of 1. So, you buy it.
All about W is dependent on how much people weight. And I think my model should be implemented to qualitative analysis, for example, questionaire or interview.