1. A Y U S H G A N G W A R
I I T K H A R A G P U R
Part 1

2. BEHAVIOURAL
ECONOMICS
In the given context , the following point has been
highlighted
Study the effects of social, emotional factors on the economic
decision of individuals and institutions and the consequences
for market prices, returns, and the resource allocation. The fields are
primarily concerned with the bounds of rationality of economic
agents.

3. Behaviour economics: Brief idea
 It deals with how the decision of consumer are
affected psychologically which can go a long way in
increasing the effectiveness in the marketing of the
product.
 Presentation manipulates the willingness and
satisfaction of the consumer and the sales of the
product increase .

4. Strategies employed to psychologically attract consumers

5. Among the various strategies employed ,the one
focused in the experiment was
W E I G H T A G E A U S E R G I V E S T O V A R I O U S
C O M P O N E N T S O F T H E T O T A L C O S T O F A N
A R T I C L E ( P R I C E C O M P O N E N T S )

6. T H E C O M P O N E N T S O F T O T A L M R P O F T H E A R T I C L E .
1 . A C T U A L V A L U E O F T H E A R T I C L E
2 . T A X E S : V A T , S A L E S T A X , G O V E R N M E N T T A X , C U S T O M
D U T I E S E T C
3 . L A B O U R C O S T S
4 . L A N D R E N T S
5 . T R A N S P O R T A T I O N C O S T S
6 . S E R V I C E C O S T S
N O W F R O M T H E S E , T H E M O S T I M P O R T A N T
F A C T O R F O R T H E U S E R W I L L B E T H E A C T U A L
C O S T O F T H E A R T I C L E . I F H E F I N D S T H A T O F
T H E T O T A L M R P H E I S P A Y I N G F O R T H E
A R T I C L E , O N L Y 5 0 % O F T H E T O T A L M R P I S T H E
A C T U A L C O S T O F T H E A R T I C L E , H E W I L L
T H I N K A B I T B E F O R E T A K I N G A D E C I S I O N
Example

7. W H A T T H E U S E R I S L O O K I N G I N T H E
P R O D U C T , H O W I S H I S P E R C E P T I O N A B O U T
T H E U T I L I T Y O F T H E P R O D U C T , T H E
C O M P O N E N T T O W H I C H M A X I M U M
W E I G H T A G E I S G I V E N B Y T H E U S E R S H O U L D
B E G I V E N H I G H E S T
Main emphasis on pricing components

8. H O W E V E R , I T D O E S N ’ T M E A N T H A T O T H E R
C O M P O N E N T S M U S T B E T O T A L L Y I G N O R E D .
F R O M T H E S E C O N D E X P E R I M E N T W H E R E
M A J O R I T Y O F C O N S U M E R S V O T E D F O R
A R T I C L E W I T H L A B O U R C O S T S R A T H E R
T H A N W I T H Z E R O L A B O U R C O S T S .
E X T R E M E C A S E O F P R I C I N G O F C O M P O N E N T S
F O R B E N E F I T M U S T B E A V O I D E D
Loop hole :the second experiment

9. I D E N T I F Y W H A T T H E C O S T U M E R E X P E C T S
F R O M T H E P R O D U C T . C O M B I N E P S Y C H O L O G Y
A N D E C O N O M I C S I N T H E B E S T P O S S I B L E
P R O P O R T I O N T O I N F L U E N C E T H E E C O N O M I C
D E C I S I O N O F T H E C O N S U M E R
Results :

10. D Y N A M I C A L L Y M A N I P U L A T E L O W B E N E F I T I N G
A N D H I G H B E N E F I T I N G C O M P O N E N T S
, D E P E N D I N G O N T H E M A R K E T E C O N O M I C
S C E N A R I O S . F O R E X A M P L E , V A R I O U S
D I S C O U N T S , S C H E M E S A R E V I S I B L E S P E C I A L L Y
D U R I N G S P E C I A L O C C A T I O N S . T H E S U P P L I E R S
T R Y T O C A P T U R E T H E M A R K E T S I T U A T I O N S A T
T H A T T I M E . S O T H E S E S C H E M E S A C T A S
P S Y C H O L O G I C A L M A G N E T S I N T H E C O N S U M E R S
M I N D W H I C H A L L O W S H I G H E R S A L E S
Result 2:

11. A C O N S U M E R W A S R E A D Y T O P A Y F O R T H E L O W
B E N E F I T I N G C O M P O N E N T S A S W E L L I F H E W A S
T O L D A B O U T T H E H I G H U T I L I T Y O F T H E H I G H
B E N E F I T I N G C O M P O N E N T S . H E N C E , I N T H I S
R E G A R D , I F H I G H E R M A R K E T I N G A N D P U B L I C I T Y
O F T H E P R O D U C T I S D O N E W H I C H I N C R E A S E S
T H E U T I L I T Y O F T H E P R O D U C T I N T H E E Y E S O F
T H E C U S T O M E R , H E W O U L D B E W I L L I N G T O P A Y
T H E A D D I T I O N A L C O S T S A S S O C I A T E D
RESULT 3:

12. A P P L I C A T I O N T O T H E I N D I A N M A R K E T
PART 2

13. Scenario in India
 Most of the Indian population is middle class ,the
per capita income being INR 73,140 in 2011-2012.

14. Indian per capita is much lesser than that of other
BRIC nations
 They keenly look for products in which their benefit
is maximum . They compare products over different
brands and only pick up the one in which they find
they are being benefited maximum.

15.  The low per capita income promote the Indian users
to invest their resources judiciously .They always
look for the deals in which their profit is the
maximum
 Here comes Behavioural Economics in the picture
.This concept acts as a guideline for the sellers to
fight for producing the most attractive deals .

16. High car sales during Diwali: An indication of the
effect of the sellers taking advantage of the festive
mood of the people

17. Behavioural economics
 In India , this field has had a very deep history and it
is applied quite intuitively by the people varying
from uneducated street vendors to big retail houses
to various online market stores .In Mumbai
,approximately 60% of the people buy their daily
need items from roadside markets who try to pitch in
pricing which goes in sync to the consumers ears and
one should know that they have no theoretical
knowledge of these concepts ,they have garnered it
by experience.

18. Pricing components
We give a lot of emphasis to where is the money going.
It is irritating if we find that some percentage of the
costs is actually the taxes imposed .It acts as negative
pricing

19. Some representations of behavioural economics
 Sales and special offers during festive seasons
 Free home delivery concepts
 Buy now ,pay later schemes
 Cash cards from various domestic stores
 Online bookings ,shopping etc
 Test drives on automobiles

20. Major implementations of Pricing components in
India
 Free gifts of very small value are given out along with
the new product being launched .The free gift is later
terminated when the product occupies a share of its
market
 Numbers which are generally favourable sounding to
ears are set as the prices of the commodities .
Commonly it can be seen with the street vegetable
vendors who can often e heard shouting out offers
like 2 for 10 at some point of the day and then
dramatically changing their offer to 15 for 4 at some
other time on the same day

21. Thank You