Monday, August 25, 2014

Name Your Price!

Among the most compelling evidence of the value to a retailer in understanding shopper psychology consists of those instances in which a shopper finds a higher price on an item to be more attractive than a lower price on an equivalent item.
     This might be because the higher price indicates greater exclusivity. Researchers at University of Texas-Dallas explored instances in which a supplier of a high-prestige item drops the price. One result of such a drop is that demand increases for a substitutable item with a higher price. The logic goes like this for the consumer, perhaps at a subconscious level: “If the price is now lower, more people will be able to buy the item. This means the people in my social group won’t be as impressed when I show them I purchased this item. However, if I buy this other item, which carries a higher price, my purchase will impress others more because it’s distinctive.”
     Or the preference for a higher price could be due to pronunciation. For instance, an “s” sound conveys smallness and smoothness to the English-speaking brain. A price stated verbally as seven dollars, sixty-six cents tends to sound small, and the purchase decision seems smooth. But an “oo” sound, as in seven dollars, twenty two cents, tends to sound larger. Researchers at Clark University and University of Connecticut found that a price of $7.66 was rated as a better deal by one group of consumers than was a price of $7.22 by another, equivalent, group of shoppers for the same item regularly priced at $10.00.
     Now Clark University researchers, this time in collaboration with Babson College researchers, find another example of sound effects in pricing: When an item’s price resembles the sound of the shopper’s name or birthdate, the shopper will like the price better. In some circumstances, this means the shopper will prefer that price to a lower price which sounds nothing like the shopper’s identifying information. A price of fifty-five dollars has extra appeal for consumers named Fred or Ms. Fine. A price of $49.15 has extra appeal for a consumer born on 9/15 or even 4/15.
     You may not set different prices for different shoppers based on an individual’s name or birthdate. However, in those circumstances where the sound of a price matches the sound of the shopper’s name, say the price and the shopper’s name in the same sentence.

Click below for more: 
Raise Luxury Prices If Equivalents Drop Prices 
Sound the Prices to Project Sound Value 
Offer Late Alphabet Customers Head Starts 
Open Up Shoppers So You Can Personalize

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