Capital Ideas - Coming From Good Stock Vol. But a series of studies investigating customers' price knowledge of grocery products suggests that we as customers are not well informed about market prices. These studies reveal that usually no more than half of customers questioned can recall the prices of recently purchased products. Assistant marketing professor Eric Anderson of the University of Chicago Graduate School of Business and former Chicago faculty member Duncan Simester, now at MIT's Sloan School of Management, explain that people regularly rely on cues to guide their behavior.
Customers are often more sensitive to price cues than changes in actual prices.
Our findings show why this is rational given retailer strategies. As important, stores generally make no commitment when using sale signs. Placing a sale sign on a product increases demand for that product. The increase in demand is smaller when more sale signs are used. Comparison of prices and sale signs at competing stores confirmed that sale signs contain information about which products offer good value.