A consumer’s attitude towards price is more complex than first meets the eye. This attitude consists of a number of components, and low prices are not always a seller’s ticket to success. In the article ‘What Do We Know about Consumers’ Price Perception? Research Findings of Studies in Sociology and Marketing Science,’ published in the journal Economic Sociology, Elena Berdysheva tried to identify the main factors that influence consumers’ interpretation of market prices and answer the question, ‘What creates a fair price for a product in the eyes of the consumer?’
Berdysheva analyzed the results of research carried out by Russian and international sociologists and marketing experts on consumers’ reaction to prices. ‘The partnership between these two disciplines is very fruitful, especially when one considers that sociological work on collective attitudes towards prices is largely theoretical. In addition, empirical and experimental marketing research will allow the link to be extended into practice,’ the author writes.
Low prices do not always serve as bait to lure in consumers, Elena Berdysheva found. ‘Many consumers can be seduced by discounted prices. Many, but not all. The readiness to pursue special deals is not universal. It depends on how price signals are interpreted,’ the researcher noted. She added that price was not simply the amount of money necessary to acquire a good. Price is a ‘complex stimulus’ that contains a number of signals to which consumers react.
‘Prices are not culturally neutral. They determine racial, class and gender frontiers in society. Price behavior is part of the arsenal of tools used to manage social identity,’ Berdysheva writes. And one’s reaction to price is another marker of belonging to a particular social group, to a particular consumption community.
For many buyers, a high price means higher quality goods and also that the buyer belongs to a group of ‘select’ and wealthy people. In addition, these individuals do not accept coupons or discount programs.
For people who are prone to demonstrative conspicuous consumption, the usefulness of a good is determined not only by its characteristics, but also by its price level. Cheap does not suit them.
Because of this, retailers sometimes have to explain not why prices are high, but why they are low. ‘At the onset of its operations in Russia, Auchan supermarkets had to use advertising to show new consumers why prices were low for their products and convince him or her that buying at a low price was not just shameful, but rather commendable, as it indicates the ability to calculate costs,’ Berdysheva writes, citing one example.
To draw attention to a product and increase demand, retailers often resort to temporary discounts and promotions in the hope that their ‘loyalty to the customer’ will result in ‘loyalty to the seller.’ But these marketing tricks must be approached very careful, the researcher warns.
Big discounts can lead to a distorted idea about a good’s initial price, which will appear unjustly high, Berdysheva notes. In one experiment, for example, the price of a museum ticket was discounted by $5 and buyers estimated the original price to be $20, even though it was actually only $10. Thus, the use of large discounts threatens the pricing reputation of a good and bears the risk of diluting the engrained social meanings of the reputation.
In order for discounts to harm neither the seller nor the product, they should be used under specific circumstances and under special conditions. This is perceived as a legitimate way of reducing market prices. ‘Christmas sales in the U.S. and Europe have long acquired the status of a cultural event during this time and they have become a driver of not only trade, but also tourism, for example,’ the author says.
For reasons not fully understood, for certain groups of consumers reduced prices have a negative impact on ideas concerning the average market value of a given product and the validity of discounts. Studies have shown that discounts to regular customers bring non-regular customers to question the validity of what is happening.
In general, a seller will have the maximum number of buyers if a good is put out for a ‘fair price.’ But calculating this price is no easy task, as consumers’ empirical assessments of fairness are extremely contradictory.
Calculating a fair price is almost impossible, but if trust is built between the buyer and the seller, then price will also be trusted. ‘Trust in the seller is the best vaccination against doubt in the fairness of the prices he sets. From the consumer’s point of view, paying a fair price means not being deceived,’ Berdysheva emphasizes.
Companies with a good reputation are better protected from the destructive consequences consumer doubt can have. Such companies also have a reserve of consumer trust. In addition, these firms have the right to change the prices when necessary, and such behavior would be considered reasonable and fair in the eyes of customers. ‘Buyers will try to understand the reasoning behind raising prices. If prices grew, they believe, under the influence of external factors beyond the seller’s control, the new and higher price will be deemed fair,’ the author concludes.