Consumer Behaviour: Price is Not What it Seems
When it comes to understanding consumers it’s always important to consider the issues from a rational perspective, and then completely ignore what you conclude.
Why?
Because consumer behaviour isn’t, for the most part, rationally based.
Recently I happened across a great example.
The UK supermarket chain Waitrose has always operated at the higher end of the market, catering to customers who are willing to pay a little more for higher quality produce. Waitrose’s marketing makes much of the fact that they source their products carefully; some of their packaging will state which farm meat has come from for instance.
With the economic downturn all of the supermarkets have been keen to communicate low price messages; which isn’t easy since most of them operated on a low price platform anyway. Indeed, the big two supermarkets (Asda who are owned by Wal Mart) and Tesco frequently squeeze suppliers brutally hard in order to drive down prices. With such large shares of the grocery market, an efficient supplier has to decide between saying goodbye to most of their profit, down-grading their product, or losing a large proportion of their sales in an instant.
With most suppliers already squeezed the supermarkets have created new products, sometimes positioned below their already lower-priced own-label offerings, to sell more cheaply. Sometimes they create new brands for these products, and sometimes they package them as new own-brand offerings.
Waitrose introduced an ‘Essentials’ own-label range and it seemed to be selling well.
I looked at the pizzas.
The ‘Essentials’ pizzas were more expensive than the regular own-label equivalents!
Looking on the company’s website I also notice that, even when the per pizza price is lower, the price per kilogram is higher on their ‘budget’ pizzas.
But they still sell.
Because customers buy the concept. If the first instance primes them to believe that the product is cheaper, and in particular if that first experience isn’t bad from a quality perspective, then future purchases are made as an emotional reaction: seeing an ‘Essentials’ product is an opportunity to make a worthy purchase – a purchase that feels like a good, money-saving decision in these difficult times.
Few people will check what the actual cost is or how it lines up against alternatives – let’s face it that would make shopping extremely time-consuming. And so the company can make a greater profit from a lower-priced product!
And to add to their prize the supermarkets, having drawn people in with the promise of lower-priced options, have the opportunity to influence the customers visiting their stores. Feeling good about the money they believe they’ve saved, some customers will indulge in small ways elsewhere in the store.
Multi-buys will feel like great value, but lead to more products being purchased and, once sitting their on the shelf, the likelihood of their being consumed is high. Consumption increases because of the constant visual prompt and feeling that a plentiful supply is available. It may even lead to feeling that a similar quantity of purchase is required next time, even if the offer is no longer present.
I’m not suggesting that such practices are admirable, desirable or morally justifiable. But they provide a useful insight into the workings of the consumer mind.
Philip Graves
P.S. If you want to learn more about consumer behaviour take a look at my eBook, The Secret of Selling: How to Sell to Your Customer’s Unconscious Mind.
Very interesting, Philip. I’m probably influenced in this manner myself. However, I do compare cost per unit weight on similar products. This makes me feel like a very wise shopper. I’m probably getting duped in other ways though.
Health, Fitness — Darryl Pace
Fitness Product Review
I must be the most undiscriminating shopper in the world. Ask me how much something costs and I’d have no idea.
I’d buy the “essentials” pizza, most likely.
I often buy the wine that says it’s 50% off too, even though I have absolutely no idea what it’s really worth!
Cool insights Phil.
JJ
i have to admit i shop for taste over price. if i like it i’ll buy it regardless of the price (within reason) but i will look for cheaper sources via the internet or other stores. A high end protein drink that i like can vary as much as $3.75. wholesale club-$3.25 to $7.00 at a convenience store. it makes me CRAZY!
I do a lot of comparison shopping online before i ever go to the store.
Don Shepherd
Central Oregon Camphiker
Hi Phil,
I have to say that i used to sop for price but now I shop based on quality and the price is a secondary influence! But i do my research before even hitting the shop so I know the pricing points that i can negotiate them down too
Duane
Discover Secret Persuading Skills that Work Like Magic by Tapping Into the Psychology of the Mind with The Worlds Leading Persuasion Expert Duane Cunningham!
“Amazing Secrets Discovered Using Cutting Edge Research! Guaranteed To Put Money In Your Pockets, Melt Away Sales Resistance…And Slash Buyers Remorse Almost Overnight!”
Hi Philip,
As always, fascinating insights and information about what drives a consumer’s decision making. Your posts are always so thought-provoking.
Pam
Invest in Your Future
Phil,
Another great insight from the Consumer Behavior Expert!
In Australia, the German owned supermarket chain Aldi is the first one which introduce uniform pricing. It lists out how much does 100g cost for each for of the products that sell by weight. This makes comparison much easier.
On the other hand when analyzing a personality by their birth dates, numbers tell it all plainly to those who are trained in the modality.
John Ho
Numerology Expert Helps Understanding Personality for Better Influence & Persuasion (WordPress Blog)
Numerology Expert Birthday Numeroscope (Vox Blog)
Numerology Expert Helps Understanding Personality for Better Influence & Persuasion
Very, very interesting Phil. I usually buy in bulk and always compare price per unit. I wonder what my blind spot is?
Anthony
http://www.anthonylemme.com
I’m not sure that it is as straightforward as this. I think that it comes down to how you interpret the term ‘rational’. So I have written a response to this article at The Price Is Not What It Seems – Or Is It?. I’d be interested in your response!
It takes me so long to go grocery shopping because I’m always comparing costs, brands, and nutritional value. great post.
Lisa McLellan
Babysitting Services – Babysitters and Nannies
It’s hard to “rationally” make decisions on everything since that is not how we are wired. Retailers, and con men, can take advantage of this fact and often do. We need to focus and concentrate on the things that really matter and then apply logic to them.
Steve Chambers, The Sales Expert
The Sales Eagle Solution – 6 months to dominate your market
This is great. I particularly love the part of how the “Essentials” line is actually more expensive per kilo! I do actually LOOK at the Unit Price thing on the shelf for NEW purchases. Not often for items I already have made up my mind YEARS ago to purchase.
It’s interesting, on the Grief and Bereavement stage, we from The Grief Recovery Institute have an article about the purported “The Stages of Grief” which has been put forth from the death and dying work of Kubler-Ross. The studies indeed show that grievers are so susceptible to outside influences that even when they are saying, “Mom died” or “My husband died” showing NO “denial” they embrace and others will describe it as, “they are in the Denial stage.”
Have you approached the periodical, Skeptic, to write any articles for them?
Best regards,
April Braswell
Single Boomer Dating Expert, Business Relationship Success Coach
Widows Grief Support Group, Bereavement Counseling, Stages of Grief, Workshop Orange County, Costa Mesa Newport Beach, Huntington Beach, CA
Newport Beach, Huntington Beach, Orange County, Website Marketing, Web Design, SEO, Social Media Marketing
@Philip Graves
Another excellent blog post on consumer behavior (or behavioUr as they spell it in the UK) and price variance. Yeah, sometimes I will pay more. Pay more for certain conveniences. And for larger items, serious price comparisons.
And Phil, the previous blog comment? that was likely spam. their site is only a sales page and their actual comment? said nothing unique and specific to you (Phil) your blog’s theme (Consumer Behavior) or the topic of this particular blog post (Consumer response to price). ergo>>> spam bot
Keep up the great job with your blog, sir
Happy Dating and Relationships,
April Braswell
Single Baby Boomer Dating Success Expert
Firstly, sorry it took so long for your comment to appear on the blog, I’ve been out of the country and in an area with very patchy internet connectivity.
I don’t have any other writers at this point, it’s all my work. Thanks for the kind words. You may have seen that I have a series of blogs on Getting (my book) Published. Hopefully there’ll be some paper-based output from me before too long! Blogging has definitely helped push me to write more and experiment with different styles.
Thanks again!
Philip