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The middle class is the driving force of any economy in the world. Many people often see the most affluent as the most influential in the financial bracket of society, but that is misleading. Collectively, the middle class spends the most money, has considerable political swing and usually a focal point for advertisers. Nonetheless, they are still part of an entire spectrum that includes the high and lower classes.
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Consumer Conundrum: Do They Like Big, One-Off Discounts or Low Prices Daily? PriceManager 300 Frank W Burr Blvd, Suite 40 Teaneck NJ07666 (800) 574-0130
The middle class is the driving force of any economy in the world. Many people often see the most affluent as the most influential in the financial bracket of society, but that is misleading. Collectively, the middle class spends the most money, has considerable political swing and usually a focal point for advertisers. Nonetheless, they are still part of an entire spectrum that includes the high and lower classes. So, when it comes to buying stuff, where do these people agree on? A new study from the Journal of Consumer Research offered a vital insight on what consumers prefer. Shai Danziger, Liat Hadar, Vicki Morwitz, and their team observed participants who had to choose to buy from one of the two retailers. They received money based on how much they can minimize their total spending, for maximum efficiency.
The Results Based on the 100 weekly purchases, the participants continued to choose the retailer that offered generally lower prices than the one that offered seldom, but big discounts. The pattern stayed the same even when the researchers altered the deals to frequent discounts against everyday low-price guarantee. It offers valuable insight to retailers as to how to attract more customers. It suggests that they should just lower their prices than what their competitors offer. Customers also tend to rely on perception of who offers better savings on average, than waiting for a big discount all while missing out on current deals. Frequent discounting, however, had one good side to it: it maximizes retail revenues. At UC Berkeley School of Business, they tested methods where retailers make most profits. The JC Penney way, which assumed that consumers like fair, everyday prices, didn’t work out well. Low-rate discounting also failed to meet expectations, as it forced customers to commit to buying something. In the end, retailers that discount frequently and go against the dynamic pricing rule get the most business.
Some Limitations In a detailed report by Accenture, they warned that there are certain retailers who can afford to slash prices so often. One of whom who cannot lower their products’ value are luxury manufacturers. By nurturing a high-end image, brands that offer premium goods must either maintain their prices or offer big discounts. Frequent discounts may have a temporary effect on increasing sales, but it will lower the brand’s prestige and lose their upscale reputation. It all comes to the fore when it comes to finding the right price. Status, future and profit are all inexcusable determinants, and it is advisable to consider each one to make the right move. Sources: http://pricemanager.com/ http://www.sciencedaily.com/releases/2014/07/140722125729.h tm https://www.accenture.com/us- en/~/media/Accenture/Conversion- Assets/DotCom/Documents/Global/PDF/Strategy_4/Accenture- The-Premium-of-Value.pdf