Consumer Psychology and pricing

1. Consumer Psychology and pricing Prepared by: Heba Al-Kahlout Instructor: Safaa Dallual.

2. Introduction. • Many Economists assume that “Consumers purchase without bargaining”. • Marketers recognize that consumers process price information, interpreting price in terms of their knowledge from “prior purchasing experience, formal and informal communication, and point-of purchase or online resources.

3. Con… • Purchase decision based on how consumers perceive prices and what they consider to be current actual price. • It’s important to Understand how consumers arrive at their perceptions of prices.

4. So we would discuss… • Reference prices. • Price-Quality inferences • Price endings Or “ Price cues”.

5. Reference prices. • Is consumers have a good knowledge of the range of price involved. So he/she can surprisingly few knows specific prices of products accurately. • When the consumers want to examine the product employ reference prices.

6. Price-Quality inferences • Many Consumers use price as an indicator of quality. • Image pricing is especially effective with ego-sensitive products such as perfumes and expensive cars. • When the alternative information about true quality is available, price becomes a less significant indicator of quality • But when those information is not available the price will be the signal indicator of quality. • Strong demand can lead to high market prices.

7. Price endings Or “ Price cues”. • Consumers perceptions of prices are also affected by alternative pricing strategies. • Many sellers believe that prices should end in an odd number. • For example: Stereo amplifier priced at $299 instead of $300. • The marketer conveys the notion of a discount or bargain, suggesting that if a company wants to high-price image.