Prospect theory teaches us that
virtually any value is perceived as a gain or a loss depending on a reference point.
Another teaching of prospect theory is that any value is “big” or “small” only relative
to a reference point.
I’ve remembered this a few days
ago when I was shopping at Albert Heijn (the main supermarket chain in The
Netherlands for who does not know). I guess there’s some sort of regulation
that makes retailers give the price of a product also per unit of measure. For
most products this is usually very intuitive from the perspective of official
and perceived units of measurement.
For example if someone buys meat,
that person would want to buy, let’s say, “two pieces of chicken”. At the same
time the person is quite aware that chicken meat is measured in kilograms and
that those two pieces of meat weight around 300-400 grams. Similarly if someone
wants to buy orange juice, that person would buy “a bottle”, but at the same
time he or she is aware that “one bottle” is about 1 liter.
For most products
we buy at a supermarket there is a very natural correspondence between the
informal (or perceived) unit of measure (e.g. a box of milk) and the official
unit of measurement – one liter. In this case, expressing prices in both “per selling
unit” (box, bottle etc.) and in official units of measurement (liter or kilogram)
makes perfect sense and I think it is really benefic for both customer and
retailer.
At the same time, in supermarkets
but not only, there are products for which the transition from informal to
formal units of measurement is not that easy an intuitive. One day I wanted to
make some mint tea (or maybe it was mojito??) and decided to buy some fresh
mint (plant). I saw a very nice “bunch” (the informal unit of measurement) of
mint on a shelf and stretched my arm to get it… that was when I saw the price
per kilogram label and everything changed. The “bunch” of mint was less than 2
Euros which for a non-frequent purchase seems reasonable… but it weighted only
15 grams. When I saw the price per kilogram – namely 92.67 Euros I was blocked…
How much can Mint cost??? (by the way, fresh basil costs the same, while the
prices for other spices are really “spicy” – up to 200 Euros per kilogram).
Another example of severe
discrepancy between informal and formal units of measurement is “mints” (mint
drops). Although I try not to make impulse purchases, one day I yielded and on
the way to the cash register I grabbed a “box” of Smint (mint flavored drops).
I couldn’t help myself and I looked on the label for price per unit. The small
box (informal unit of measurement) of Smint was so cute and was priced only at
a bit below 2 Euros, but the price per kilogram was around 170 Euros… That was
really a shock, so I got the bigger box which was priced at only 55 Euros per
Kilogram.
Here’s some food for thought: How
much does a liter of Printer Ink cost? In case you had a shock, get a glass of water.
Now, how much do we actually pay
for the stuff we buy and how should we think about our purchases? I remember
that a real estate agency (don’t you just love real estate people??) started to
communicate prices of houses not by the square meter, but by the kilogram. What
they claimed was that “a Kilogram of house” doesn’t cost much differently than
a kilogram of regular groceries. For sure I think that a Kilogram of house is
cheaper than a liter of printer ink :).
These are more extreme examples,
but as I can remember a kilogram of detergent is priced very close to a
kilogram of meat and the examples can continue. Should we see our shopping more
in terms of official units of measurement or should we stick to the informal
ones? What do you think?
Latter edit: Read also "The Most Expensive Thing in a Supermarket"
Latter edit: Read also "The Most Expensive Thing in a Supermarket"
No comments:
Post a Comment