Consumer response to product and price programs. Outline. A model of quality, price, and value Perceived quality The quality perception process Brand and COO as extrinsic quality cues Perceived price The price perception process The psychology of pricing Perceived value.
Consumer response to product and price programs
Non-alcoholic beer has traditionally had a watered-down negative image among beer drinkers. When Heineken introduced Buckler non-alcoholic beer, it used the following marketing strategy: new Buckler brand name but identification as a Heineken product; typical beer bottle and label; priced at a 20% premium above regular beer; Pan-European positioning as a premium brand with a good quality beer taste. Discuss Buckler’s marketing strategy from the perspective of the model of perceived quality and value.
PL1 1.79 .99 .59 1.79 1.25
PL2 1.89 1.09 .79 1.79 1.38
although store brands enjoyed an average price advantage of 21%, mean value for money ratings were only 7% higher and perceived quality was more strongly correlated with willingness to buy than perceived value for money;
Positive and negative role of price
The December 2011 issue of Consumer Reports reported an evaluation of 21 models of E-book readers. The file EReaders.pdf reproduces parts of the article (you will need Acrobat Reader to open this file) and the file EReaders.xls contains a summary of the relevant data for your convenience. Graph the overall scores against price and then answer the following questions: Is price a good signal of quality in this product category? Which brands offer good or bad value? Would you rate any of the brands as a best buy? How can brands providing poor quality and/or value survive?
The owner of a gas station intends to charge different prices for credit card and cash sales. There are two options:
What would you recommend?
Discounts vs. premiums
Assume that one group of students gets Penn State coffee mugs which sell for $6 at the bookstore. Another group of students gets tokens to be used as cash. Students from the two groups are then paired and they are invited to “bargain” for the mugs. At what price do you think mug owners will be willing to sell their mug, and how much will cash holders be willing to pay for a mug?
The endowment effect
A bank offers two options (assume an interest rate on savings accounts of 5.8 percent, compounded monthly):
What would you do?
Which seems the better bargain?