Attach Style to Customized Pricing

Studies at Baylor University, University of South Carolina, and Vanderbilt University explored a type of customized pricing, in which what you charge is determined by your knowledge of a known customer’s past purchases. The researchers found that the reaction of a shopper to such a system is influenced by what psychologists call “attachment style.”
     Attachment style refers to how accepting and supportive people believe others are toward them. Those who are confident others will be available whenever needed have a secure attachment style. In the research, words that characterized them included wanted, welcomed, liked, and cherished. People who worry about the stability of relationships with significant others have an anxious attachment style. Words used by the researchers to characterize them included abandoned, neglected, disregarded, forsaken, disconnected, and let down.
     The study results indicated that customers with a secure attachment style have generally favorable views of a store using customized pricing. But the basis for the favorable view is that the customers believe they’ll get better prices than do others. Unless there is some compensating advantage for the retailer, a customized pricing strategy with these customers results in reduced revenues on balance. It can work if you charge a higher price often enough and explain the higher price in terms of a benefit important to the shopper. It might be expedited delivery, at-home installation, initial training in product use, or access to an increased number of alternatives to select from. Researchers at University of Kentucky suggest setting a price on a customized bundle of items, since this is a step removed from the individual prices.
     On the other hand, customers with an anxious attachment style who shop in a store with a customized pricing policy are relatively less concerned about getting a cut from the price tag tariff. It appears that their yearning for a good relationship with the retailer motivates them to accept that, over the long haul, they won’t be exploited. As long as the retailer maintains a fair overall pricing policy with these people, the customized pricing policy can pay off by evening up product demand and introducing some excitement into transactions.
     How to recognize who feels secure and who abandoned? With customers you’ve come to know over time, their general disposition is revealing. With other customers, engage in conversation and then attend to the words the shopper uses and the nonverbal tells like posture and gestures.

For your success: Retailer’s Edge: Boost Profits Using Shopper Psychology

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