Statistics for Business: Decision Making and Analysis, 3rd Edition

A Pricing Experiment

Research has found a variety of ways to influence customer behavior. The study that underlies the experiment in this case study discovered that the way in which a price is presented influences customer perceptions and purchase decisions. The particular example concerns the way a company advertises the prices of automobile repairs. This company operates a national chain of auto repair shops whose services include brake maintenance and repairs. Prices for these services are typically split into the cost of labor and the cost of parts. The brake service offered in this experiment typically costs $245 but is being offered for $198.

The marketing team wants to learn how partitioning of the price affects consumer responses. Following ...