The power of the price

Cost is obviously a big factor when customers are looking to make a purchase. It seems that everyone is on the lookout for a bargain, weighing up the benefits of low price perhaps at the expense of quality.

But in a new study from the Journal of Consumer Research released on September 10, researchers have reported on a rather new concept – that a customer's reaction to the price of a product is partially a response to how powerful they feel they are.

"The degree to which one feels powerful influences which type of price comparison threatens their sense of self-importance and, in turn, affects the perception of price unfairness," wrote the authors Liyin Jin and Yanqun He from Fudan University and Ying Zhang from the University of Texas.

Customers will evaluate the fairness of a price by comparing it with what they've paid for the same thing before, or how the price compares with what other consumers are paying.

The study found that participants who felt powerful experienced a feeling of unfairness if they felt they were paying more than other people for the same thing. Yet those who didn't feel powerful experienced more unfairness when comparing prices with what they'd paid before.

The researchers suggested that this means marketing professionals can find unique ways to engage customers who relate to different statuses of power.

"For example, when marketing to high-power customers, one can better elicit preference by highlighting the special treatment that they are receiving in relation to other customers," they said.

"Conversely, when the target customers are relatively low in power, loyalty may be better cultivated by highlighting the consistency in service or the level of commitment to these customers."

Have you ever thought about power when it comes to your own business? Consider a customer feedback survey to learn more about your customer base. This will help you to make more informed decisions about your target customers and implement better strategies for consumer engagement.

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