Poor Math Skills Costing Americans Big Bucks
CREDIT: Math on chalkboard image via Shutterstock
Attention shoppers: You may want to brush up on your math skills before your next bargain hunt. New research finds that American consumers are missing out on the best deals because they lack basic math skills.
Shoppers in a study conducted by the University of Miami School of Business Administration were unable to tell which of two different types of product offers was the better bargain.
In one example, almost three-quarters of study participants purchased hand lotion when it was labeled "50 percent more" than when it was labeled "35 percent off," even though the deal is slightly better on the lotion whose price is reduced 35 percent. (If you normally paid $3 for eight ounces of lotion, a "50 percent more" offer would be $3 for 12 ounces, or 25 cents an ounce, while a "35 percent off" offer would be $1.95 for eight ounces, or about 24 cents an ounce.)
"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," said Michael Tsiros, chair and professor of marketing, who conducted the research. "It is clear from the study that shoppers often, and incorrectly, assume more product is better."
This information has huge implications for for marketers, who can use it to help explain which product options appear more attractive to consumers, as well as for companies.
"Marketers could take this information and rework their sales strategies and messages to focus more on bonus packs with odd numbers than easy-to-convert percentages or the more typical 'percent off'-type sales," said Tsiros. "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 conducted the research with Howard Marmorstein, of the University of Miami, Allan Chen at Texas A&M University, and Akshay Rao at the University of Minnesota.