Good Example Of Essay On Mind Your Pricing Cues

These retailers have perfected the use of several pricing cues to convince customers about their pricing. The most common pricing cues applied by most retailers are the use of sale signs. Research shows that the use of the word sale next to a price might lead to an increase in demand by more than 50%. Most customers trust these signs because most of the time of the time they are correct. However, the misuse of this sign by retailers can lead to prosecution if it is found out to be misleading to consumers.
The other pricing cue used mainly by retailers is by placing 9 at the end of a price of various products. From the research it was found out that most customers actually pay attention to such pricing and it might lead to an increase in demand. The prices ending with 9 act the similarly as the sale sign by assisting customers assess whether they are receiving a good deal.
Customers also use the prices of signpost signs to help them evaluate the prices of other goods in a store. If a store charges more for signpost items such as a can of coke then the customer will conclude that it will be charging more for other goods too without actually checking. Most stores will keep the prices of these signpost items at the minimum while making up for the loss at other items that the customer has no accurate knowledge of their prices.
Most retail markets apply pricing guarantee techniques to keep their customers aware of their low prices. There is evidence that customers actually pay attention to these price-matching policies. The research conducted by professor Sanjay Jain and Joydeep Srivastava of the University of Maryland revealed that price-matching guarantees were some of the factors that would make a customer believe that a store’s prices were lower than its competitors.
The use of these cues must be well calculated by the retailer to make them more effective. The use of these cues must be checked used under special circumstances such as when the customers in one store are regular and they purchase frequently. When clients are new they might not know the normal prices of goods and so these cues might be used. Products that vary over time might also be used since it will be difficult for customers to compare their prices from time to time. Items that vary seasonally may also be used since customers have no knowledge whether there is a shortage of the product or the store is charging premium. Same applies to products whose quality and sizes vary from store to store.
It is important for retailers to balance their efforts to offer favorable prices to consumers in order to control the image of their company. This is because some customers will look at the discounts on a product as a sign of weak demand which brings the question of their quality.