Shoppers might not remember exact prices, but they often do remember the amount that a product was marked down — for example, 50 percent. If today’s markdown is not 50 but 25 percent, the deal is perceived as less good, and price perception falls. A scientific approach to promotion analysis is required to provide insights into the true net effect of promotions, and the identification of clear improvement opportunities.
Shoppers’ price perception is often driven more by differences in a retailer’s assortment than by differences between retailers in like-for-like pricing and promotions. A retailer will enjoy a much better price perception if it has a wider assortment of products at the low end, increasing the chance that shoppers will walk out of the store with heavily laden bags for a low price.
Price-matching guarantees ensure that shoppers are less likely to engage in comparative shopping, and they boost the retailer’s price image. A close look at other services, understanding their effect on price perception, and acting accordingly also are required. In general, a high service level not only improves the shopping experience but also can raise the price perception of a store.
Handwritten product information, clean and tidy stores, and wide aisles improve the store environment, but can also raise the price perception of a store. Hard discounters, on the other hand, often present products still boxed, using the “stack ’em high, sell ’em cheap” marketing method to underline their low prices.
Focusing marketing efforts to present a certain price message can strongly influence price perception. Campaigns featuring “lowest prices for everyday products” have been shown to have a strong impact on a retailer’s price perception, even when focused only on a subset of the assortment.
This not only includes price levels, but also price points and price cues. Retailers need to identify the items whose price elasticity is highest and understand which reference points shoppers use to judge prices.