Saturday, September 19, 2009

Allow Modest Expectations of Discounted Products

Research at Israel's INSEAD and at Stanford University confirms that when people buy products or services at what they consider to be deeply discounted prices, they tend to end up feeling that the benefits are less than if they'd paid full price. They love having gotten a discount, but they don't have as much love for the product or service. Consumer psychologists call this the price-quality link.
     We'd like our customers to be absolutely thrilled with all their purchases from us, so we may be tempted to point out that the discounted item is identical to what the person would have gotten at a higher price somewhere else. But because the price-quality link operates at an emotional, non-rational level, it doesn't easily yield to logical arguments.
     In the short term, this can create a nuisance. People who think a product or service is inferior are more likely to request refunds. But in the longer term, it's to the benefit of the retailer to maintain the price-quality link in the consumers' minds. Your staff can say, "We'd be pleased to accept a return and give you a full refund or if you'd like, a credit towards purchase of a regularly-priced alternative to the item you bought."
     The price-quality link also is useful in another way: Research at University of Texas, San Antonio found that the initial enthusiasm when making a purchase often fades over the time the consumer uses and then eventually discards the product. Because the discounted product or service begins with more modest expectations, any disappointment the consumer experiences may be less, meaning that good will towards your store is protected.
     Certainly deliver full value to every customer. But allowing those customers to believe, "You get what you pay for," can be to your benefit as a retailer.

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