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Compete Smarter, Not Harder: A Process for Developing the Right Priorities Through Strategic Thinking by William Putsis

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CHAPTER 6

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Understanding Your Customers in the Right Space

The Use of Choice Theory and Customer Choice Analytics

—The Story of the Coke and the Temperature Sensitive Vending Machine1

This chapter kicks off with an exercise. You are tasked with discerning what the following eight management decisions have in common:

Decision 1: Framing. It's a hot summer day; temperatures are running in the high 90s with searing humidity. You've been running around in the scorching heat and develop a strong thirst. You spot a vending machine and gratefully make your way over to it. The price of a can of Coke posted on the vending machine is $1.25. However, there is a sign that states, “If the outside temperature is above 90 degrees Fahrenheit, then the price will be raised to $1.75.” Do you feel taken advantage of when you have to pay $1.75 rather than $1.25 because it's so hot outside? Seventy-seven percent of respondents in recent experiments did; they objected to such a pricing system and felt “gouged” and taken advantage of.

Now, imagine the following. You walk up to that same vending machine and the posted price is $1.75, but the sign now states, “If the outside temperature is below 90 degrees Fahrenheit, then the price will be reduced to $1.25.” Do you no longer feel taken advantage of? ...

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