Consumer Comeback Blog

Not Getting the Best Deal? Blame it on Bad Math

While navigating the aisles of the grocery store after a long day of work and errands, converting percentages and other mental math measures may not rank high among consumer priorities.

In tough economic times, millions of consumers are looking for bargains among their daily purchases to help pay down debt or just make ends meet. But a recent University of Miami study indicates that many shoppers don’t know a good deal when they see one.

The study, published in the Journal of Marketing, blames poor math skills for consumers missing out on a better bargain. For example, the study showed that 73% of shoppers selected the “50% more” hand lotion instead of the “35% off” mark-down bottle of lotion, which would have been the better deal.

Researchers asked consumers to chose between bonus packs and price discounts in both a lab and field survey settings at retail stores and malls.

“When faced with a scenario of converting percentages, most of us are helpless and simply guess when it comes to figuring out the better deal,” Michael Tsiros, chair and professor of marketing at the University of Miami School of Business Administration, said in a press release. “It is clear from the study that shoppers often, and incorrectly, assume more product is better.”

The study also showed:

  • Shoppers do not take into account that making something cheaper by a certain percentage is a larger absolute change than increasing quantity by the same percentage. Instead, they choose the bigger number at face value.
  • When offered the following deals on loose coffee beans, 33 percent extra for the same price or 33 percent off of the price, many studied viewed the two as equivalent though the discounted price is far better economically.
  • The preference for bonus packs disappears when the percentages associated with the discount are less difficult to compare (e.g., 50 percent off is easily translated into 100 percent more).

“To avoid getting tricked, consumers should evaluate products in terms of unit pricing – how much they cost per pound or liter – and should pack a calculator to calculate them,” Tsiros said.