How do consumers compare prices? It depends on their power

The way that consumers react to prices is relevant to how powerful they feel, according to research published in the Journal of Consumer Research. 

One person’s reaction to a bottle of wine may be completely different to another person’s purely because of differences in how powerful they feel.

The authors of the study, Liyin Jin, Yanqun He (both from Fudan University), and Ying Zhang (University of Texas, Austin), said:

“The degree to which one feels powerful influences which type of price comparison threatens their sense of self-importance and, in turn, affects the perception of price unfairness.”

Price variations are becoming more and more common in today’s market. Consumers evaluate the fairness of price in two ways:

  1. Comparing the price of a product to a similar one they have bought in the past
  2. Asking how much others have paid for the same product

One study found that “powerful” people who felt like prices were unfair were much more likely to get angry and complain about the prices compared to those who did not think they were powerful. In contrast, people who didn’t feel powerful tried to avoid thinking about the unfair price.

The authors said:

“Our findings suggest important ways that marketing professionals can engage customers of different power statuses. For example, when marketing to high-power customers, one can better elicit preference by highlighting the special treatment that they are receiving in relation to other customers.

They concluded:

“Conversely, when the target customers are relatively low in power, loyalty may be better cultivated by highlighting the consistency in service or the level of commitment to these customers.”

Another interesting finding published in the Journal of Consumer Research revealed that consumers tend to have negative reactions to salespeople’s flattery.

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