The study, which followed the reactions of consumers to different price
guarantee and reimbursement deals from retailers, shows that people are wary if
a deal seems too advantageous for the buyer. This is contrary to conventional
wisdom, which assumes consumers will choose the cheapest option when offered the
same product at different prices.
But it turns out that consumer behavior isn’t as predictable as retailers
might assume. If a price is too low, or a reimbursement guarantee too high,
consumers start to have doubts about the quality of the product they’re
purchasing.
“If the offer seems too good to be true, the consumer may start to believe
that there is a catch, and become wary or suspicious of the details,” said
Adilson Borges, head of the Value and Research Center at Reims Management
School, which conducted the study. The business school is located in Reims,
France.
The study found that offering a price guarantee on a
product can be an effective strategy for retailers, but only if they’re
guaranteeing to make up a difference in price, not go overboard by reimbursing
the consumer much more than the price difference.
“When we examine the retailers together, we observe that their objective is
to give the impression that they have the most competitive offer in the market,”
Borges said.
Borges said that this observation should encourage retailers to keep offering
a guarantee of the best price and simply
reimburse the difference in price if a competitor undersells them. After all,
consumers like fairness in pricing, but they don’t seem to be buying the concept
of getting something for nothing.
Source: Fox small business
Monday, January 14, 2013
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