The price of a product is one of the most important determinants of consumer behaviour. It is capable of completely swaying the potential consumer’s decision of purchasing one product over the other. A price lower than that of other competitors can convince the consumer to choose your product over theirs. However, if the consumer is of the opinion that they are being charged higher than what they would expect to be charged, their reactions can be unsatisfactory.
Prior to finalizing a price hike for your product, it is essential to analyze and understand how this change would lead to a change in consumer behaviour. A price hike is always a risky step, as there is the possibility of the consumer turning away from your product in favour of a cheaper competitor. Alternatively, if your product is one that is not offered by other competitors, combined with a high demand for it, a raise in the price would make no difference on the purchasing behaviour of your consumers. Consumers sometimes tend to associate a higher price with higher quality, and hence introducing a price hike might just make them more favourable towards buying your product as they look at the high price as a marker of superior quality.
Lowering the price of your product can also pan out in two ways. The consumer might look at the drop in price as a lucrative opportunity to stock up on your product and thus lead to more purchases. On the other hand, the drop in price can also be perceived to be a drop in the quality of your product which consumers will not take well.
It is evident that making changes to the price of a product once its launched is an extremely risky choice. Hence, you need to make sure that you set the right price from the moment your product is launched. It is always advisable to research well before you take this step to understand the consumer’s reactions to your product. You need to find the right balance between appealing to the consumer and making enough profit to keep your company running. However, this relationship between consumer behaviour and price is changing gradually.
Recent studies have concluded that not all consumers are as heavily influenced by price as it seems. Convenience and positive reviews of a product are two important factors which have emerged lately. The importance of word of mouth has today been replaced by positive online reviews. If a product has a positive review online, customers are more likely to look beyond the pricing while purchasing the product. Customer experience is another influential feature that influences buyers today. Thus, it is evident that the relationship between consumer behaviour and price is no longer traditional, with a transformation in the purchasing process with change in technology.