Here's a Quick Way to Understand Consumer Theory
|Tags:||strategy, management, consumer, mindset|
As consumers we tend to have a naïve train of thought when it comes to making purchases, low price eithers means good value or low quality & high price could mean high quality or poor value.
According to a study by Journal of Consumer Research consumers tend to rarely have the complete information break down for a product or service; ultimately using various strategies filling in the gaps with their own perception and knowledge to then make the purchase.
One of the more favoured strategies is using naïve theories; informal, common sense explanations such as low price either means low quality or good value and high price means high quality or poor value.
So when the consumer sees a popular item or service they’ll instantly assume that it’ll be of the higher quality, the same being said for hard to find items. This is when you ultimately need to be careful about the discounts and deals you begin to offer.
"... duty of allowing the consumer to perceive that they are in fact getting a good deal..."
A sales promotion has the duty of allowing the consumer to perceive that they are in fact getting a good deal, this being a successful promotion, but there are plenty of companies out there who tend to have some sort of offer at all times.
The UK is filled with companies that seem to be having never ending deals examples would be SportsDirect.com & DFS; the trouble is after a while the consumers perception begins to change as one group will think of it as great value and the other will see it as low quality.
"... low pricing strategy that begins to reduce the brands value..."
This begins to incorporate an everyday low pricing strategy that begins to reduce the brands value and it also begins to alienate a group of consumers which ultimately is not what anyone wants to be doing.
Using subtle tactics a company can in fact bring a pre-existing naïve theory to the consumers mind allowing favourable interpretation within the message. In the study there was a simple test done with consumers and bottles of wine to see how the naïve theory worked.
“In one study, consumers were shown an ad for a bottle of wine with either a high or low price. When subtly reminded of quality, consumers evaluated the expensive wine more favorably than the cheap wine. However, when subtly reminded of value, they rated the cheap wine more favorably. “
When you’re dealing with a customer you’ll be tempted at times to give a discount, to close the deal or get out the office either way you’ll always be tempted, this is when you really need to think it through – the story you’ve put together before this will have a major effect on the consumers mindset.
Sell them the high quality and high in demand story (Apple as an example) and any discount will be perceived as an incredible offer. Think about the discounts you can get on an Apple product, most people think they have hit a bargain with a simple 10% off!
But sell them a poor story with a huge discount and they’ll begin to consider how much value there is with this product and would be worth going ahead with it.
All in all remember that the consumer loves a discount just don’t go over board as you begin to devalue the brand and the product which ultimately begins to alienate a group of consumers.
By: John Perrin