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The Importance of Price Perception in a Marketing Strategy

As it is commonly known price is an essential part of the marketing mix, but it is sometimes overlooked. Price says so much about a brand or a product, and it helps position it in the mind of the consumers. It is not the same thing to talk about price than the price perception, and perception is where a marketer should spend most of their efforts. In marketing, there is no bigger true that perception is reality and how the prices of your product or brand are perceived by your customers will have a high impact on the relationship you can build with them over time.

In this 2017 HBR article on How Customers Perceive a Price I have found a great example of how price perception can make or break a brand: “one retailer’s reputation as an upscale discounter, built through its store and product design, has given consumers the perception that it charges a price premium, when in fact its prices run slightly lower than the average in the two cities. Its pricing strategy does not mesh with its overall proposition to customers, with the result that the retailer does not get the pricing credit it deserves. One option for the retailer would be to raise its prices slightly, since customers have already baked the (incorrectly) perceived premium into their shopping decisions.”

The retailer in the example had chosen to have a low prices strategy, but their consumers were confused by the type of experience they offered and had a perception that their prices were higher than the competitors. The store experience was likely helping the brand in many other ways than just focusing on price, but they were mistakenly putting their time and energy into the low-prices strategy and not being successful. This is a very common scenario in today’s market where brands are price obsessed given that customers have all the information in their hands to compare prices among different stores online, but marketers need to see that customers value many other things and not only the perception of the low price.

So, how can brands earn more recognition from customers for their pricing and at the same time grow traffic and loyalty? The first and most important step is to understand how your prices are perceived, and my advice would be to meet your customers where they are. Don’t expect to change their perceptions right from the beginning, because that would be almost impossible, or very expensive. If you are not perceived the way you thought you were start learning why are your customers preferring your brand among the others? Why they are willing to “pay extra” for your product (maybe they are not actually paying extra, but they think they are)? Here you will get points of difference for your brand and instead of focusing all your time and energy on changing price perceptions, you will start focusing on added value and building towards brand loyalty.


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andreaizas

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