Role of Price Perception in Consumer Buying Process with Consumer Behavior
The price perception has been one of the most important research issues on the consumer behavior for last many years. The concept of reference point is very important in this regard and efforts have been made in order to define it. Consumers establish their reference points according to their personal understanding, annotations, the existing knowledge of prices and their subjective interpretation. Why You Should Be Balancing Your Books on Every Single Month? Definition of Price Perception.
The reference points are dependent of two factors: the kind of information i.e. external or internal and behavioral process of formation of references. The internal reference point comes from the consumer estimation of price in his mind. The two factors contextual and temporal are involved in this formation. The first factor is related to the perception of different prices within the same category of product while buying.
The temporal factor depends on the past buying experiences of the customer. The importance of both these factors varies according to the customer’s characteristics. For instance, consumer who purchased the one product more frequently will remember its price more clearly and as a result temporal factor will be more important. External information comes from the marketing and internal form other sources.
It means any message of the price consumer receives through external channel and which he uses to make comparisons. The seller can control the external information by the marketing efforts i.e. through advertising and some internal factors may be beyond their control. But the information must be credible so that the consumer can use it in making his assessment of the product.
The external reference point can be the price suggested by the seller on the product’s packaging, or the brand which is more frequently purchased or the price of the dominating brand. The main aim of the external reference point is to increase the internal reference price so that customer perceive existing price as attractive and buy the product
According to a research study, price perception is clearly more relevant factor in purchasing decision than reality. Research was conducted in five countries to measure the extent to which perception of price is important for retailers. Three factors were identified which are responsible for price perception.
The first one is the clarity with which price is communicated, second is price communication on entry points and the third is overall environment. The research indicated the fact that the retailers who are perceived as more expensive than others are unable to compete effectively in the market.
A study conducted on entry level price communication difference of Zara and H&M is a good example on price perception. According to the study, Zara was found to be 31% more costly than H&M, but the customers’ perception of this difference quite low as compared to the actual figure.
This reveals the Zara’s ability to manage its perception through effective and clear communication of prices. They have been successful in portraying their prices as nearly equal to competitor but in actual their prices are relatively high. The magic of perception has worked really well in this case which reveals the importance of perception the consumers.
Another classic example is the price perception of Argos which shows how they have been able to build their price perception that is better than reality. They have been able to communicate their price position in a way that results in a cheaper price perception than reality. Their advertising strategy was price centered along with prominent supply of low priced goods in order to create a cheap price perception of their goods.
In this way, the have been able to portray themselves as low-priced as compared to competitors while the reality may be different. However, the company has to work continuously in order to maintain that perception. How To Make Your Small Business Stand Out? Many Ways You Can Try IT!
Role of Perception in Consumer Behavior
The perceptions consumers have of a business and its products or service have a dramatic effect on buying behavior. That’s why businesses spend so much money marketing themselves, honing their customer service and doing whatever else they can to favorably influence the perceptions of target consumers. With careful planning and execution, a business can influence those perceptions and foster profitable consumer behaviors.
Consumers continually synthesize all the information they have about a company to form a decision about whether that company offers value. In a sense, consumer perception is an approximation of reality, notes the book “Consumer Behaviour,” by Atul Kr. Sharma. Businesses attempt to influence this perception of reality, sometimes through trickery and manipulation but often just by presenting themselves in the best possible light. For example, advertisements often trumpet the quality and convenience of a product or service, hoping to foster a consumer perception of high value, which can pay off with increased sales.
A key factor in influencing consumer perception is exposure. The more information consumers have about a product, the more comfortable they are buying it. As a result, businesses do all they can to publicize their offerings. Positive Relationships with Individual and Organization Outside, However, this causes a problem: When every business bombards consumers with marketing messages, consumers tend to tune out. To influence consumer perception, a business not only must expose its product to consumers, it also must make its product stand out from the crowd.
Consumer risk perception is another factor businesses must take into account when trying to encourage buying behaviors. The more risky a proposition is, the more difficult it is to get consumers to act. If consumers aren’t familiar with a brand of product, they can’t assess the risk involved; it could be poorly built, for instance, or too costly compared to substitutes. Businesses can overcome this hesitancy by offering as much product information as possible in the form of advertisements or by encouraging product reviews. Allowing potential customers to handle the product in stores or test it at home also decreases risk perception, as does offering a flexible return policy.
Successful businesses don’t relax once a customer makes a purchase. Rather, they continue to foster perceptions that result in profitable behaviors. Once consumers have tried a product, the task becomes maintaining a good reputation and establishing brand loyalty. Offering superior customer service is an effective tactic because it maintains the perception that the business cares about its customers’ best interests. In return, customers become loyal to the business, which secures a consistent revenue stream for the company and makes it more difficult for competitors to poach customers.