“Retail is a fiercely competitive sector, but exclusive research shows that while shops might try to beat each other on price, consumer perceptions of how cheap or expensive brands are is not as simple as seeing what rings up when the barcode is swiped.”–Michal Barnett, is your price strategy broken? Marketing Week.
In the article, it mentions “on average, consumers get prices wrong by a margin of 13.2%. American shoppers come second worst to the UK with a 9.2% margin.” Therefore we sometimes get the wrong idea of what value he product is worth for.
Price, one of the marketing mix (4 Ps), has a clear demonstration of the value of the product itself and its market positions. Companies always determine the price of their products carefully on the basis of the potential consumers’ preceptions of their value.
In the entertainment sector, people believe shopping online is cheaper than going into a store. “The importance of price here is readily apparent by brands such as Zavvi, formerly Virgin Megastores, disappearing from the high street.” What is more, HMV also has moved into live events and sound equipment from being so reliant on sales of physical CD and DVD, mainly because it can not compete with the online players such as Play.com. It shows that consumers’ price perception has not been very helpful, but this is not always the case.
For example, supermarket shopping. Except convenience, there is no convincing reasons most consumers choose online supermarket shopping over bricks-and -mortar stores.
However in many other sectors, it is better for us to have a clear idea of how much the product should be priced. We can do a bit background research such as comparing the prices of products that have same functions (different brands); different locations may sell for different price etc. However, this only works when the perceived benefits are overweight the perceived costs.
I agree with the article that, sometime it is more about a brand’s positioning and the dynamics of the market in which it operates, rather than the true value of the product.
