Saturday, September 25, 2010

Offer Exclusive Price Discounts Cautiously

When you tell a customer they’re receiving a price discount, they’ll build good will toward your store. If you add that the discount isn’t available to every other customer, the good will might be even greater. Or your announcement might make the customer uncomfortable. Shopper psychology research finds that exclusive price discounts operate in strange ways:
  • Be consistent and be ready to explain the reason for the discount. Otherwise, the customer might get angry, thinking that your store pricing is highly arbitrary or even discriminatory. Researchers at University of St. Thomas and University of California-Berkeley analyzed a pricing policy used by Amazon in year 2000, in which some shoppers were offered a discount of 30% on a set of DVDs, while others were offered a discount of 40%. When customers discovered in online chat rooms what was going on, they had challenging questions for Amazon.
  • Research findings from Baruch College, University of California-Berkeley, and San Francisco State University indicate that the sort of reasons acceptable to Western and Asian consumers differ. With consumers having a Western mindset, it’s best if the reason is demographic (“We give a 10% discount to senior citizens”) or marketing-determined (“We give a 10% discount to first-time purchasers”). For consumers having an Asian mindset, it’s best if the person concludes they earned the good fortune (“You are lucky enough to have selected an item for which we’re giving an extra 10% discount today”). When the reward appeared to be unearned, the East Asian recipients in the studies often felt it produced a menacing imbalance.
  • Researchers at University of Louisville and Iowa State University found that there was one group for whom the offer of exclusive price discounts was especially likely to produce an abundance of gratitude toward the store: Men who had done business with the store before.
  • These same researchers found that exclusive discounts are most effective in the long-term when the shopper concludes that they were not pressured into making the purchase, but rather view themselves as acting in an independent way.
Click below for more:
Earn Good Will in Giving Discounts
Have Unannounced Discounts on Common Purchases
Tailor Loyalty Programs to Customer Culture

No comments:

Post a Comment