1. Why pricing cues are important to both consumers and retailers? 2. Pick and choose two pricing cues (out of four) discussed in article and discuss how they could be used properly.
Price cue can be defined as the marketing technique which is used by the organisations to create a sense of perceptions among the customers that the price which is being offered by the organisation is better than their competitior's prices. Price cue is an important element for both retailer as well as the customer as it helps the customer to segregate the best competitior or the firm from a group of organisations as customer doesn't know what the actual price of the product would be. Thus, it helps the customer to make a fair decision out of all available options. And it is benificial for the retailers as price cue helps in developing a perception thus making your products look better than your competitior's and thus make your sale volume go up as the prices attracts the customer to buy your prducts or services.
Our of the 4 price cues options, the two options I would like to discuss about is the:
1. Sale Signs: You have often seen that you get to be attracted by the shops or products/services having a flashing of 50-60% discount over it. Have you ever wondered why? Retailers often use this perceptional technique of putting the sale signs on the products to make them look attractive in the eyes of the customers. By putting that sign, generally they don't go into the losses. What they do is they increase their price of the product on the label, then put a 50% sign for which the customer thinks that he/ she is getting a better quality products at half the price which is a good deal but the actual thing is the price that you'll pay even after this discount will still profit the organisation more than 15-20% margin. It is one of most effective pricing techniques.
2. Prices that end in 9: Another strategy is the prices that ends with 9. You have often seen the 99 stores around you where all the products are labelled with $299, $99 or $9 instead of $300, $100 or $10 respectively. Have you ever considered why? It is again because of the psychological factor which the marketers use in which we percieve that $299 is an effective deal than $300 as we see the $299 is the 200 range which is obviously lesser than the $300 which we'll consider in the 300 range. It is a simple brain trick but this actually makes the customer to buy the products which ends with 9 more than the whole number as it tends to give brain an idea that we are getting a better deal.
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