How Price Impacts Consumer Buying Behaviour?

Understanding consumer buying behaviour is quite crucial for any business irrespective of its size or industry because it helps business owners reach important decisions. Particularly, when they are looking to make a decision regarding the price of their product or service. Since change in price has a different impact on different groups of buyers and not everyone appreciates reduction in price. Similar is the case, when a vendor increases the price of products or services.

Therefore, to lure and retain customers, studying consumer buying behaviour is a must for every business before altering their price. Else, buyers have plenty of options out there and it won’t take them much time to make the switch. To make things easy for organizations, here we have discussed how price impacts buying behaviour and what business managers should keep in mind before altering the price:

The Impact of Cutting Prices

Lowering the price of an item or service has a different effect on consumer buying behaviour. Sometimes it negatively impacts customer experience because many equate low price products with low quality. Thus, when a business reduces the prices of its products such buyers becomes suspicious and switch to another brand, which they believe offer better value. However, for price-conscious shoppers reduction in price is a golden opportunity to stock up their favourite items.

The Impact of Increasing Prices

Before increasing the price of your product or service businesses should comprehend its effects on consumers buying behaviour, as it can go either way. A rise in price can make even the most loyal customers of a company abandon its product, if a competitor offers them same item at low price. This will not only hurt the company’s base of loyal customers, but also effect its sales stream poorly. On the other hand, hike in price can have a completely different effect, if the product or service has no match and it’s high in demand. In fact, increase in the price sometimes effect buyers positively because many believe that high price products offer better quality.

Conduct Research

Due to unexpected effects of change in price over consumer buying behaviour it is crucial that organizations should price their products or services correctly right from the start. Altering the price of a product or service is always risky. Hence business managers must alter it after serious consideration and thorough research. Retailers can start off by inspecting the prices of their competitors and studying actual business cases. It will enable them to determine the average price set and mark-up percentage of the industry.

Monitor Buying Behaviour

Conducting research alone is not enough to reach a decision, when it comes to changing the price. Placing a system for tracking customers’ buying behaviour is another essential thing, which should be on top of business managers’ minds. Since customers buying behaviour never stays the same and it keeps on changing over the time. Here a barcode tracking system can prove extremely helpful, as it allow companies to record and equate product sales at various price points.