oA more complex element of reference prices is the relationship among them: external 12 | N a t a s h a P a r k
B352 MarketingTues. Oct. 22. 2013.reference prices influence internal reference prices. When consumers are repeatedly exposed to higher reference prices, their internal reference prices shift toward the higher external reference prices (assuming their initial internal reference price was not too far from it.) consumers will perceive the product to have a relatively lower price, and it thus becomes a better deal in their perceptions.2)Everyday Low Pricing (EDLP) Versus High/Low PricingoCompanies stress the continuity of their retail prices at a level somewhere between the regular, nonsale priceand the deep-discount sale pricestheir competitors may offer.oBy reducing consumers' search costs, EDLP adds value; consumers can spend less of their valuable time comparing prices, including sale prices, at different stores. oWalmart relies on EDLP to communicate to consumers that, for any given group of often purchased items, its prices are lower than any other company in that market ON AVERAGE oHigh/low pricing relies on promotion of sales; prices are temporarily reduced to boost purchases. oWhich consumers prefer which strategy depends on how those consumers evaluate pricesand quality. Some prefer not to expend the time to find the lowest price and favour EDLP. Others may relish the challenge of getting the lowest price or be so price sensitive that they spend time/effort.oSome consumers perceive that stores that use EDLP carry lower quality goods, whereas high/low pricing stores carry better items consumers view the initial price at high/low store as reference oIn the end, the consumer's decision, once again and as always, comes down to value.3)Odd Prices: those that end in odd numbers, usually 9, are very common, such as $3.99 and $7.77. Although not documented,most marketers believe that odd pricing started as a way to prevent sales clerks from just pocketing money.Because the price was odd, the clerk would have to open the cash register for change, which required that the sale be rung up on the register.oOdd pricing may be so traditional that sellers are afraid to round off their prices for fear that consumers will respond negatively. Maybe consumers mentally truncate the actual price, making the perceived price appear lower than it really is. oif the price is $21.99, consumers may focus more on the $21 than on the 99 centsoodd prices signal to consumers that the price is low4)The Price–Quality Relationship: Without other information to help you make a choice, you will likely go for the most expensive option because you believe that they must be of higher 13 | N a t a s h a P a r k
B352 MarketingTues. Oct. 22. 2013.
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