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Price perception is a marketing strategy that aims to convince customers that expensive items are not that far off in price from less expensive products. Placing expensive products in the same area as less expensive inventory could alter a consumer’s perception of price. However, price perception could work against an organization if a customer feels cheated. Companies that don’t seek to capitalize on price perceptions would instead focus on consumer transparency.
Price perception is a marketing strategy used by companies to increase total sales. While the practice is not necessarily misrepresenting the products being sold, it is often considered a covert or slightly undercover approach. The success of this strategy depends on consumer psychology because the message must convince customers that expensive items are not that far off in price from less expensive products. Ultimately, it is up to customers to decide whether or not the products justify their investment.
A business can sometimes benefit from downplaying the value of high-end products instead of treating expensive items as special. This type of psychology might work because of price perception, which is how consumers interpret the cost of items despite the price tag that might be attached to the products. Placing expensive products in the same area as less expensive inventory could alter a consumer’s perception of price so that there is less of a discrepancy between high-end and low-end items.
When an expensive product is marketed to serve a similar purpose as less expensive items, it may be more acceptable to consumers. Without even knowing it, customers may be equating expensive items with their less expensive counterparts simply by the way the items are marketed and placed in an outlet. Subsequently, consumers may be more likely to pay more for an item simply because of price perceptions. As long as customers understand that a price is acceptable, even if it’s the result of strategic marketing efforts by a retailer or manufacturer, they can be persuaded to make a purchase at higher prices that would otherwise be ignored.
Price perception could work against an organization if a customer feels cheated. For example, bait and switch is another marketing tactic that companies can use when done ethically. It is the practice of advertising a cheap item, but later attempting to sell to customers who demand a higher price. Retailers can boost sales by using the customer inquiry as an opportunity to exchange the cheaper item for a more expensive product. Savvy consumers may not fall for this strategy, and price perception may be a less persuasive tactic when customers have already agreed to pay a certain amount for an item.
Companies that don’t seek to capitalize on price perceptions would instead focus on consumer transparency. This is a marketing approach that attempts to provide as much information and context about a purchase as possible, including the potential risks associated with an item. Subsequently, consumers are less likely to make selections they may later regret.
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