27th January 2025
Mr. and Mrs. Ghosh often find themselves caught in a household debate whenever they go shopping. A similar situation arose last time when they went to buy a wristwatch in a shopping mall. Mr. Ghosh argued that high quality comes with a high price, while Mrs. Ghosh believed that there should be a trade-off between the quality of the product and its cost. These kinds of differing perspectives on price and quality are very common across the world.
Price, one of the most important marketing cues plays a vital role in purchasing decisions and is a critical element among the four Ps of Marketing- Product, Price, Place and Promotion. Consumers react to the price and price promotion of any product in several ways. Price is the economic value that is sacrificed to get a service or product, often price has been perceived as having a negative role. But there are customers for whom price plays a role of a positive influencer as higher price works as a cue for higher quality. This article aims to bring the heterogeneous perceptions of consumers on price. Based on a small sample survey it explains the consumer style of purchasing regarding price as a primary element and highlights the dual role of price in buying behaviour.
Value-conscious consumersâThese types of buyers shop around for lower prices on products but still ensure that the products maintain certain quality. Indian consumers are not price-conscious; rather, they are value-conscious. They strike a balance between price and quality, as claimed by Mr T Sei, India CEO of Uniqlo, a Japanese lifewear brand (Forbes, 2023)[1].
Price-Conscious Customers– Consumer who seeks to pay lower prices, often doesnât hesitate to search for different stores to compare the prices of the same product and buy the product from a store that offers the lowest price. Comparing prices become easier than ever because of smartphones and the presence of omnichannel retail and e-commerce. Budget-friendly varieties with flexible payment options work very well for this kind of consumer.
Coupon-prone customers– Price reduction in coupon form often encourages many buyers to make purchases and coupons act as a lucrative promotional tool. The proliferation of smartphones encouraged e-markers to distribute m-coupons through SMS or apps to attract customers and m-coupons became more popular than traditional paper coupons. The usage of coupons is growing every year across the globe (20% growth in 2023) [2] and though India is slightly behind the global rate, online purchases using coupons are steadily increasing even in India. The usage of m-coupons is very common in movie, music, restaurant, and OTT streaming services. These types of buyers keep track of coupon-related offers and enjoy redemption of coupons. However, the fear of scams and hacking reduces the usage of m-coupons. Our study shows only 40% of customers fall under this category.
Sale-proneness– Some consumers respond to any purchase offer where the price of a product is displayed in a discounted figure rather than the regular selling price. Marketers advertise sale prices accompanied by reference prices and create an enhanced perception of value. This buying behaviour is quite similar to coupon proneness and here discounted price is presented positively to impact the purchase evaluation of the customers and increases the propensity to buy. In our survey, 74% of respondents are more likely to buy brands that are on sale.
Price-maven customers– Some consumers are price-conscious and keep updated information on price changes and like to transmit that information to others. They have a desire to be known as âprice-mavenâ who act as a source of information on many kinds of products and places to shop for the lowest prices. Other consumers show trust in them because of their expertise, knowledge and keen observation of price changes. Usually, they have good networks and connections and are influential in their social circles. 50% of our respondents considered themselves an expert when it comes to knowing the prices of products.
Price-quality schema– Some consumers perceive price favourably and perceive high prices associated with high-quality products. They believe an increase in product quality is compensated by additional monetary outlays and are ready to pay a higher price and their behaviour is referred to as âprice-seekingâ by researchers. The role of price as a surrogate indicator of product quality may vary from product to product and buying situations. Only 14% of the respondents in our survey associate quality with price.
Prestige sensitive – Some consumers prefer high prices as they infer that their surrounding people will perceive the high price as a reflection of higher social status. Here high price signals higher prestige and social prominence. Status-conscious customers perceive price in a positive role and the marketers have the flexibility to increase the price based on the quality of the products.
Price Sensitivity of Indian Consumers
Price Sensitivity and Indian Consumers: Who They Are– Our survey depicts that the majority of Indian consumers are value-conscious with 68.3% of the customers identifying themselves with this category. Indian consumers are also sale-prone, coupon prone and price-conscious.
Price Sensitivity and Indian Consumers: Who They Arenât– Another very interesting finding of our study is that Indian consumers are primarily not Status-conscious. In our study, 64% of customers identified themselves that they are not status-conscious whereas 50% of the respondents donât consider price as an indicator of quality.
Positive versus negative perception of Price
The first five categories of buyers: Price-Conscious, Value-Conscious, Coupon prone, Sale prone and Price maven customers tend to perceive price negatively. Consumers develop an internal reference price based on their previous exposures to different prices and compare the reference price with the current price of the product and perceive an opinion. Since Indian consumers predominantly view price in a negative role, marketers have limited flexibility when it comes to raising the price. Hence marketers should focus on raising the internal reference price by exposing the buyers to higher price points. Most of the popular e-commerce platforms use list prices as anchor points, setting them at higher levels and then offering discounted prices to convince price-sensitive consumers. Dynamic pricing is another effective pricing strategy used by companies where flexible prices are offered to the market that are adjusted according to the market demand and competitor activity. This pricing tactic works well for deal-prone, price-sensitive markets. Once consumers develop trust in the companyâs ability to provide the best deals, a loyal customer base can be built.
On the other hand, marketers enjoy the liberty to charge premium prices in markets where customers are status-conscious and associate higher prices with superior quality. In those cases, price positioning aligns with a high-quality, high-price strategy and consumers buy premium products as a demonstration of their social status. Luxury brands in particular set explicitly premium prices and consumers buy them not for the functional utility of the products but for the brand prestige. However, those premium brands should meet or exceed the expectations of the buyers ensuring the value matches the price paid for the product or service.
Conclusion
While purchasing, consumers pay prices that directly reduce their wealth, so price is often perceived as a constraint. The actual price information comes at the later stage of the buying process. Consumers deal with price perception rather than actual price as they are not aware of the cost of production. Here marketers play a crucial role in shaping positive price perceptions by emphasizing product attributes, product quality, and brand image while strategically positioning the product at a certain price scale. These subjective beliefs about price level can be either positive or negative as they are intertwined with other attribute beliefs. Brands must carefully analyze their target customer segments, market demand, competitors’ pricing, and adopt a smart pricing strategy that resonates with their audience.
- https://www.forbesindia.com/article/leadership/indian-consumers-arent-priceconscious-they-are-value-conscious-uniqlo-india-ceo/88803/1
- https://www.medianews4u.com/online-purchases-using-coupons-grew-by-20-in-
