| |
| |
|
KwikMarketing.com - Marketing Information |
|
|
|
Psychology of Setting Prices
Pricing is one of the four major components of marketing. Psychological pricing forms one of the key elements of demand pricing wherein the consumer demand is the main focus. The price and quality relationship that governs the central theme of the consumer market relationship is surrounded by uncertainty and gives the consumer the perception that higher the price, better the quality. The science of pricing is an art in itself. Rounding off the figures may be good for basic math but never in business. The art of setting prices for articles has been an ever challenging task in business. Keeping in mind the changing economy, heavy competition in the market and consumer affordability, the trick of pricing an article has been more on a psychological evaluation of the consumer. Pricing is usually done by keeping with industry standards. But in order to sell their products after a baseline or whole sale price has been fixed, individual business organizations have most often dealt with pricing in terms of smaller denominations such as cents and pennies. While quoting the universal example of $9.95 or 9.99 being more attractive to consumers as compared to $10, this psychology seems to hold in business world wide. The main reason for this is that people tend to see the first figure in dollars as compared to the cents. $9 is cheaper than $10, and the cents don't figure in the perception. While shopping, consumers tend to overlook small differences in cents but go by the dollar value. And funnily, the highest single odd digit is the most psychologically favored and 9 is that most fortunate figure of acceptance. However one cannot rule out the fact that the cents are totally ignored by the customer but the ignorance is at the subconscious level and is partial. Also the use of odd figures has a background in that it was used to curb theft by employees by way of forcing them to give change and enter the amount in the cash register a practice that was originally put forth way back in 1875 by the publisher of Chicago daily news, Melville E. Stone. Another most popular way of attracting consumers has been introductory offers. Suppose a new toothpaste is released in market, it often sells better when its accompanied by a free sample, a toothbrush or even 25% extra toothpaste. And more so when the actual price is quoted and struck off, with a new pricing quoted in a different color alongside to attract the consumer. Often in these cases the consumer has this inherent feeling that he is getting more for a lesser price. Sometimes he also compares another similar priced similar product with the one available on discount to satisfy himself that he is certainly getting more for the price quoted. When an article comes to shelf with a certain price, consumers most often never question how and why it was priced. If a group of articles is priced at say in the range of $20's, the price is taken for granted and the evaluation and comparison of prices is limited to that range only even if the product may be of lower or higher value of that price. However, when the price of the same set is increased after a certain period, the consumers do not appreciate it. The tactic of increasing the price by 20% and giving a 10% discount on the same article is perceived better than just an increase in price. "Buy one take one free" is another pricing tactic to attract buyers although the offer maybe for a limited period of time. Definitely such articles sell fastest. By increasing the price of a product by a few cents, a company can earn profit as there seems to be no complaints from the consumer as the price hovers around a key threshold point and minor increase is accepted. Consumer sensitivity in pricing can be found when the consumers have no other product to compare with or when the product is exclusive and unique. Even in such cases, when the product is bundled with a few other accessories, the aspect of consumer emotion is very much aroused and they sell better. Above all, when a customer is satisfied, both the company and the customer are profited. But then the response to the concept of psychology pricing has always been mixed. As long as the customer is not cheated, the concept is of advantage to sellers. Copyright 2005 Konstantin Goudkov Konstantin Goudkov studies the psychology of pricing, ways to manipulate prices for maximum profit, and tactics to control consumer price perception. You can find his latest report at: http://www.PricePointReport.com
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
New Years Revolution No, that's not a typo in the title. Resolutions are easy; most of us make them at least once a year. Direct Mail Leads - Brand Identity Guru Direct mail can be one of the most effective tactics to reach your target audience. Developing a strategy for direct mail is critical to obtaining the best ROI. How to Discover your Primary Market and Where to Find Them Whether you market online or offline, you already know the shot-gun approach to marketing brings few results. You will sell more products and services when you step back and set up a strategy to reach your targeted market. Dramatically Improve Your Marketing Results With These 6 Simple Steps What if there were things you could start doing now that could help you to market more successfully in the future? Even if you didn't have your marketing act together over the past year. Well, there are. Trigger Button Marketing Sometimes, experiencing bleak sales is a matter of failing to find your prospective customers' trigger buttons.By trigger buttons, we mean anything that the customer would find of peculiar value. Marketing Quandaries Being in a quandary prevents you from moving forward in developing and marketing your business. When we're in a quandary, we are in a state of perplexity and doubt. Reasons Why People Usually Dont Buy Again There are many psychological reasons why people will buy from the first time and why they do not buy from you again. There are books on many of these reasons. How to Critique Your Own Yellow Page Ad Forget what you know about your business Your goal is to see your Yellow Page display advertisement the way a directory user sees it. You can't act like you know anything about your enterprise that isn't there, on the page. Teaming Up Marketing and Sales The Pitchers: SalesLet's say you have a new baseball team in town and it's almost time for the first game of the season. Your sales force is ready to sell a variety of package deals for the season. How to Use Direct Response Post Card Decks as a Valuable Market Research Tool Market research specialists have discovered a new tool which enables them to quickly identify target market cells, measure buyer acceptance, test new product or service concepts quickly and inexpensively and survey market characteristics.. Don't Put All Of Your Eggs Into One Basket I vaguely remember a particular story from my childhood. It had something to do with transporting eggs to market. 10 Effective Ice Breaking Questions Whether you go to a Chamber of Commerce event, a PTA meeting, the racquetball court, the local health club, or practically anywhere else, opportunities to network present themselves constantly. But there are fears which present themselves as well. Mobile Auto Detailers and Newspaper Companies as Clientele If you are a mobile auto detailer or mobile car wash company you might wish to think of attaining the local newspaper as a strategic client for your services. Usually newspapers have large staffs, especially daily newspapers. Are Keywords Destroying the Flow of Your SEO Copy? With all the shuffling that's been seen in the search engine world within the last year, the issue of obvious optimizing has become a hot button. The current line of thinking is that most engines (especially Google) are on the lookout for sites that purposely make an effort to optimize their pages in order to get high rankings. Five Mistakes Absolutely Guaranteed to Drive Away Your Best Clients We all work hard to attract even one paying client. In fact, we work hard to attract serious inquiries. How to Promote Yourself Or Your Company Through Award Competitions There isn't a day that goes by that I don't receive some sort of announcement about an awards competition. We get so many, in fact, that I have created a special place on my website where you can learn about what opportunities are awaiting. Effective List Management Can Save You Big Let's talk about how to keep your postage costs down.So far you have been following my advice and mailing to the same list more than once. An Easy Start to Mail Order Listing names of Big Mail Requestors, and sending out packages ofBig Mail is an easy way to get your start in the business ofselling by mail. There are a number of mail operators pulling in an easy, extrathousand dollars a month, by what you'd hardly call work--doingnothing more than receiving money for advertising a list ofpeople's names interested in receiving Big Mails, and sending outenvelopes stuffed to overflowing with Big Mail. Trade Show Events - Do's and Don'ts You can love it or you can hate it but there is no escaping trade shows in a business environment. If you happen to be in the Sales and Marketing division in an industry where trade shows are a part of the marketing plan, it is more than likely than not that you will be involved in them sooner or later. Massage Therapists Can Now Make More Money As a massage therapist, your income is usually limited by your stamina and the amount of hours there are in a day. Have you considered that there is a way to make extra income that is literally "no sweat off your back?" Adding retail products to your massage business could provide you with the additional income you would like, by doing something that you already do .
|
| home | site map |
| © KwikMarketing.com 2007 |
