Offer Service Pricing to Fit Idiosyncrasies

Consumers make choices based on the fairness of an item’s price and on how well the item fits the shopper’s idiosyncratic characteristics. University of Passau researchers looked at the juncture of these two as it applies to pricing for ongoing service usage plans, such as might be levied by a country club, community supported agriculture program, or mobile phone service.
     The researchers verified that people enjoy the perception that their pricing plan is personalized. The implication for service providers is to have a range of tariffs, each alternative described in terms of the characteristics of a target consumer. As examples, some of the tariffs offered or suggested might be flat fee for unlimited usage with a label of “Worry-free,” others pay-per-use with a label of “You’re in control,” and still others a barebones plus add-on options with a label of “Getting started.” 
     The feeling of price being right comes both from a sense of equity and a sense of personal fit. When it comes to ongoing services, the sense of personal fit is especially important because the shopper often lacks the ability to do comparative pricing, as would be done with merchandise, and is often unsure about the how much of the service they’ll end up using. A tariff attending to idiosyncrasies gives comfort in the face of the uncertainties.
     Supporting this interpretation, the researchers found that fitting service pricing plans to shopper idiosyncrasies added the most attractiveness in circumstances where shoppers lacked confidence, such as when the service was less familiar to the consumer. A range of other studies supports the interpretation that shopper attraction to idiosyncratic marketing comes from the ability to choose, not only from the better fit of these personalized alternatives. When a pricing plan was assigned to the customer by the seller based on an assessment of the customer’s particular characteristics, the relative appeal of the personalization faded.
     Researchers at University of Pittsburgh and University of Southern California note the evidence that labeling by shopper characteristics helps, beyond pricing, with the items themselves. They point out how Hertz formerly classified its cars by attributes—four-door, trucks, minivans, SUVs, then switched to classification with labels green traveler, adrenaline, and prestige.
     Researchers at University of Virginia found that the draw of customized discount coupons occurred even if the recipient didn’t use the coupons. People like to be recognized as individuals. Personalization in any form communicates caring.

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

Click below for more: 
Subscribe to Community Supported Retailing
Personalize Discount Coupons
Drive Personalization by Fostering Narcissism