Price & memory
- Price recall: this is where consumers can remember the exact price weeks or months after a purchase. Few consumers – and in consumer goods, very few – are able to recall price with this degree of accuracy.
- Price recognition: although they cannot remember prices, if prompted (say, by a menu) consumers can identify if it’s a price they’re used to paying. For example, if I go into Pret-a-Manger I know that most boxed salads are between £4-£5, so I’d be comfortable with a salad at £4.79.
- Deal spotting: the most superficial level of price understanding is where I can tell if a price represents a good/bad deal because it lies outside my reasonable range. To take the same Pret example, I’d regard a salad at £7 as a rip off and a salad priced at £3 as incredibly good value.
Practical takeout – we tend to overestimate the number of consumers with perfect price recall. One of the ways we can help retailers (and help ourselves) is to uncover evidence-based shopper insights about pricing that are specific to our category.
Price as proxy for quality & the placebo effect
This belief so widely held that many studies have shown that higher priced products are more effective/satisfying (even when there is no material physical difference to cheaper options).
Frequency of price changes
The greatest challenge in pricing is the human factor. On the face of it, the approaches in this book look more complex than a traditional micro-economic thinking. But – because this book recognises the reality that pricing decisions are about psychology and emotion – to marketing practitioners the approaches presented will feel far more grounded and applicable as a result.