Based on the article, most consumers usually have no idea of the accurate price of product they put in their carts when doing shopping. A research reveals that most of the consumers will normally quote a price of a product by either more or less the actual product’s price, which they are intending to buy. Ideally, the consumer will tend to rely on the retailer to provide the price of the product. The article seeks to provide a brief discussion of pricing cues that retailers use.
Sales signs are normally placed near the item or product, which is being discounted. Sales signs have the ability to attract customers and increase the demand even though the price is not varied at all. However, some retailers can inflate the price of a product and indicate a sale sign. This is normally considered unethical and goes against pricing policies. Sometimes, customers may become weary of the overuse of sale signs since they mostly occur during the holidays. The author notes that based on a study of frozen fruits, the increase in sales signs did not translate to an increase in demand. Sales signs on over 30% of the products reduced the effectiveness of the pricing cue. Likewise, in another study, in a women’s clothing catalog, the demand reduced by 62% when more than 25% of the catalog orders had sale signs.
Prices that End in 9
In the study of women’s catalog raising the price of the clothing from $34 to
$39 resulted to an increase in demand compared to increasing the price from $34 to $44. Other studies conducted on women’s clothing in 1996 revealed that catalogs with prices ending in 99 cents were more likely to receive an order placed from potential customers than catalogs with 00 cents at the end. The 9 at the end of the price makes the customer believe that they are getting a good deal. The logic of using the 9 at the end of a price is normally done on discounted items. However, when done on all items it is regarded as a miscue.
Consumers will tend to use the basic price of products they purchase frequently as their benchmark in determining the accuracy of other products a store may be selling. Retailers have recognized this and are using the prices of popular products to generate traffic to their department stores. This method is effective where consumers have accurate knowledge of the price of a popular product.
Stores use pricing guarantees by making promises that indicate they want to beat potential competition from other businesses. Customers will likely choose a store whose prices are lower than their competitors’ prices. This is based on a study conducted by the University of Maryland. Pricing guarantees are considered effective in cases where the consumer’s knowledge of the price of a product is minimal.
Implementation of pricing cues requires a certain form of evaluation if they are to be effective. Marketers need to take into consideration the long run implications of a marketing cue. The author notes pricing policies targeting short-term profits may end up in generating long-term profits. Secondly, marketers need to take into consideration the customer’s perception of the quality of a product in conjunction with the customers’ perception of the price of the product. Marketers will also need to ensure that they do not overuse their pricing cues as it may lead to decrease in demand in certain cases.