Post on 16-Aug-2015
Purchase decisions are based on how
consumer PERCEIVES PRICES
Traditionally, Consumers were considered “PRICE-TAKERS” -
accepted prices at the “FACE VALUE”
BUT
REFERENCE PRICES:Compare OBSERVED PRICE to INTERNAL REFERENCE PRICE or EXTERNAL FRAME
Clever Marketers try to FRAME THE PRICE
to SIGNAL BEST VALUE POSSIBLE (ex: EMIs)
Sellers Often attempt to manipulate them.
Fair Price Typical Price Last Price Paid
Upper Bound Price
Lower Bound Price
Historical Competitor
Prices
Expected Future Price
Usual Discounted
Price
PRICE QUALITY INFERENCES
Many Consumers use price as an INDICATOR of QUALITY
Some Brands adopt Exclusivity and Uniqueness to justify Premium Pricing
PRICE ENDINGS 999/- only
Customers see an Item priced $299 to be $200 rather than $300
“9”-ending also suggests Discounts/-
Prices ending with 0 and 5 are thought be be easier to process
DISCLAIMER
Created by Srujan Dasari, IIT Kharagpur,
during an internship by
Prof. Sameer Mathur, IIM Lucknow.
www.IIMInternship.com