How do consumers compare prices? It depends on how powerful they feel

Sep 10, 2013

Your reaction to the price on a bottle of wine or another product is partly a response to how powerful you feel, according to a new study in the Journal of Consumer Research.

"The degree to which one feels powerful influences which type of price comparison threatens their sense of self-importance and, in turn, affects the of price unfairness," write authors Liyin Jin, Yanqun He (both Fudan University), and Ying Zhang (University of Texas, Austin).

Variations in price are common in today's market, the authors explain, but companies risk consumers' wrath when those customers perceive unfairness. According to the authors, consumers have two main ways of evaluating the of a price: they compare with what they've paid for the same item in the past (self-comparison) or they ask how the price compares with what other customers are paying (other-comparison). The authors looked at the ways consumers' self-perceptions affected their reactions to the two kinds of comparisons.

In one study, the authors found that participants who felt powerful experienced more unfairness when it appeared that they were paying more than others. But people who did not feel powerful experienced more unfairness when they used self-comparisons. The study also revealed that "high-power" participants were more likely to get angry about unfairness and indicated they were more likely to complain about the perceived . Meanwhile the "low-power" individuals were more likely to feel sad and to use tactics to avoid thinking about the unfair price.

"Our findings suggest important ways that marketing professionals can engage customers of different power statuses," the write. "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. Conversely, when the target customers are relatively low in power, may be better cultivated by highlighting the consistency in service or the level of commitment to these customers."

Explore further: When do consumers think a freebie is more valuable than a discounted product?

More information: Liyin Jin, Yanqun He, and Ying Zhang. "How Power States Influence Consumers' Perceptions of Price Unfairness." Journal of Consumer Research: February 2014.

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Dug
not rated yet Sep 11, 2013
Not anymore. I compare (lowest price for same brand delivered to my door in two days or less) various vendors on the internet. First on Amazon, then on eBay, and if not satisfied with the results I do a search on Google. Last - I may check local vendors assuming they have an online presence and pricing. Vendors who do not provide shipping and handling prior to purchase are immediately excluded. Obviously those who have high shipping and handling rates are excluded. Those that do not offer same day shipping are excluded. In general, Amazon Prime with two day free shipping wins out in about 50% of my shopping comparisons. Unfortunately, the Prime price is often not competitive in pricing.

There is no sense of "power" or "sadness" (more marketing psycho-babble) - it's just the most basic common sense way to shop this way - at least for the present.

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