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How to Write a Research Paper
Writing a research paper is a bit more difficult that a standard high school essay. You need to site sources, use academic data and show scientific examples. Before beginning, you’ll need guidelines for how to write a research paper.
Start the Research Process
Before you begin writing the research paper, you must do your research. It is important that you understand the subject matter, formulate the ideas of your paper, create your thesis statement and learn how to speak about your given topic in an authoritative manner. You’ll be looking through online databases, encyclopedias, almanacs, periodicals, books, newspapers, government publications, reports, guides and scholarly resources. Take notes as you discover new information about your given topic. Also keep track of the references you use so you can build your bibliography later and cite your resources.
Develop Your Thesis Statement
When organizing your research paper, the thesis statement is where you explain to your readers what they can expect, present your claims, answer any questions that you were asked or explain your interpretation of the subject matter you’re researching. Therefore, the thesis statement must be strong and easy to understand. Your thesis statement must also be precise. It should answer the question you were assigned, and there should be an opportunity for your position to be opposed or disputed. The body of your manuscript should support your thesis, and it should be more than a generic fact.
Create an Outline
Many professors require outlines during the research paper writing process. You’ll find that they want outlines set up with a title page, abstract, introduction, research paper body and reference section. The title page is typically made up of the student’s name, the name of the college, the name of the class and the date of the paper. The abstract is a summary of the paper. An introduction typically consists of one or two pages and comments on the subject matter of the research paper. In the body of the research paper, you’ll be breaking it down into materials and methods, results and discussions. Your references are in your bibliography. Use a research paper example to help you with your outline if necessary.
Organize Your Notes
When writing your first draft, you’re going to have to work on organizing your notes first. During this process, you’ll be deciding which references you’ll be putting in your bibliography and which will work best as in-text citations. You’ll be working on this more as you develop your working drafts and look at more white paper examples to help guide you through the process.
Write Your Final Draft
After you’ve written a first and second draft and received corrections from your professor, it’s time to write your final copy. By now, you should have seen an example of a research paper layout and know how to put your paper together. You’ll have your title page, abstract, introduction, thesis statement, in-text citations, footnotes and bibliography complete. Be sure to check with your professor to ensure if you’re writing in APA style, or if you’re using another style guide.
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Original research article, impact of pricing and product information on consumer buying behavior with customer satisfaction in a mediating role.
- 1 Department of Product Design, School of Fine Arts, Guizhou Minzu University, Guiyang, China
- 2 School of Mechanical Engineering, Guizhou University, Guiyang, China
- 3 School of Data Science and Information Engineering, Guizhou Minzu University, Guiyang, China
- 4 School of Mechanical Engineering, Guiyang University, Guiyang, China
The relationship between product pricing and product packaging plays an important role in the buying behavior of consumers, whereas customer satisfaction plays a mediating role. To test these hypotheses, research was conducted on university students in China. Questionnaire-based convenience sampling was conducted on 500 students for data collection using online and offline sources. A total of 367 (73%) students responded, and 17 questionnaires were rejected due to missing information. SPSS and AMOS software were used for the data analysis. Product pricing and product information were independent variables in this study, whereas consumer buying behavior was a dependent variable. Customer satisfaction is mediated by one dependent and two independent variables. Confirmatory factor analysis, path analysis, and discriminant validity in structural equation modeling revealed that product pricing and packaging had a statistically significant relationship with the buyer decision process. The introduction of satisfaction as a mediating variable led to the observation of full mediation in the case of product pricing and partial mediation in product packaging. Given the results of this research, product managers should adopt pricing tactics along with product packaging to influence the buying intentions of consumers.
Introduction
In the competitive market of commodities, products, varieties, consumers, ethnicities, and preferences, product pricing and product packaging information descriptions have a considerable influence on the buying behavior of consumers. To explore the cumulative effects of product pricing and packaging on the buying behavior of consumers of different ethnicities, it is essential to research these aspects of marketing. It is worth mentioning that consumer satisfaction also plays a decisive and mediating role in the development and molding of buying behavior of consumers ( Larsen et al., 2017 ). It is believed that pricing has a significant effect on the buying behavior of consumers because the higher a product is priced, the fewer units are sold. By contrast, products selling at prices lower than the market rate are assumed to sell at a higher volume ( Sadiq M. W. et al., 2020 ). Several studies have shown that pricing is more critical and relevant to consumer buying behavior ( Huo et al., 2021 ).
When discussing the combined effect of product pricing and packaging relationships on consumer buying behavior, pricing alone plays a more critical role than packaging, which has a partial role in buying behavior ( Jabarzare and Rasti-Barzoki, 2020 ). Thus, using this analogy, products can be sold, surprisingly, at a much higher volume. One can increase the prices of the products if the competitor products are scarce in the market or if the manufacturers are low in number. This behavior may not affect the number of sales or the attitude of the consumer toward buying. If the product is already in abundance in the market, then pricing will definitely play an important role because the increase in price will discourage customers from buying it. Similarly, if prices are lowered under such market conditions, then consumers will increase the amount that they purchase significantly.
Even though product pricing has a greater influence than product packaging on the decision process of a buyer ( Pratama and Suprapto, 2017 ; Abdullah et al., 2021 ), high prices in a highly competitive market can lose customers permanently due to the effect of increased pricing ( Kotler et al., 2012 ). While talking about the packaging of products, it should be kept in mind that packaging has a significant relationship on consumers and their decision making about product purchases ( Sadiq M. W. et al., 2020 ). For example, quality, color, and material can have a positive effect on consumers ( Rambabu and Porika, 2020 ). Most consumers desire a range of product choices when purchasing, in terms of packaging. Thus, marketers should place a premium on creative and exclusive packaging that is distinctive in scale, instruction, convenience, product design, and form when compared with rivals in the market segment ( Li et al., 2021 ). Marking a product with accurate information adds to its value. Consumers are attracted to detailed labels, content, and packaging. Many people are influenced by the way a product is packaged and presented in the market. While the product itself may be of any quality, the relationship it produces through its packaging has a strong influence on the purchasing attitude of the consumer. Nowadays, eco-friendly packaging is essential. Thus, advertisers should prioritize this factor and employ best practices to the maximum degree possible, including eco-friendly recyclable packaging ( Abdullah et al., 2021 ). Consumer buying behavior also has a lot to do with product selling and buying ( Brun et al., 2014 ), although some customers are not influenced by the packaging or labeling of products, buying is demand-driven or need-oriented by most consumers.
However, super packaging or labeling of products may not attract the consumer for several reasons. One of the primary reasons may be the high price and packaging, announcing the excellent quality of the product. In such cases, there may be a lack of interest by the consumer toward attractive packaging; instead, they may prefer to buy local products that are cheap and readily available in the market. According to Tu and Chih (2013) , consumer satisfaction is another aspect of product selling and consumer buying behavior. It also plays a mediating role in product buying behavior, pricing, and packaging ( Rambabu and Porika, 2020 ). Even though a price might be negotiable and the product is provided with helpful information and good, decent packaging, there is a lot to do to satisfy a consumer. All of these factors are correlated with consumer satisfaction. If the consumer is satisfied with all these, they may buy the product, but there is no guarantee of this. Thus, consumer buying behavior is also influenced by satisfaction ( Brun et al., 2014 ). This study seeks to answer several questions to explain consumer buying behavior in relation to product pricing and packaging, with consumer satisfaction as a mediating factor. In this work, we first present a brief review of this research, which differs from the current literature in various respects. The research has generated several findings.
• Product prices significantly correlate with consumer buying behavior.
• The product information available on packaging influences the consumer’s buying behavior.
• Satisfaction plays a mediating role in consumer buying behavior.
• Pricing of the product plays an essential role in customer satisfaction.
• Product information available on labels plays a significant role in customer satisfaction.
The remainder of this work is structured as follows: Section “Review of Literature and Hypothesis Development” presents a review of previous studies supporting different theoretical frameworks. Section “Research Methodology” presents the methodology adopted for the empirical analysis. Section “Data Analysis and Results” presents the results of this analysis. Section “Conclusion and Recommendations” concludes the present study, limitations and future directions.
Review of Literature and Hypothesis Development
Product pricing and consumer buying behavior.
Product pricing seems to be the only direct element that generates revenue and indicates the success or failure of a product or service. As a result, the researchers in this study chose to emphasize this aspect. Manali (2015) carried out research into the theoretical dimensions of consumer purchasing behavior and the factors that affect it. He analyzed the relationship between consumer buying behavior and factors affecting the buying process and decisions of the consumers. His research provides enough evidence to show that the internal and external influences of a consumer have a major relationship with their purchasing behavior.
According to Al-Salamin et al. (2015) , good prices of well-known brands negatively affect the purchasing process. Young people are eager to buy brands, but their low income hinders them from doing so. The only aspect of the marketing mix that generates revenue is price, whereas the others generate costs. The authors also noted that the purchasing decisions of consumers focus on their price perception and what they think about the actual price of a product. The main goal of marketing is to understand how customers move toward their price perception. We are all customers, no matter how old, educated, wealthy, or talented. Understanding customer behavior thus becomes a critical challenge for advertisers, distributors, and salespeople. Therefore, we hypothesized the following:
H 1 : Product pricing is significantly correlated with consumer buying behavior.
Product Packaging and Consumer Buying Behavior
Packaging a product with relevant product details contributes positively to consumer buying behavior. Names, features, and product packaging attract consumers. Many people are influenced by the packaging and marketing of items. While a product may be of any quality, the impact on customer purchasing is essential ( Rundh, 2009 ; Li et al., 2021 ; Naseem et al., 2021 ). The aim of this study was to determine the effect of product pricing and information about product packaging on the buying behavior of consumers. Innovation in product labeling and packing often has a major relationship with demand, which is why there are many methods for this type of action plan if a company wants to pursue this strategy with regard to its product packaging. When it comes to packaging, many buyers want a range of product choices. Therefore, marketers should pay high prices for innovative and exclusive packaging that differentiate their products from the competition in terms of size, guidance, functionality, product innovation, and shape ( Rundh, 2009 ; Li et al., 2021 ; Sarfraz et al., 2021 ). For the target consumer, product packaging acts as an outstanding networking tool, ultimately increasing their awareness levels. Packaging must highlight key aspects of the product and brand, such as material composition, purpose, and quality. To show respect for customers, packaging should include all of this information in regional languages. Not only is efficient packaging important for storing and preserving products, but it is also important for creating an interest in and generating actions toward purchasing the product. Packaging that is environmentally friendly has become increasingly important. As a result, marketers should place a high priority on this aspect and use best practices to the greatest possible extent, including the use of environmentally friendly recycled materials ( Deliza and MacFie, 2001 ; Abdullah et al., 2021 ; Mohsin et al., 2021 ).
H 2 : Product information on packaging is significantly related to consumer purchasing behavior.
Satisfaction of Consumers and Their Buying Behavior
Customer value and customer satisfaction are considered important parameters for the relationship between customer value and the willingness to sacrifice ( Zechmeister et al., 1997 ). This sacrifice is made in accordance with an exchange mechanism that includes transaction costs and the risk of the goods of the company. According to Larsen et al. (2017) , customers will be disappointed in the future if the ratio value considered by the economic sacrifice of customers with the goods sold by the company does not meet their expectations. Customers will be satisfied if the ratio value is sufficient or exceeds their expectations. Another analysis of consumer value examines the understanding of customers of the quality and benefits of toothpaste in relation to price sacrifice. Social, emotional, and functional values are all aspects of customer value ( Keller and Kotler, 2012 ).
Customer satisfaction is evaluated by obtaining feedback from customers after purchasing products or services, and then comparing it with their expectations. Customer satisfaction is calculated using the performance requirements of products or services that are capable of satisfying the needs and desires of customers. A satisfied consumer is a consumer who believes that the products or services were worth purchasing, which would encourage them to buy the products again. On the other hand, a frustrated consumer will persuade other consumers not to buy the same brand, which ultimately causes switching to rival brands. According to Tu and Chih (2013) , “customer satisfaction is perceived as affecting repurchasing intentions and actions, which, in turn, contributes to an organization’s potential sales and income.”
H 3 : Satisfaction plays a mediating role in consumer buying behavior.
Role of Product Pricing on Consumer Satisfaction
Price is regarded as something that can be calculated according to several measures, such as a reasonable price, a competitive price, a discounted price, a retailer’s price, and price suitability. Value is a higher-level definition than quality and price because it is more individualistic and personal. A satisfied consumer believes that the value of goods and services is comparable with the price, which will encourage them to repurchase the products. According to Zeithaml (1988) , “quality can be characterized as superiority or excellence in a broad sense.” From the customer’s perspective, “The price is given up or sacrificed to get the product or service” ( Zeithaml, 1988 ). According to Bei and Chiao (2001) , “[P]rice is described as giving or sacrificing for the acquisition of a service or product,” while Kotler et al. (2012) proposed that “the price is the amount paid for a product or service and the sum of the value exchanged by consumers for the advantages of a product or service available or being used.” The perceptions of customers of a given price can have a direct relationship with the their decision to buy a product ( Zechmeister et al., 1997 ). Customers will pay attention to the prices paid by their peers, and no one wants to spend more money than their peers do. The fairness of a price can affect the perception of consumers of the product, and ultimately their desire to become a consumer.
H 4 : The pricing of a product plays a significant role in customer satisfaction.
Role of Product Packaging on Consumer Satisfaction
Packaging and labeling can be considered one of the most important tools in marketing and communication, which means that a thorough examination of their components and their relationships with consumer buying behavior is necessary. According to Joewono and Kubota (2007) , consumer satisfaction results from product and service reviews based on customer perceptions and a broad assessment of the overall consumption experience. It is suggested that customer satisfaction affects repurchase intentions and actions, which, in turn, determine potential sales and revenue for a company. According to Zeithaml (2000) , consumer satisfaction is measured on a multidimensional scale that includes service quality, product quality, scenario factors, personal factors, and price factors.
Product packaging plays a variety of roles. It provides information about the product and the company, connects them with customers, and ensures product quality ( Naseem et al., 2020 ; Rambabu and Porika, 2020 ). It is important to remember that packaging has a significant influence on customers and their purchasing decisions. Consumers react positively to quality, color, and content. Similarly, if a product is labeled with accurate information about the product, it increases the value of the product. Consumers respond to a product’s specific name, ingredients, and packaging. Many consumers are concerned about the way a product is designed and advertised. Although the quality of the product itself may vary, the effect of packaging on customer purchasing decisions is important.
H 5 : Product information available on labels plays a significant role toward customer satisfaction.
Theoretical Support of the Study
The following research was conducted to investigate underlying issues. This study is a continuation of expectancy disconfirmation theory (EDT) and social cognitive theory (SCT). Both theories provide a strong background for conducting this research. According to EDT, the satisfaction of consumers is linked to the expectation and perception of product quality. A consumer sets an expectation before examining a product in real time. This comparison of preset expectations with real-sense performance is the basis of EDT. In this study, consumer satisfaction plays a mediating role between product pricing, product packaging, and consumer buying behavior. The expectations of consumers are based on the price of the product, information on product packaging, and perceived quality.
The other central backbone of this research is SCT, developed by Bandura (2012) , which explains that learning takes place in a social context with a complex and reciprocal relationship between the individual, their environment, and their actions. The emphasis on social relationships, and also external and internal social reinforcement, is a distinctive feature of SCT. SCT considers the specific ways in which people maintain their behavior and interact with others. It also considers the specific ways in which people learn and sustain behaviors and the social context in which they do so. According to this theory, past experiences strengthen ideas and expectations, all of which affect whether a person maintains his/her attitudes. Many behavioral models that are used in studies related to health do not include behavior maintenance; instead, they focus on behavior initiation. This is a shame because the real purpose of public health is to maintain conduct rather than initiate it. SCT aims to illustrate how people monitor and reinforce their actions to achieve goal-directed behavior that can be managed. Thus, the product pricing and packaging of a product with useful information on labels will surely correlate with consumer buying behavior that will persist. The customer will buy or not buy in the future on the basis of the expectations and perceptions of the product once his behavior about the product has already been initiated. A conceptual framework was developed to focus on the specific variables. The framework consists of the hypotheses shown in Figure 1 .
Figure 1. Theoretical framework.
Research Methodology
The research methodology of a study represents an essential and integral part of the entire process and explains how science contributes to aims. The behavioral approach of respondents, i.e., expectations, evidence, observations, knowledge of reality, and individual point of view, can be summarized by analytical parameters. According to James and Vinnicombe (2002) , the assurance of objectivity in the scientific procession is compulsory. Furthermore, a perspective emphasizing social variable is considered essential by the society for practical implications ( Blaikie, 2007 ). Their innovative discoveries and interpretation are leading activities of label research.
Research Design
In this research, the structure of behavior science by Zechmeister et al. (1997) is followed with mediation and description for the problem-solving process. The main focus of this research is the state of mind, mood swings, variations in feelings, and behavior toward the specific situation of the respondents. In addition, the organizational performance in the market and consumer buying behavior can solve many problems by approaching the cooperative feedback process with peers and accumulating knowledge. The analysis of buying behavior may be categorized as “co-oriented” or “comparative.” According to behavioral science, these two factors have real meaning. This study seeks to understand the effect of product pricing and packaging on the buying behavior of consumers. At the same time, satisfaction plays its role as a mediating variable ( Zechmeister et al., 1997 ; Bollen and Pearl, 2013 ). For data collection, self-administered questionnaires were used for quantitative analysis.
Study Population
The sample of this study comprises students from different universities in China. The main reason for choosing university students is that recent research concentrates on product pricing with consumer buying behavior while considering university students as their population. The population selection is based on the area of interest and importance, which covers the objectivity of this research. Divergent online and offline sources were used to collect analytical data. The questionnaires were circulated among 500 students, and the 367 replied to us regarding that, and so the aggregate received response was 73%. Seventeen answers received from respondents were rejected due to incomplete information, and 350 were finalized for the analytical process. This study used convenience sampling for data collection. Bonds-Raacke and Raacke (2012) suggested that field examinations should use a questionnaire. The researcher used a questionnaire to collect the data in this study. SPSS software was used to check the quality, validity, and scale reliability of the instrument.
Data Analysis and Results
SPSS and AMOS software were used for the data analysis. Table 1 presents the reliability analysis results. Product pricing and product information are independent variables in this study, whereas consumer buying behavior is a dependent variable. In this study, satisfaction is mediated between two independent variables and one dependent variable. All variables have acceptable reliability alpha values.
Table 1. Reliability analysis.
Table 2 shows the descriptive statistics. The mean value of product pricing is 3.4, where product information has a mean value of 3.9, satisfaction has a mean value 3.6, and consumer buying behavior has a mean value of 3.8.
Table 2. Descriptive statistics.
The product price measuring scale was introduced by Lichtenstein et al. (1993) . The Likert scale ranges from strongly agree to strongly disagree, and this scale was used in this research with slight modifications. The Lichtenstein et al. (1993) ranking was further verified by confirmatory factor analysis (CFA) analysis to meet the requirements of this research. The measuring scales of Brun et al. (2014) and Zekiri and Hasani (2015) were used to measure the product packaging and customer satisfaction. The behavior of consumers toward buying decisions, the measurement scale of Bagga and Bhatt (2013) is used with slight modification to fit the scale for scope and broaden the view of this research. All predefined models/scales were rated on 5-point Likert scale, with higher numerical values indicating greater satisfaction.
Confirmatory Factor Analysis
The pooled CFA is more reliable than other versions and the most up-to-date approach. The AMOS 24 is used to check the relationship among variables ( Afthanorhan et al., 2014 ; Chong et al., 2014 ).
The results of Table 3 declare the structural fitness of the model by meeting all criterion requirements. The reliability values or factor loading of individual items are presented in Figure 2 . The findings of Table 4 have also covered the composite reliability of a wide scale. The composite reliability is indicated by the reliability of the measurement scales while reporting reliability ( Netemeyer et al., 2003 ).
Table 3. Pooled CFA model fitness tests.
Figure 2. Pooled confirmatory factor analysis.
Table 4. Factor loading of items.
Assessment of Discriminant Validity
Discriminant validity was measured using HTMT analysis by considering two determinants, i.e., supposed to be related or unrelated. The value of cut-off criteria for strict discriminant validity was 0.850, and for liberal discriminant validity it was 0.900 ( Henseler et al., 2015 ), obtained by employing discriminant validity. The following discriminant validity criteria have provided the results of Table 5 .
Table 5. HTMT analysis.
Path Analysis in Structural Equation Modeling
In this study, structural equation modeling was used to determine the proposed relationships. Exogenous variables were included in this analysis to allow for the study of endogenous variables using AMOS 24. Here, we can see whether the independent and dependent variables are linearly related to each other. The analytical observations and their mean values are tabulated and linked with the collected information. The results of Table 6 declare the structural fitness of the model by meeting all criterion requirements.
Table 6. SEM, model fitness tests.
Figure 3 shows the direct effects of the independent variables on the dependent variable. In this figure, the mediator variable is missing from this path analysis diagram to capture the direct correlation of the independent variable on the dependent variable.
Figure 3. Direct effects of path analysis.
Table 7 shows that H 1 , H 3 , and H 5 are statistically significant, and their P-value is less than 0.05, which shows the 95% confidence interval. The structural equation modeling with the path analysis is presented in Figure 4 . The path analysis declared the nature of variables, i.e., two variables are independent: one is the mediator and the other one is dependent.
Table 7. Results of indirect effects.
Figure 4. Indirect direct effects of path analysis.
The findings of Table 8 indicate that both hypotheses are statistically significant, but the observed mediation values for these hypotheses differ. H 2 is statistically significant but has a full mediation effect, whereas H 4 is statistically significant and has a partial mediation effect.
Table 8. Results of indirect effects.
Hypothetical Results
The results of the hypothesis are shown in Table 9 in a more detailed and comprehensive manner. To calculate the standard error with T and P-values and the significance of the path coefficient, bootstrapping (1,000 subsamples) was used, which provided direct evidence of the hypotheses being accepted or rejected. The structural model analysis results show the path coefficients and their significance levels, as presented in Table 9 . The findings confirmed that all five relationships were significant, and it can be concluded that H 1 , H 2 , H 3 , H 4 , and H 5 were supported.
Table 9. Hypothesis results.
According to Sisodiya and Sharma (2018) , the marketing mix has a significant influence on the buying behavior of consumers. In this study, the main principle in packaging is to “reach a greater height of opportunity.” It is often regarded as a critical component of purchase decision making, and has often been shown to be a way of building market awareness and connecting with consumers outside the product itself and across several channels ( Rambabu and Porika, 2020 ; Sadiq W. et al., 2020 ). Packaging performs multidimensional functions. It can not only offer knowledge about products and business entities, but it is also a technique for communicating with consumers and safeguarding product quality ( Silayoi and Speece, 2007 ). Pricing can be considered one of the most vital and essential elements that can influence consumer buying behavior or the buyer decision process ( Dhurup et al., 2014 ; Sadiq W. et al., 2020 ).
According to Kotler et al. (2012) , customer satisfaction “is the extent to which a product’s perceived performance matches the buyer’s expectations.” Aslam et al. (2018) stated that price has a positive and significant correlation with customer satisfaction. Furthermore, they believed that the success of the sector was based on price fairness and customer satisfaction. Previous studies have also discussed this phenomenon in connection with other geographical locations. The price factor is more relatable to consumer buying behavior than product packaging ( Jabarzare and Rasti-Barzoki, 2020 ; Huo et al., 2021 ). Product pricing has a greater influence than product packaging on the buyers’ decision processes ( Pratama and Suprapto, 2017 ; Abdullah et al., 2021 ). Innovation in product packaging also has a significant relationship with the consumer; however, if any organization wants to follow a strategy that is relevant to its product packaging, then there are several strategies for this kind of plan of action. Most consumers desire a range of product choices when purchasing, in terms of packaging. Thus, the marketer should place a premium on creative and exclusive packaging that is distinctive in terms of scale, instruction, convenience, product design, and form when compared to rivals in market segmentation ( Rundh, 2009 ; Bollen and Pearl, 2013 ). Product packaging serves as an excellent networking medium for target customers, eventually increasing their knowledge levels. Packaging must convey pertinent details about the product and brand, including ingredient composition, intent, and consistency. In addition, packaging should provide all of this material in regional languages to demonstrate respect for consumers. Efficient packaging is critical not only for storing and protecting goods but also for generating interest in and action toward buying the commodity. Currently, eco-friendly packaging is essential. Thus, advertisers should prioritize this factor and employ best practices to the maximum degree possible, including eco-friendly recyclable packaging ( Deliza and MacFie, 2001 ; Abdullah et al., 2021 ).
Conclusion and Recommendations
The study results clearly show that both product pricing and packaging have a statistically significant relationship with the buyer’s decision process. At the same time, the introduction of satisfaction leads to the observation of full mediation in the case of product pricing and partial mediation in product packaging. Despite knowing that both the variables have a statistically significant relationship with the consumer buying behavior, it is essential to understand the managerial implications. Suppose, we would like to report and recommend these findings to different organizations looking to cut their operational costs in any possible way without compromising product quality, we suggest in such cases that they focus on pricing strategies for a better consumer response. A focus on the product packaging design process, packaging material, or the information available on product packaging positively influences consumer buying behavior. However, its effect is lower than product pricing. Therefore, it is recommended for managers that if they want to connect with their target customers more efficiently and effectively, they should focus on both product pricing and packaging options. However, if they can afford only one option from the product’s operational cost perspective, they must focus on product pricing strategies.
In future studies, it must be kept in mind that these findings pertain directly to the individuals listed as respondents. To make it more accurate, other demographic, psychographic, and geographic samples should be used. It is likely that when data are thus obtained, the findings will differ. To ensure more lasting and repeatable corporate outcomes, several studies are required to obtain results that are more accurate and reliable.
Data Availability Statement
The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.
Author Contributions
HZ, XY, and ZL contributed to conception and design of the study. HZ organized the database, performed the statistical analysis, and wrote the first draft of the manuscript. XY, ZL, and QY wrote sections of the manuscript. All authors contributed to manuscript revision, read, and approved the submitted version.
This work was funded by the National Natural Science Foundation of China (52065010), Open Fund of Key Laboratory of Advanced Manufacturing Technology, Ministry of Education (GZUAMT2021KF[07] and GZUAMT2021KF[08]), Natural Science Research Project supported by the Education Department of Guizhou Province [Grant Nos. (2018)152 and (2017)239], Humanities and Social Science Research Project of Guizhou Provincial Department of Education (Grant No. 2018qn46), and the Guiyang University Teaching Research Project (Grant No. JT2019520206).
Conflict of Interest
The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Publisher’s Note
All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.
Abbreviations
CFA, Confirmatory Factor Analysis; RMSEA, Root Mean Square of Error Approximation; CFI, Comparative fit index; EDT, Expectancy Disconfirmation Theory; SCT, Social Cognitive Theory.
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Keywords : product pricing, product packaging, consumer buying behavior, consumer satisfaction, confirmatory factor analysis, structural equation modeling
Citation: Zhao H, Yao X, Liu Z and Yang Q (2021) Impact of Pricing and Product Information on Consumer Buying Behavior With Customer Satisfaction in a Mediating Role. Front. Psychol. 12:720151. doi: 10.3389/fpsyg.2021.720151
Received: 03 June 2021; Accepted: 08 October 2021; Published: 13 December 2021.
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Copyright © 2021 Zhao, Yao, Liu and Yang. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
*Correspondence: Huiliang Zhao, [email protected]
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Impact of Pricing and Product Information on Consumer Buying Behavior With Customer Satisfaction in a Mediating Role
Huiliang zhao.
1 Department of Product Design, School of Fine Arts, Guizhou Minzu University, Guiyang, China
2 School of Mechanical Engineering, Guizhou University, Guiyang, China
3 School of Data Science and Information Engineering, Guizhou Minzu University, Guiyang, China
Zhenghong Liu
4 School of Mechanical Engineering, Guiyang University, Guiyang, China
Associated Data
The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.
The relationship between product pricing and product packaging plays an important role in the buying behavior of consumers, whereas customer satisfaction plays a mediating role. To test these hypotheses, research was conducted on university students in China. Questionnaire-based convenience sampling was conducted on 500 students for data collection using online and offline sources. A total of 367 (73%) students responded, and 17 questionnaires were rejected due to missing information. SPSS and AMOS software were used for the data analysis. Product pricing and product information were independent variables in this study, whereas consumer buying behavior was a dependent variable. Customer satisfaction is mediated by one dependent and two independent variables. Confirmatory factor analysis, path analysis, and discriminant validity in structural equation modeling revealed that product pricing and packaging had a statistically significant relationship with the buyer decision process. The introduction of satisfaction as a mediating variable led to the observation of full mediation in the case of product pricing and partial mediation in product packaging. Given the results of this research, product managers should adopt pricing tactics along with product packaging to influence the buying intentions of consumers.
Introduction
In the competitive market of commodities, products, varieties, consumers, ethnicities, and preferences, product pricing and product packaging information descriptions have a considerable influence on the buying behavior of consumers. To explore the cumulative effects of product pricing and packaging on the buying behavior of consumers of different ethnicities, it is essential to research these aspects of marketing. It is worth mentioning that consumer satisfaction also plays a decisive and mediating role in the development and molding of buying behavior of consumers ( Larsen et al., 2017 ). It is believed that pricing has a significant effect on the buying behavior of consumers because the higher a product is priced, the fewer units are sold. By contrast, products selling at prices lower than the market rate are assumed to sell at a higher volume ( Sadiq M. W. et al., 2020 ). Several studies have shown that pricing is more critical and relevant to consumer buying behavior ( Huo et al., 2021 ).
When discussing the combined effect of product pricing and packaging relationships on consumer buying behavior, pricing alone plays a more critical role than packaging, which has a partial role in buying behavior ( Jabarzare and Rasti-Barzoki, 2020 ). Thus, using this analogy, products can be sold, surprisingly, at a much higher volume. One can increase the prices of the products if the competitor products are scarce in the market or if the manufacturers are low in number. This behavior may not affect the number of sales or the attitude of the consumer toward buying. If the product is already in abundance in the market, then pricing will definitely play an important role because the increase in price will discourage customers from buying it. Similarly, if prices are lowered under such market conditions, then consumers will increase the amount that they purchase significantly.
Even though product pricing has a greater influence than product packaging on the decision process of a buyer ( Pratama and Suprapto, 2017 ; Abdullah et al., 2021 ), high prices in a highly competitive market can lose customers permanently due to the effect of increased pricing ( Kotler et al., 2012 ). While talking about the packaging of products, it should be kept in mind that packaging has a significant relationship on consumers and their decision making about product purchases ( Sadiq M. W. et al., 2020 ). For example, quality, color, and material can have a positive effect on consumers ( Rambabu and Porika, 2020 ). Most consumers desire a range of product choices when purchasing, in terms of packaging. Thus, marketers should place a premium on creative and exclusive packaging that is distinctive in scale, instruction, convenience, product design, and form when compared with rivals in the market segment ( Li et al., 2021 ). Marking a product with accurate information adds to its value. Consumers are attracted to detailed labels, content, and packaging. Many people are influenced by the way a product is packaged and presented in the market. While the product itself may be of any quality, the relationship it produces through its packaging has a strong influence on the purchasing attitude of the consumer. Nowadays, eco-friendly packaging is essential. Thus, advertisers should prioritize this factor and employ best practices to the maximum degree possible, including eco-friendly recyclable packaging ( Abdullah et al., 2021 ). Consumer buying behavior also has a lot to do with product selling and buying ( Brun et al., 2014 ), although some customers are not influenced by the packaging or labeling of products, buying is demand-driven or need-oriented by most consumers.
However, super packaging or labeling of products may not attract the consumer for several reasons. One of the primary reasons may be the high price and packaging, announcing the excellent quality of the product. In such cases, there may be a lack of interest by the consumer toward attractive packaging; instead, they may prefer to buy local products that are cheap and readily available in the market. According to Tu and Chih (2013) , consumer satisfaction is another aspect of product selling and consumer buying behavior. It also plays a mediating role in product buying behavior, pricing, and packaging ( Rambabu and Porika, 2020 ). Even though a price might be negotiable and the product is provided with helpful information and good, decent packaging, there is a lot to do to satisfy a consumer. All of these factors are correlated with consumer satisfaction. If the consumer is satisfied with all these, they may buy the product, but there is no guarantee of this. Thus, consumer buying behavior is also influenced by satisfaction ( Brun et al., 2014 ). This study seeks to answer several questions to explain consumer buying behavior in relation to product pricing and packaging, with consumer satisfaction as a mediating factor. In this work, we first present a brief review of this research, which differs from the current literature in various respects. The research has generated several findings.
- • Product prices significantly correlate with consumer buying behavior.
- • The product information available on packaging influences the consumer’s buying behavior.
- • Satisfaction plays a mediating role in consumer buying behavior.
- • Pricing of the product plays an essential role in customer satisfaction.
- • Product information available on labels plays a significant role in customer satisfaction.
The remainder of this work is structured as follows: Section “Review of Literature and Hypothesis Development” presents a review of previous studies supporting different theoretical frameworks. Section “Research Methodology” presents the methodology adopted for the empirical analysis. Section “Data Analysis and Results” presents the results of this analysis. Section “Conclusion and Recommendations” concludes the present study, limitations and future directions.
Review of Literature and Hypothesis Development
Product pricing and consumer buying behavior.
Product pricing seems to be the only direct element that generates revenue and indicates the success or failure of a product or service. As a result, the researchers in this study chose to emphasize this aspect. Manali (2015) carried out research into the theoretical dimensions of consumer purchasing behavior and the factors that affect it. He analyzed the relationship between consumer buying behavior and factors affecting the buying process and decisions of the consumers. His research provides enough evidence to show that the internal and external influences of a consumer have a major relationship with their purchasing behavior.
According to Al-Salamin et al. (2015) , good prices of well-known brands negatively affect the purchasing process. Young people are eager to buy brands, but their low income hinders them from doing so. The only aspect of the marketing mix that generates revenue is price, whereas the others generate costs. The authors also noted that the purchasing decisions of consumers focus on their price perception and what they think about the actual price of a product. The main goal of marketing is to understand how customers move toward their price perception. We are all customers, no matter how old, educated, wealthy, or talented. Understanding customer behavior thus becomes a critical challenge for advertisers, distributors, and salespeople. Therefore, we hypothesized the following:
- H 1 : Product pricing is significantly correlated with consumer buying behavior.
Product Packaging and Consumer Buying Behavior
Packaging a product with relevant product details contributes positively to consumer buying behavior. Names, features, and product packaging attract consumers. Many people are influenced by the packaging and marketing of items. While a product may be of any quality, the impact on customer purchasing is essential ( Rundh, 2009 ; Li et al., 2021 ; Naseem et al., 2021 ). The aim of this study was to determine the effect of product pricing and information about product packaging on the buying behavior of consumers. Innovation in product labeling and packing often has a major relationship with demand, which is why there are many methods for this type of action plan if a company wants to pursue this strategy with regard to its product packaging. When it comes to packaging, many buyers want a range of product choices. Therefore, marketers should pay high prices for innovative and exclusive packaging that differentiate their products from the competition in terms of size, guidance, functionality, product innovation, and shape ( Rundh, 2009 ; Li et al., 2021 ; Sarfraz et al., 2021 ). For the target consumer, product packaging acts as an outstanding networking tool, ultimately increasing their awareness levels. Packaging must highlight key aspects of the product and brand, such as material composition, purpose, and quality. To show respect for customers, packaging should include all of this information in regional languages. Not only is efficient packaging important for storing and preserving products, but it is also important for creating an interest in and generating actions toward purchasing the product. Packaging that is environmentally friendly has become increasingly important. As a result, marketers should place a high priority on this aspect and use best practices to the greatest possible extent, including the use of environmentally friendly recycled materials ( Deliza and MacFie, 2001 ; Abdullah et al., 2021 ; Mohsin et al., 2021 ).
- H 2 : Product information on packaging is significantly related to consumer purchasing behavior.
Satisfaction of Consumers and Their Buying Behavior
Customer value and customer satisfaction are considered important parameters for the relationship between customer value and the willingness to sacrifice ( Zechmeister et al., 1997 ). This sacrifice is made in accordance with an exchange mechanism that includes transaction costs and the risk of the goods of the company. According to Larsen et al. (2017) , customers will be disappointed in the future if the ratio value considered by the economic sacrifice of customers with the goods sold by the company does not meet their expectations. Customers will be satisfied if the ratio value is sufficient or exceeds their expectations. Another analysis of consumer value examines the understanding of customers of the quality and benefits of toothpaste in relation to price sacrifice. Social, emotional, and functional values are all aspects of customer value ( Keller and Kotler, 2012 ).
Customer satisfaction is evaluated by obtaining feedback from customers after purchasing products or services, and then comparing it with their expectations. Customer satisfaction is calculated using the performance requirements of products or services that are capable of satisfying the needs and desires of customers. A satisfied consumer is a consumer who believes that the products or services were worth purchasing, which would encourage them to buy the products again. On the other hand, a frustrated consumer will persuade other consumers not to buy the same brand, which ultimately causes switching to rival brands. According to Tu and Chih (2013) , “customer satisfaction is perceived as affecting repurchasing intentions and actions, which, in turn, contributes to an organization’s potential sales and income.”
- H 3 : Satisfaction plays a mediating role in consumer buying behavior.
Role of Product Pricing on Consumer Satisfaction
Price is regarded as something that can be calculated according to several measures, such as a reasonable price, a competitive price, a discounted price, a retailer’s price, and price suitability. Value is a higher-level definition than quality and price because it is more individualistic and personal. A satisfied consumer believes that the value of goods and services is comparable with the price, which will encourage them to repurchase the products. According to Zeithaml (1988) , “quality can be characterized as superiority or excellence in a broad sense.” From the customer’s perspective, “The price is given up or sacrificed to get the product or service” ( Zeithaml, 1988 ). According to Bei and Chiao (2001) , “[P]rice is described as giving or sacrificing for the acquisition of a service or product,” while Kotler et al. (2012) proposed that “the price is the amount paid for a product or service and the sum of the value exchanged by consumers for the advantages of a product or service available or being used.” The perceptions of customers of a given price can have a direct relationship with the their decision to buy a product ( Zechmeister et al., 1997 ). Customers will pay attention to the prices paid by their peers, and no one wants to spend more money than their peers do. The fairness of a price can affect the perception of consumers of the product, and ultimately their desire to become a consumer.
- H 4 : The pricing of a product plays a significant role in customer satisfaction.
Role of Product Packaging on Consumer Satisfaction
Packaging and labeling can be considered one of the most important tools in marketing and communication, which means that a thorough examination of their components and their relationships with consumer buying behavior is necessary. According to Joewono and Kubota (2007) , consumer satisfaction results from product and service reviews based on customer perceptions and a broad assessment of the overall consumption experience. It is suggested that customer satisfaction affects repurchase intentions and actions, which, in turn, determine potential sales and revenue for a company. According to Zeithaml (2000) , consumer satisfaction is measured on a multidimensional scale that includes service quality, product quality, scenario factors, personal factors, and price factors.
Product packaging plays a variety of roles. It provides information about the product and the company, connects them with customers, and ensures product quality ( Naseem et al., 2020 ; Rambabu and Porika, 2020 ). It is important to remember that packaging has a significant influence on customers and their purchasing decisions. Consumers react positively to quality, color, and content. Similarly, if a product is labeled with accurate information about the product, it increases the value of the product. Consumers respond to a product’s specific name, ingredients, and packaging. Many consumers are concerned about the way a product is designed and advertised. Although the quality of the product itself may vary, the effect of packaging on customer purchasing decisions is important.
H 5 : Product information available on labels plays a significant role toward customer satisfaction.
Theoretical Support of the Study
The following research was conducted to investigate underlying issues. This study is a continuation of expectancy disconfirmation theory (EDT) and social cognitive theory (SCT). Both theories provide a strong background for conducting this research. According to EDT, the satisfaction of consumers is linked to the expectation and perception of product quality. A consumer sets an expectation before examining a product in real time. This comparison of preset expectations with real-sense performance is the basis of EDT. In this study, consumer satisfaction plays a mediating role between product pricing, product packaging, and consumer buying behavior. The expectations of consumers are based on the price of the product, information on product packaging, and perceived quality.
The other central backbone of this research is SCT, developed by Bandura (2012) , which explains that learning takes place in a social context with a complex and reciprocal relationship between the individual, their environment, and their actions. The emphasis on social relationships, and also external and internal social reinforcement, is a distinctive feature of SCT. SCT considers the specific ways in which people maintain their behavior and interact with others. It also considers the specific ways in which people learn and sustain behaviors and the social context in which they do so. According to this theory, past experiences strengthen ideas and expectations, all of which affect whether a person maintains his/her attitudes. Many behavioral models that are used in studies related to health do not include behavior maintenance; instead, they focus on behavior initiation. This is a shame because the real purpose of public health is to maintain conduct rather than initiate it. SCT aims to illustrate how people monitor and reinforce their actions to achieve goal-directed behavior that can be managed. Thus, the product pricing and packaging of a product with useful information on labels will surely correlate with consumer buying behavior that will persist. The customer will buy or not buy in the future on the basis of the expectations and perceptions of the product once his behavior about the product has already been initiated. A conceptual framework was developed to focus on the specific variables. The framework consists of the hypotheses shown in Figure 1 .
Theoretical framework.
Research Methodology
The research methodology of a study represents an essential and integral part of the entire process and explains how science contributes to aims. The behavioral approach of respondents, i.e., expectations, evidence, observations, knowledge of reality, and individual point of view, can be summarized by analytical parameters. According to James and Vinnicombe (2002) , the assurance of objectivity in the scientific procession is compulsory. Furthermore, a perspective emphasizing social variable is considered essential by the society for practical implications ( Blaikie, 2007 ). Their innovative discoveries and interpretation are leading activities of label research.
Research Design
In this research, the structure of behavior science by Zechmeister et al. (1997) is followed with mediation and description for the problem-solving process. The main focus of this research is the state of mind, mood swings, variations in feelings, and behavior toward the specific situation of the respondents. In addition, the organizational performance in the market and consumer buying behavior can solve many problems by approaching the cooperative feedback process with peers and accumulating knowledge. The analysis of buying behavior may be categorized as “co-oriented” or “comparative.” According to behavioral science, these two factors have real meaning. This study seeks to understand the effect of product pricing and packaging on the buying behavior of consumers. At the same time, satisfaction plays its role as a mediating variable ( Zechmeister et al., 1997 ; Bollen and Pearl, 2013 ). For data collection, self-administered questionnaires were used for quantitative analysis.
Study Population
The sample of this study comprises students from different universities in China. The main reason for choosing university students is that recent research concentrates on product pricing with consumer buying behavior while considering university students as their population. The population selection is based on the area of interest and importance, which covers the objectivity of this research. Divergent online and offline sources were used to collect analytical data. The questionnaires were circulated among 500 students, and the 367 replied to us regarding that, and so the aggregate received response was 73%. Seventeen answers received from respondents were rejected due to incomplete information, and 350 were finalized for the analytical process. This study used convenience sampling for data collection. Bonds-Raacke and Raacke (2012) suggested that field examinations should use a questionnaire. The researcher used a questionnaire to collect the data in this study. SPSS software was used to check the quality, validity, and scale reliability of the instrument.
Data Analysis and Results
SPSS and AMOS software were used for the data analysis. Table 1 presents the reliability analysis results. Product pricing and product information are independent variables in this study, whereas consumer buying behavior is a dependent variable. In this study, satisfaction is mediated between two independent variables and one dependent variable. All variables have acceptable reliability alpha values.
Reliability analysis.
Table 2 shows the descriptive statistics. The mean value of product pricing is 3.4, where product information has a mean value of 3.9, satisfaction has a mean value 3.6, and consumer buying behavior has a mean value of 3.8.
Descriptive statistics.
The product price measuring scale was introduced by Lichtenstein et al. (1993) . The Likert scale ranges from strongly agree to strongly disagree, and this scale was used in this research with slight modifications. The Lichtenstein et al. (1993) ranking was further verified by confirmatory factor analysis (CFA) analysis to meet the requirements of this research. The measuring scales of Brun et al. (2014) and Zekiri and Hasani (2015) were used to measure the product packaging and customer satisfaction. The behavior of consumers toward buying decisions, the measurement scale of Bagga and Bhatt (2013) is used with slight modification to fit the scale for scope and broaden the view of this research. All predefined models/scales were rated on 5-point Likert scale, with higher numerical values indicating greater satisfaction.
Confirmatory Factor Analysis
The pooled CFA is more reliable than other versions and the most up-to-date approach. The AMOS 24 is used to check the relationship among variables ( Afthanorhan et al., 2014 ; Chong et al., 2014 ).
The results of Table 3 declare the structural fitness of the model by meeting all criterion requirements. The reliability values or factor loading of individual items are presented in Figure 2 . The findings of Table 4 have also covered the composite reliability of a wide scale. The composite reliability is indicated by the reliability of the measurement scales while reporting reliability ( Netemeyer et al., 2003 ).
Pooled CFA model fitness tests.
Pooled confirmatory factor analysis.
Factor loading of items.
Assessment of Discriminant Validity
Discriminant validity was measured using HTMT analysis by considering two determinants, i.e., supposed to be related or unrelated. The value of cut-off criteria for strict discriminant validity was 0.850, and for liberal discriminant validity it was 0.900 ( Henseler et al., 2015 ), obtained by employing discriminant validity. The following discriminant validity criteria have provided the results of Table 5 .
HTMT analysis.
Path Analysis in Structural Equation Modeling
In this study, structural equation modeling was used to determine the proposed relationships. Exogenous variables were included in this analysis to allow for the study of endogenous variables using AMOS 24. Here, we can see whether the independent and dependent variables are linearly related to each other. The analytical observations and their mean values are tabulated and linked with the collected information. The results of Table 6 declare the structural fitness of the model by meeting all criterion requirements.
SEM, model fitness tests.
Figure 3 shows the direct effects of the independent variables on the dependent variable. In this figure, the mediator variable is missing from this path analysis diagram to capture the direct correlation of the independent variable on the dependent variable.
Direct effects of path analysis.
Table 7 shows that H 1 , H 3 , and H 5 are statistically significant, and their P-value is less than 0.05, which shows the 95% confidence interval. The structural equation modeling with the path analysis is presented in Figure 4 . The path analysis declared the nature of variables, i.e., two variables are independent: one is the mediator and the other one is dependent.
Results of indirect effects.
Indirect direct effects of path analysis.
The findings of Table 8 indicate that both hypotheses are statistically significant, but the observed mediation values for these hypotheses differ. H 2 is statistically significant but has a full mediation effect, whereas H 4 is statistically significant and has a partial mediation effect.
*** = Significance level at 1%.** = Significance level at 5%.
Hypothetical Results
The results of the hypothesis are shown in Table 9 in a more detailed and comprehensive manner. To calculate the standard error with T and P-values and the significance of the path coefficient, bootstrapping (1,000 subsamples) was used, which provided direct evidence of the hypotheses being accepted or rejected. The structural model analysis results show the path coefficients and their significance levels, as presented in Table 9 . The findings confirmed that all five relationships were significant, and it can be concluded that H 1 , H 2 , H 3 , H 4 , and H 5 were supported.
Hypothesis results.
According to Sisodiya and Sharma (2018) , the marketing mix has a significant influence on the buying behavior of consumers. In this study, the main principle in packaging is to “reach a greater height of opportunity.” It is often regarded as a critical component of purchase decision making, and has often been shown to be a way of building market awareness and connecting with consumers outside the product itself and across several channels ( Rambabu and Porika, 2020 ; Sadiq W. et al., 2020 ). Packaging performs multidimensional functions. It can not only offer knowledge about products and business entities, but it is also a technique for communicating with consumers and safeguarding product quality ( Silayoi and Speece, 2007 ). Pricing can be considered one of the most vital and essential elements that can influence consumer buying behavior or the buyer decision process ( Dhurup et al., 2014 ; Sadiq W. et al., 2020 ).
According to Kotler et al. (2012) , customer satisfaction “is the extent to which a product’s perceived performance matches the buyer’s expectations.” Aslam et al. (2018) stated that price has a positive and significant correlation with customer satisfaction. Furthermore, they believed that the success of the sector was based on price fairness and customer satisfaction. Previous studies have also discussed this phenomenon in connection with other geographical locations. The price factor is more relatable to consumer buying behavior than product packaging ( Jabarzare and Rasti-Barzoki, 2020 ; Huo et al., 2021 ). Product pricing has a greater influence than product packaging on the buyers’ decision processes ( Pratama and Suprapto, 2017 ; Abdullah et al., 2021 ). Innovation in product packaging also has a significant relationship with the consumer; however, if any organization wants to follow a strategy that is relevant to its product packaging, then there are several strategies for this kind of plan of action. Most consumers desire a range of product choices when purchasing, in terms of packaging. Thus, the marketer should place a premium on creative and exclusive packaging that is distinctive in terms of scale, instruction, convenience, product design, and form when compared to rivals in market segmentation ( Rundh, 2009 ; Bollen and Pearl, 2013 ). Product packaging serves as an excellent networking medium for target customers, eventually increasing their knowledge levels. Packaging must convey pertinent details about the product and brand, including ingredient composition, intent, and consistency. In addition, packaging should provide all of this material in regional languages to demonstrate respect for consumers. Efficient packaging is critical not only for storing and protecting goods but also for generating interest in and action toward buying the commodity. Currently, eco-friendly packaging is essential. Thus, advertisers should prioritize this factor and employ best practices to the maximum degree possible, including eco-friendly recyclable packaging ( Deliza and MacFie, 2001 ; Abdullah et al., 2021 ).
Conclusion and Recommendations
The study results clearly show that both product pricing and packaging have a statistically significant relationship with the buyer’s decision process. At the same time, the introduction of satisfaction leads to the observation of full mediation in the case of product pricing and partial mediation in product packaging. Despite knowing that both the variables have a statistically significant relationship with the consumer buying behavior, it is essential to understand the managerial implications. Suppose, we would like to report and recommend these findings to different organizations looking to cut their operational costs in any possible way without compromising product quality, we suggest in such cases that they focus on pricing strategies for a better consumer response. A focus on the product packaging design process, packaging material, or the information available on product packaging positively influences consumer buying behavior. However, its effect is lower than product pricing. Therefore, it is recommended for managers that if they want to connect with their target customers more efficiently and effectively, they should focus on both product pricing and packaging options. However, if they can afford only one option from the product’s operational cost perspective, they must focus on product pricing strategies.
In future studies, it must be kept in mind that these findings pertain directly to the individuals listed as respondents. To make it more accurate, other demographic, psychographic, and geographic samples should be used. It is likely that when data are thus obtained, the findings will differ. To ensure more lasting and repeatable corporate outcomes, several studies are required to obtain results that are more accurate and reliable.
Data Availability Statement
Author contributions.
HZ, XY, and ZL contributed to conception and design of the study. HZ organized the database, performed the statistical analysis, and wrote the first draft of the manuscript. XY, ZL, and QY wrote sections of the manuscript. All authors contributed to manuscript revision, read, and approved the submitted version.
Conflict of Interest
The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Publisher’s Note
All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.
Abbreviations
This work was funded by the National Natural Science Foundation of China (52065010), Open Fund of Key Laboratory of Advanced Manufacturing Technology, Ministry of Education (GZUAMT2021KF[07] and GZUAMT2021KF[08]), Natural Science Research Project supported by the Education Department of Guizhou Province [Grant Nos. (2018)152 and (2017)239], Humanities and Social Science Research Project of Guizhou Provincial Department of Education (Grant No. 2018qn46), and the Guiyang University Teaching Research Project (Grant No. JT2019520206).
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Pricing and the Psychology of Consumption
- John T. Gourville
- Dilip Soman
The way you set prices doesn’t just influence demand. It also guides the way buyers use your product or service—and that can have a lasting impact on customer relationships.
The Idea in Brief
Why should you care if your customers actually use your products? Isn’t it enough that they buy them? Not if you want repeat business.
Consider this counterintuitive impact of price on customer loyalty: When your customers are aware of your product’s cost, they’ll likely use the product—to feel they’ve gotten their money’s worth. And the more they use it, the more likely they’ll buy it again.
For example, suppose that Mary and Bill join a health club. Bill pays $600 on enrolling; Mary selects the $50-per-month plan. Who’s more likely to renew their membership? Mary. Every month, she’s reminded of the cost—so she works out more, to get her money’s worth. And members who frequently work out tend to renew.
But to stimulate initial demand, most companies mask their prices, through advance purchases, seasonal memberships, annual subscriptions, etc. Demand-centered pricing has merit—but executives who use it exclusively risk trading long-term customer retention for short-term sales.
The Idea in Practice
Here’s how pricing and consumption work:
- Customers who use paid-for products tend to buy them again. Consumption matters to any business relying on customer satisfaction to generate positive word-of-mouth and repeat sales. Customers can’t repurchase or praise products they never consume.
This is especially important for businesses selling subscriptions or memberships—where long-term profitability hinges on retention, because acquiring customers is so expensive. But keeping them is tough. Most magazines’ renewal rates are 60% or less.
- People tend to consume products if they’re aware of their price. Why? The sunk-cost effect: People abhor wasting non-recoverable investments. For example, two weeks after paying $300 to join a tennis club, a man develops painful tennis elbow—but keeps playing.
- Customers’ perceptions of price determine their likelihood of consuming paid-for products. When people pay with credit cards, they’re less likely to remember the cost—or consume the product. At one theater, the no-show rate for credit-card customers was 10 times that for cash customers.
- Price bundling masks an individual product’s cost, reducing the likelihood of its consumption. Season tickets “hide” each ticket’s cost, unintentionally encouraging customers to view their tickets as free. With little sunk-cost pressure, people don’t use the tickets—reducing their likelihood of buying next season.
To augment demand-centered pricing with consumption-focused tactics:
- Practice yield management. A theater manager can expect more no-shows if the proportion of season ticket holders is high. She could better manage costs by staffing according to expected actual , rather than paid , demand—or boost revenues by overselling events for which she expects many no-shows.
- Stagger payments to smooth consumption. By staggering membership payments to spread use of their facilities over the year, health clubs could prevent overcrowding—increasing customer satisfaction.
- Psychologically link payments to benefits. By itemizing individual services’ costs within a bundled fee, HMOs may prompt patients to consume paid-for benefits. This promotes preventive care, reducing HMOs’ costs.
Ask any executive how pricing policies influence the demand for a product or service, and you’ll get a confident, well-reasoned reply. Ask that same executive how pricing policies affect consumption—the extent to which customers use products or services that they’ve paid for—and you’ll get a muted response at best. We find that managers rarely, if ever, think about consumption when they set prices—and that be a costly oversight.
Consider this example. Two friends, Mary and Bill, join the local health club and commit to one-year memberships. Bill decides on an annual payment plan—$600 at the time he signs up. Mary decides on a monthly payment plan—$50 a month. Who is more likely to work out on a regular basis? And who is more likely to renew the membership the following year?
Almost any theory of rational choice would say they are equally likely. After all, they’re paying the same amount for the same benefits. But our research shows that Mary is much more likely to exercise at the club than her friend. Bill will feel the need to get his money’s worth early in his membership, but that drive will lessen as the pain of his $600 payment fades into the past. Mary, on the other hand, will be steadily reminded of the cost of her membership because she makes payments every month. She will feel the need to get her money’s worth throughout the year and will work out more regularly. Those regular workouts will lead to an extremely important result from the health club’s point of view: Mary will be far more likely to renew her membership when the year is over.
For many executives, the idea that they should draw consumers’ attention to the price that was paid for a product or service is counterintuitive. Companies have long sought to mask the costs of their goods and services in order to boost sales. And rightly so—if a company fails to make the initial sale, it won’t have to worry about consumption. To promote sales, health club managers encourage members to get the payment out of the way early; HMOs encourage automatic payroll deductions; and cruise lines bundle small, specific costs into a single, all-inclusive fee.
However, executives may be discouraging consumption when they apply those pricing practices. People are more likely to consume a product when they are aware of its cost—when they feel “out of pocket.” But common pricing practices such as advance sales, season tickets, and price bundling all serve to mask how much a buyer has spent on a given product, decreasing the likelihood that the buyer will actually use it. And a customer who doesn’t use a product is unlikely to buy that product again. Executives who employ those pricing tactics without considering their impact on consumption may be trading off long-term customer retention for short-term increases in sales.
The Psychology of Consumption
Let’s look more closely at why consumption is important and how pricing affects consumption.
Higher consumption means higher sales.
One of the first steps in building long-term relationships with customers, we believe, is to get them to consume products they’ve already purchased. Research has repeatedly shown that the extent to which customers use paid-for products in, say, one year determines whether they will repeat the purchase the next year. One field study, for instance, found that health club members who worked out four times a week were much more likely to renew their memberships than those who worked out just once a week. According to another study, customers who regularly used an enhanced cable television service in one year were more likely to renew their subscriptions in the next year than those who used the service only occasionally. 1
The extent to which customers use the products they’ve paid for determines whether they will repeat the purchase.
Consumption is important to the bottom line in many ways. In businesses that sell subscriptions or memberships—like Time Warner, the YMCA, or the Metropolitan Opera—customer retention is vital. But keeping customers is tough: Most magazines experience renewal rates of 60% or less, and health clubs retain just 50% of their members every year. As competitive pressures intensify and the cost of customer acquisition rises, a key to long-term profitability is making sure that customers actually use the products and services they buy.
Consumption also helps establish switching costs. In the software business, for example, companies often make more money selling upgrades than selling the initial application. Once customers start using an application, they have to either buy upgrades or make the painful transition to another system. Companies whose software is purchased but never used—shelfware, as it’s disparagingly called—miss the opportunity to lock customers in for the long term.
Consumption is no less important for businesses that rely on a two-part revenue stream. For movie theaters, sports arenas, and concert halls, ticket sales are just one source of revenue; parking, food and drink, and souvenir sales are a profitable second source. Team Marketing Report estimated that the cost for a family of four to attend a major league baseball game in 2000 was $121.36. Only half of that sum was used to buy tickets; the other half was spent on beer, soda, hot dogs, programs, baseball caps, and the like. Clearly, if ticket holders don’t attend events, these high-margin secondary sales are lost.
Still other organizations believe that their core mission includes encouraging certain kinds of consumption. HMOs, for instance, know that their clients’ overall health will improve—and their own costs will be contained—if patients can be persuaded to get regular immunizations and periodic checkups. But they have limited success making this happen. By one estimate, 15% of insured children do not get all the immunizations they need, 30% of insured at-risk women fail to get mammograms within any two-year window, and 50% of insured men over 50 fail to have physical exams within any three-year period.
Finally, consumption is important to any business that relies on satisfaction to generate repeat sales and positive word-of-mouth. For products as diverse as wine, books, and PDAs, customers won’t purchase again or evangelize about products if they don’t use them in the first place. Indeed, it’s difficult to think of any business in which consumption does not make a difference.
Costs drive consumption.
People are more likely to consume a product if they’re aware of its cost. This is known as the sunk-cost effect: Consumers feel compelled to use products they’ve paid for to avoid feeling that they’ve wasted their money. It’s well documented that consumers routinely consider sunk costs when deciding future courses of action. In one example made famous by Richard Thaler, a behavioral economist at the University of Chicago, a man joins a tennis club and pays a $300 membership fee for the year. After just two weeks of playing, he develops an acute case of tennis elbow. Despite being in pain, the man continues to play, saying: “I don’t want to waste the $300.”
In a similar vein, Hal Arkes, a psychologist at Ohio University, asked 61 college students to assume that, by mistake, they’d purchased tickets for a $50 and a $100 ski trip for the same weekend. The students were informed they’d have much more fun on the $50 trip. They were then told they had to choose between the two trips and let the other ticket go to waste. Amazingly, more than half the students reported that they would go on the less enjoyable $100 trip. For those students, the larger sunk cost mattered more than the greater enjoyment they’d get out of the less expensive trip.
Pricing drives perceptions of cost.
Our research also suggests that consumption is driven not so much by the actual cost of a paid-for product as by its perceived cost. This perception is influenced greatly by the manner in which the product is priced. Some pricing policies highlight the perceived cost of a paid-for product while other pricing policies mask the cost.
Consider something as simple as the method of payment. A $10 cash transaction feels different than a $100 cash transaction. Counting out currency and receiving change make a buyer very aware of the magnitude of a transaction. But a $10 credit card transaction is, in important ways, indistinguishable from one for $100—both involve merely signing a slip of paper.
Pricing tactics that mask rather than highlight prices reduce pressure on buyers to use the product in order to get their money’s worth.
Not surprisingly, people are better able to remember the cost of products if they pay with cash than if they pay with credit cards. In addition, they feel more pressure to consume products if they paid with cash than if they paid with a credit card. In one theater company we studied, the no-show rate for credit card customers was ten times higher than the no-show rate for cash customers. Other pricing tactics that mask rather than highlight prices—like season tickets, advance purchases, and subscriptions—also reduce the pressure to consume the product in order to get the money’s worth.
Putting the Pieces Together
Because pricing has such a powerful effect on consumption, managers must make careful decisions about when and how to charge for goods and services.
Companies often have great discretion about when to bill for goods and services. Some companies demand payment at or near the time the product is to be consumed—this is true when you buy a Big Mac or a movie ticket. Other businesses require payment far in advance of consumption. Concert promoters and sports teams have long operated on this principle. Health clubs and country clubs also charge large, up-front initiation fees. Finally, some businesses allow customers to pay long after a product is purchased. Increasingly, automakers and consumer electronics companies advertise “buy now, pay later” schemes.
Companies make these timing decisions based on either financial considerations (payment sooner is better than later) or demand considerations (“buy now, pay later” increases customer demand). But that may be shortsighted. Payments that occur at or near the time of consumption increase attention to a product’s cost, boosting the likelihood of its consumption. By contrast, payments made either long before or after the actual purchase reduce attention to a product’s cost and decrease the likelihood that it will be used.
We conducted a survey at the Chicago Science Museum in 1997 to determine how timing affects consumption. We presented the following hypothetical scenario to 80 visitors: “Six months ago, you saw an ad for a theater event and called to reserve a $50 ticket. Yesterday, you went to the box office and paid $50 in cash for your ticket, which is nonrefundable. This morning, you woke up with the flu. The event is tonight. Will you go to the theater or stay home?” Almost 60% of the people reported that they would go to the theater. They were not willing to let the $50 they had just paid for the ticket go to waste.
We then presented a slightly different scenario to another group of 80 visitors. This group was told that they had paid for the ticket six months prior to the event, rather than the day before. This time, less than 30% of the people surveyed told us that they would go to the theater. The only difference between the two scenarios was the timing of the payment. Yet that difference was sufficient to reduce the predicted consumption by 50%. The results of this as well as several similar surveys show that the immediacy of payment can be critical for the consumption of a paid-for product.
In fact, consumption closely tracks the timing of payments by customers. We analyzed data on the payment and attendance records of 200 members of a prestigious Colorado-based health club. All the members were contractually committed to one-year memberships that cost them $600 each. The club’s pricing policies allowed members to choose from among four payment plans: annual, semiannual, quarterly, and monthly.
Members who made a single annual payment used the club most frequently in the months immediately following payment, reflecting a strong sunk-cost effect. But as time passed, the sunk-cost effect dissipated. By the final months, individuals seemed to be treating their memberships as if they were free and worked out at a rate that was only a quarter of what it had been in the first few months. The same pattern held for members who had paid on a semiannual or quarterly basis: Attendance was highest immediately following payment, only to decline steadily until the next payment. This resulted in a sawtooth pattern of usage, spiking in the first and seventh months for semiannual payment members and every three months for quarterly members. By contrast, the usage pattern of members who paid on a monthly basis was smoother. Since they were reminded of the cost of their memberships every month, they used the facility at a steady rate (see the exhibit “Consumption Follows the Timing of Payments). The timing of payments is important because it influences the club’s retention of customers. Members who paid on a monthly basis used the gym most consistently, making this pricing scheme the most likely to generate membership renewals.
Consumption Follows the Timing of Payments Our analysis of one health club’s records showed that consumption closely follows the timing of payments. Whether members made annual, semiannual, or quarterly payments, club use was the highest in the months immediately following payment and declined steadily until the next payment. Members who paid on a monthly basis used the gym most consistently, making this pricing scheme the most likely to generate membership renewals.
Price Bundling.
Organizations often bundle prices to increase the demand for products and services. This practice does increase short-term demand—but it may also reduce consumption.
Several studies demonstrate this tendency. We conducted a survey in a Colorado ski town, for example, presenting two slightly different scenarios to two groups of 50 skiers. The first group was told: “It’s early spring in Colorado, and you’re on a four-day ski vacation. The day you arrived, you purchased four one-day ski tickets for $40 each. It’s now the morning of the last day. You’ve had three excellent days of skiing, but rain hit the area last night, making a mess of the slopes. A friend suggests that, rather than skiing, you take it easy and leave early to beat the traffic home.” We presented the same scenario to the other group with one important difference. We told members of the second group that, instead of purchasing four one-day tickets for $40 apiece, they had each bought a four-day ski pass for $160.
We asked members of both groups to report their likelihood of skiing on a scale of one to ten, where one indicated “definitely would not ski” and ten indicated “definitely would ski.” The average response of the first group was 7.0, indicating a high likelihood of skiing on the fourth day. The average response of the second group was 3.3, indicating a low likelihood of skiing.
The two scenarios were financially identical, so why the difference? In this study and in several others, we found that price bundling influenced consumption considerably. Quite simply, it is far easier to identify and account for the cost of an individual product in an unbundled transaction than within a bundled transaction. The one-to-one relationship between price and benefits in an unbundled transaction makes the cost of that item obvious, creating a strong sunk-cost effect and a high likelihood of consumption.
Nowhere is the impact of price bundling on consumption more obvious than in the case of season tickets. The purchaser pays one bundled sum for a collection of individual events, making it difficult to allocate costs to any one performance or game. This reduces the likelihood of its usage. We tested this out by analyzing ticket purchase and attendance data at a Shakespearean summer festival. The festival ran from June through August 1997 and involved the production of four plays. Some ticket holders had purchased tickets to a single play, some to two or three of the plays, and others to all four plays. What we found was that the no-show rate for people who had bought tickets to a single play was 0.6%, indicating that almost all ticket holders showed up. But the no-show rate for those purchasing tickets to two plays was 3.5%; for three plays, 13.1%; and for four plays, 21.5%. As the bundling of tickets increased from one to four plays, the likelihood of a person not showing up for one of the plays rose 35-fold.
One could argue that the higher no-show rate for those who had bought tickets to more than one play was due to other factors: boredom (ticket holders got sick of Shakespeare) or perhaps dissatisfaction (after the first play, ticket holders realized the quality of the performances was not very good). However, when we looked at only the first play each person had bought tickets for, the pattern remained the same. Compared with the no-show rate of 0.6% for the single-play ticket holders, the no-show rate at the first play for those patrons who had purchased tickets to two, three, and four plays was 2.8%, 7.8%, and 15.8%, respectively. So, the bundling of tickets had much the same effect as the advance selling of tickets in our earlier examples: It hid the cost of each ticket. Unable to link the costs and benefits of any given play, patrons who purchased tickets to multiple plays increasingly treated their tickets as if they were free. With little sunk-cost pressure, many of these customers did not use tickets they had previously paid for, reducing their likelihood of repeating their ticket purchases for the following season.
Linking Price and Consumption
We’re not suggesting that executives throw out their current, demand-centered pricing policies and focus exclusively on encouraging consumption through pricing decisions. It wouldn’t be realistic, and it wouldn’t be smart. Many companies lack the ability (or the desire) to restructure their pricing practices. In some cases, industry norms or consumer expectations dictate the use of advance selling or price bundling. However, we believe that executives should take consumption into account when they set prices. Here are some suggestions on how to do that.
Practice yield management.
Managers can run operations more efficiently by anticipating actual demand given the naturally occurring mix of bundled versus unbundled purchases or the ratio of advance to current purchases. Consider the case of a theater manager. She might forecast a no-show rate of 20% if the proportion of season ticket holders is high but a no-show rate of only 5% if the proportion of season ticket holders is low. Armed with this knowledge, she could better manage costs by staffing according to actual, as opposed to paid, demand. Alternatively, she could increase revenues by overselling some events and not others. In much the same way that an airline oversells a flight in proportion to the expected rate of no-shows, a theater manager could oversell performances where the no-show rate is expected to be high.
Stagger payments to smooth consumption.
A second course of action, slightly more proactive but still within current pricing practices, would be to stagger billing cycles so that demand is smoothed over time. This is another form of yield management. Health clubs, for example, know that most of their new members sign up at specific times of the year, most commonly in January. But many still offer discounts to members who pay in full at the start of the calendar year. The net effect is that peak usage occurs in January, February, and March, which reduces customer satisfaction because of the strain it places on the facilities. Health clubs could stagger billing cycles to offset that trend. For instance, a health club could offer ten- or 14-month contracts, perhaps on a discounted basis, to break the cycle of January renewals. Over time, this change would help smooth demand and increase customer satisfaction.
Time payments to maximize consumption.
Some executives can do more than react to demand: They can use their pricing policies to actively encourage consumption. Perhaps the most dramatic way to do this is to link payments more closely to benefits. Consider Boston Red Sox season ticket holders, who are asked to pay for tickets five months before the season begins. To promote attendance over the course of the season, Red Sox executives could spread out that one large payment. They could, say, bill patrons in four installments. Customers might even prefer this approach because smaller installments are financially more manageable. Similarly, the health club we studied could increase usage and, thus customer retention, by promoting annual memberships with monthly, rather than annual, payments.
Psychologically link payments to benefits.
Some companies view price bundling as a necessary tool to promote initial sales: If they eliminate price bundling, they could eliminate the sale. However, organizations could psychologically unbundle those offerings to promote consumption. One way of doing this would be to highlight the prices of individual items in the bundle after the payment has been made. For instance, travel companies could itemize the approximate cost of offerings in vacation packages. Some all-inclusive cruise ships already make guests pay for drinks, meals, and entertainment with beads to highlight the fact that nothing is really free. Restaurants could offer the same dishes both à la carte and as part of a fixed-price dinner, so that the cost of each item in the latter becomes clear. In the same way, HMOs could promote preventive care by itemizing the cost of individual services within the bundled fee, making the cost of those services more apparent to the customer. This would increase enrollees’ likelihood of consuming the benefits (getting checkups, immunizations, and so on) they’ve already paid for.
Reduce consumption.
Not all organizations want to encourage consumption all the time. Consider the manager of a truly scarce resource, such as a private golf course on a beautiful Sunday morning in June. Managing peak demand is the main concern. The current alternatives are to limit the number of customers admitted, as when a country club caps membership, or to accept all customers and run the risk of dissatisfaction when the facility is at capacity. The first solution limits revenues; the second increases customer frustration. By managing when and how payments are made, executives can maximize the total number of customers who pay for their services and, at the same time, limit peak demand. If the golf course manager charges annual membership fees in January or February, long before the golf season has begun, a member’s pain of payment will fade by the time the peak summer months come, reducing the need to get his money’s worth. That should allow the club to maximize its membership base without turning away members wanting to play during the peak period. By contrast, if the club bills its members just prior to the peak season, say in May or June, it will be inadvertently promoting demand at its busiest time. Similarly, when vacationers at a ski resort buy a week’s worth of lift tickets, the resort has the option of providing them with seven daily tickets or a bundled pass. The former will encourage consumption every day (“I’m not going to let today’s ticket go to waste!”), while the latter will mask the cost of skiing on any given day and reduce crowds on the slopes. • • •
Managers spend a lot of time thinking about how to get customers to buy their products and services. But that’s just half the battle. If organizations wish to build long-term relationships with customers, they must make sure their customers actually use their products. A first step is pricing.
1. Stefano DellaVigna and Ulrike Malmendier, “Self-Control in the Market: Evidence from the Health Club Industry,” Working Paper (Harvard University, 2001). Katherine N. Lemon, Tiffany Barnett White, and Russell S. Winer, “Dynamic Customer Relationship Management: Incorporating Future Considerations into the Service Retention Decision,” Journal of Marketing, January 2002.
- JG John T. Gourville is the Albert J. Weatherhead Jr. Professor of Business Administration at Harvard Business School.
- DS Dilip Soman is an associate professor at the School of Business and Management at Hong Kong University of Science and Technology.
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Price Effects on Consumer Behavior: a Status Report
Jerry F. Conover (1984) ,"Price Effects on Consumer Behavior: a Status Report", in NA - Advances in Consumer Research Volume 11, eds. Thomas C. Kinnear, Provo, UT : Association for Consumer Research, Pages: 633-635.
Advances in Consumer Research Volume 11 , 1984 Pages 633-635
PRICE EFFECTS ON CONSUMER BEHAVIOR: A STATUS REPORT
Jerry F. Conover , University of Arizona
INTRODUCTION
The role of price in consumer behavior is certainly both influential and complex. As the four papers in this session demonstrate, this role can be explored in many ways, each leading to different insights about how price influences consumer decisions. The review that follows highlights some of the key issues and problems suggested by these papers, offering ideas for the further development of research and theory on consumer response to price.
"ENTRY/EXIT DEMAND ANALYSIS"
Dickson and Sawyer's (1984) exposition of "Entry/Exit Demand Analysis" presents a well documented review of previous attempts to assess a managerially important relationship: the response of consumer demand to various price levels for a product. As the authors point out, there are more troublesome limitations to those earlier approaches to estimating demand curves, and entry/exit demand analysis represents a technique for overcoming those difficulties.
Among its advantages, Dickson and Sawyer note, is the technique's versatility of administration. It can be administered in person, in group settings, or by mail, which makes the approach valuable to pricing decision makers in a variety of situations. Moreover, the technique elicits information about all the competing brands, and thus gives managers more useful data on which to base price-setting strategies than do demand-estivation techniques that refer to generic product categories.
On the other hand, entry/exit demand analysis does have some inherent drawbacks that limit its utility. Perhaps most significant is the requirement that subjects be familiar with the brands being considered. In order to give meaningful answers to such questions as, "At what lower price would you buy Brand A?" the consumer subject must have some knowledge of Brand A's characteristics. Thus, the technique would be of limited value for estimating demand for new or otherwise unfamiliar products. A related problem is the laboriousness of collecting adequate data when the choice set is large (as is common with many consumer packaged goods). This problem might be overcome, however, with appropriate sampling of brand subsets to which each subject could respond, pooling results from different subjects together. Even so, the problem of unfamiliarity with some brands could confound efforts to obtain a balanced set of responses for all the brands.
In addition to these concerns with administering the measure, certain demand artifacts might complicate interpretation of its results. The whole thrust of the questioning focuses the subject's attention on price, and thus may lead to small price differences causing larger responses than they would in an actual marketplace situation. This, however, is an empirical question that could be addressed by comparing demand curves obtained through entry/exit analysis with corresponding curves from field experiments manipulating prices. (Such field experiments would also serve the valuable purpose of validating the general usefulness of this technique.) One other possible bias in subjects' responses might result from the use of odd-prices as the starting points for the various brands' prices (as was the case in the example provided in this session). Although those prices were selected to represent actual market conditions. they may lead subjects to specify entry or exit prices in terms of odd-prices, whereas in a real choice situation, they might enter or exit the brand's market before an odd-price level is reached. Thus, the precision with which entry/exit analysis identifies break points may be compromised. Despite these potential disadvantages, entry/exit analysis represents an important step forward in the development of a practical and meaningful basis for estimating price-response functions.
"PRICE-QUALITY RELATIONSHIPS"
In his analysis of market response in situations where price is used as a cue to quality, Shugan (1984) presents a theoretically sound logical development of factors influencing price-quality relationships. Moreover, this conceptualization of market response as influenced by different segments of consumers, each with different perceptions of and preferences for product characteristics, leads to a managerially useful means for determining the optimum levels of price and quality to set for a product.
In order to apply Shugan's model to a real market situation, one would need data about the market's response coefficients for both price (i.e., "b" in Shugan's equations) and quality ("c"). The coefficient of sensitivity to changes in price could be determined from data collected in actual field manipulations of prices, or from experimental simulations, such as Dickson and Sawyer's (1984) approach. The quality-response coefficient, however, would be somewhat more difficult to determine empirically. Manipulations of product quality would, in many cases, be rather impractical, requiring changes in production processes for small-scale testing. levels of quality might be described verbally for some product attributes, but for others that are difficult to describe explicitly (eg., such subjective characteristics as "styling" or "luxuriousness"), it would be hard to experimentally test quality-response via simulated choice conditions. Thus, the practical applicability of this model may be limited to products characterized by relatively simple, easy-to-describe features.
Such questions of application notwithstanding, Shugan's formulation does have considerable theoretical appeal. It represents a straightforward. yet elegant account of the determinants of price-quality relationship in consumer purchases. From this initial formulation, further refinements of the model might be in order to adapt it to conditions typical of the real world. For instance, in its present form, the model assumes that consumers may be sensitive to either price or to quality, but not to both. Realistically, however, many consumers may value both low price and high quality, and thus may have to make tradeoffs in their choices. How might the model be extended to account for such consumers?
Another type of consumer who is currently unaccounted for in the model is the person who simultaneously seeks more than one quality from a product. Such a consumer is likely typical for a large number of products, and the model could probably be adapted to handle such consumers' existence.
Given adaptations such as these, Shugan's model of market response to price and quality may well provide managerially useful insight into product demand, as well as offering a conceptually appealing account of why price-quality relationships occur.
"PRICE AS A 'GIVE' COMPONENT"
Ahtola-(1984) presents a view of price that is rather different from prior conceptualizations. In this "exchange-theoretic" model, price is seen as a common (and perhaps the major) element on the "give" side of a give/ get equation that a buyer faces. That is, one gives up a certain price in return for a bundle of attributes that constitute the "get" package of the transaction. If one adopts this point of view, then Ahtola is correct in stating that the overall value of the "get" package should be measured without regard to a specific price, but rather with respect to the value of "not getting" it.
The propositions of Ahtola's model present some interesting research questions concerning situations in which the predicted outcome is not clear. For example, two assumptions are stated in Ahtola's paper:
1. If two attributes at a low level of the attribute hierarchy are seen as interacting, then they are not evaluated separately by the consumer; instead, assessment of their value occurs at the superordinate level. 2. On the other hand, if separate prices are known for each attribute (as might be the case for automobile options or pizza toppings), the consumer will evaluate each attribute separately.
It is easy to imagine a situation where these two propositions conflict, when prices are known for interactive lower-level attributes (for example, when the value of getting anchovies on one's pizza depends on whether one also orders jalapeno peppers on it, and the prices for both toppings are known). What, one wonders, would happen in the evaluation process then? Would the value of each attribute be determined separately, or would a summary evaluation of the overall attribute-six occur?
In addition to suggesting research questions based on the present model, this work suggests extensions of the model. As it now stands, Ahtola's model describes a consumer evaluating a given choice option; that is, whether to buy d given brand or not. Further development of the model might profitably address the question of choice among a set of brands. That is, if a consumer declines one alternative to "get" another, how much will he be willing to "give" up? Does the evaluation of one brand depend on what must be "given up" by not selecting another? And in what way? Such elaborations of the model are encouraged.
"CONSUMER RESPONSE TO PRICE"
Zeithaml's (1984) review of the literature on psychological response to price information has long been needed. is research area is characterized by a hodge-podge of concepts and measures, many of which overlap each other, and the boundaries of which are often indistinct. Zeithaml's call for refinement of our concepts and measures is very well taken. Without the sort of work she encourages, our understanding of consumer response to price is bound to progress very slowly.
This is the first published work to systematically explore the past constructs and measures of price response, and to tie them together through the use of a common conceptual schema. Although the review of this literature is more descriptive than critical, it does help organize this body of work so that future research can better select appropriate measures with an eye toward establishing some continuity of usage of terms and operationalizations. If future work in this area does achieve some consistency in its measures, then the literature will become more amenable to techniques for assessing the general conclusions to be drawn from the entire body of research results (eg., meta-analytic techniques; see Class, McGaw & Smith 1981, and Reilly & Conover 1983 for examples).
The Jacoby and Olson (1977) framework for studying psychological response to price is an appropriate basis for organizing this literature. The task of classifying a given concept or measure in.to the categories of this schema, however, is not always straightforward. In particular, the stages of forming perceptions of prices, and forming attitudes toward prices are often confusingly similar. For example, when such concepts as "price acceptability" or "perceived value for the money" are classified as attitudinal responses, they seem to share much in common with concepts such as "perceived savings," which is described by Zeithaml as perceptual response. In both cases, the consumer is making judgments about a given price relative to other prices (i.e., savings relative to prior or usual prices; value-for-money implies more standard of comparison).
Another classification of variables as "attitude toward P-price" also seems somewhat dubious. The consumer's "difficulty in. evaluating prices" (Nystrom, Tamsons & Thams 1975) and "confidence in price knowledge" (e.g., Zeithaml 198.2) seem to be not so much measures of attitude toward price as they are self-reports of the consumer's processing abilities. That is, they are not really responses to prices, per se, but rather to the task of processing price information. Perhaps these concepts should not be classified in. the Jacoby and Olson (1977) schema along with all the others reviewed by Zeithaml.
The concept of "price image," referring to the perceived level of prices in ore store relative to other stores, is perhaps another concept that doesn't fit neatly into this overall schema. The majority of concepts reviewed by Zeithaml reflect responses to prices of individual products, whereas "price image" refers to a global assessment based or perceptions of numerous products' prices (or possibly on other sources of information such as store advertisements). In the former case, consumer reactions to prices are caused by discrete items of O-price, whereas "price image" is a response to less distinct stimuli. More work is needed. to establish the parameters influencing consumer assessment of store price images and how those images affect processing of individual product prices within the store.
The "Integration of P-Price with Other Information" classification is one which might be extended to include additional concepts besides the relative salience of price vis-a-vis other attributes. For example, in evaluating a given price at the time of a shopping decision, the consumer must integrate that price information with price knowledge accumulated from prior experience and from other information sources, in order to interpret it effectively. And in making "value for money" judgments, the price must be assessed relative to other product information (e.g., the "get" package, Ahtola, 1984).
The difficulty in placing different price-response concepts neatly into a single schema stems from the lack of such a schema in the original development of those concepts. In. future research, however, a coherent framework for conceptualizing consumer response to price will greatly facilitate progress in this field. One particularly interesting area for such investigation is the topic of how P-price is encoded and stored. For example, it would he useful to know what determines the accuracy of price knowledge, and whether that accuracy is influenced by market conditions, situational factors, or individual differences among consumers. Choosing the appropriate measure for studying price knowledge accuracy depends on just which aspect of it one wishes to explore. The "exact price recall error" measure discussed by Zeithaml (1984) appears to offer a conceptually appealing formula for assessing the error in one's estimate of a product's price-although there may be occasions in which it would he equally useful to study the direction of that error as well as its magnitude. On the other hand, if one is concerned with knowledge of relative prices, the best measure to use is less apparent. Is Zeithaml's earlier work (1982), "price comparison error" was operationalized by counting the differences in rank positions between the correct rankings of brands within a category and the subject's estimated rankings. Such a measure poses difficulties in comparing categories with different numbers of brands, or even comparing subjects within a category if they do not know the relative prices of more brands (and, thus cannot rank some brands without sheer guessing). A measure more amenable to such comparisons, but based on the same sort of task, would involve calculation of the correlation between estimated brand ranks and actual ranks. Or one right consider using a different sort of task, especially if the focus is on knowledge of the relative price of a single brand within its category, not on the relative price of every brand in the category. For such a question, the researcher right ask the subject to estimate on a scale (ranging from "least expensive brand" to "most expensive brand") where a given brand fits in price. As can be seen, even the issue of investigating the accuracy of a consumer's price knowledge is not without its problems when it comes to selecting appropriate measures.
In summary, it is readily apparent that there is much to be learned about the influence of price on consumer behavior. The papers presented in this special topic session represent rather different approaches to studying this important area. As Zeithaml (1484) points out, the benefits to be gained by pooling knowledge from a wide variety of independent studies will be greatly expedited to the extent that we who carry out the research adopt consistent concepts and measures for our work. Through the development of standard price-response concepts and techniques for studying them, and with extensions of prior conceptualizing such as those represented by the papers of this session, advancement of knowledge of consumer price response will surely follow.
Ahtola, Olli T. (1984), "Price as a Give' Component in an Exchange Theoretic Multicomponent Model," Advances in Consumer Research, 11, forthcoming.
Dickson, Peter R. and Alan C. Sawyer (1484), "Entry/Exit Demand Analysis," Advances in Consumer Research, 11, forthcoming.
Class, Gene V., Barry McGaw and Mary Lee Smith (1981), Meta-Analysis in Social Research, Beverly Rills, CA: Sa&e Publications.
Jacoby, Jacob and Jerry C. Olson (1977), "Consumer Response to Price: An Attitudinal, Information-Processing Perspective," in Y. Wind and M. Greenberg, eds., Moving Ahead with Attitude Research, Chicago: American Marketing Association, 73-86.
Nystrom, Harry, Hans Tamsons and Robert Thams (1975), "An Experiment in Price Generalization and Discrimination," Journal of Marketing Research. 7 (May), 177-181.
Reilly, Michael D. and Jerry H. Conover (1984), "Mete-Analysis: Integrating Results from Consumer Research Studies " Advances in Consumer Research, 11, forthcoming.
Shugan, Steven M. (1984), "Price-Quality Relationships, Advances in Consumer Research, 11, forthcoming.
Zeithaml, Valarie A. (1982), "Consumer Response to In-Store Price Information Environments," Journal of Consumer Research, 8 (March), 357-369.
Zeithaml, Valarie A. (1984), "Issues in Conceptualizing, and Measuring Consumer Response to Price," Advances in Consumer Research, 11, forthcoming.
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Jerry F. Conover, University of Arizona
NA - Advances in Consumer Research Volume 11 | 1984
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Effect of Psychological Pricing of Goods on Consumers’ Perception: Shoprite as a Case Study
16 Pages Posted: 22 Mar 2022
Ibukun Iwalewa
University of Ibadan - Faculty of Public Health
Date Written: January 31, 2021
Psychological pricing has been used by marketers over the years to manipulate buying behavior of consumers. Marketers often use psychological policy in pricing products or services. In fact knowledge on the perception of consumers on psychological pricing can help marketers in framing vital marketing policies in terms of marketing communication and distribution. Hence the need to know the perception of consumers on psychological pricing of goods. The way a product price ends has an impact on the market. It is an important pricing policy that has been used by retailers over the years. The fashion seems to be useful considering how consumers respond especially to products with odd price endings or fractional endings. Since the matter is subjective that operates at the cognitive level, it is essential to understand the psychological impact of price ending on consumers, using the theory of perception. Psychological pricing has been used by marketers over the years to manipulate buying behaviour of consumers. Marketers often use psychological policy in pricing their product or service; sometimes unintentionally. Psychological pricing is the way of structuring and presenting prices to stimulate consumers’ emotions and to influence the process in making decision (Pride and Ferrell, 1997). Practice of a pricing policy does not deal with only figures but an effort is made to play on the perception of consumers as well Psychological pricing has been used by marketers over the years to manipulate buying behavior of consumers. Marketers often use psychological policy in pricing products or services. In fact knowledge on the perception of consumers on psychological pricing can help marketers in framing vital marketing policies in terms of marketing communication and distribution. Hence the need to know the perception of consumers on psychological pricing of goods. This study is conducted with an objective of studying the overall consumer perception on psychological pricing of goods. The waya product price ends has an impact on the market. It is an important pricing policy that has been used by retailers over the years. The fashion seems to be useful considering how consumers respond especially to products with odd price endings or fractional endings. Since the matter is subjective that operates at the cognitive level, it is essential to understand the psychological impact of price ending on consumers, using the theory of perception. Psychological pricing has been used by marketers over the years to manipulate buying behaviour of consumers. Marketers often use psychological policy in pricing their product or service; sometimes unintentionally. Psychological pricing is the way of structuring and presenting prices to stimulate consumers’ emotions and to influence the process in making decision (Pride and Ferrell, 1997). Practice of a pricing policy does not deal with only figures but an effort is made to play on the perception of consumers as well. People process numbers differently, and they may never know what is in their minds when they consider prices and how this affects their behavior. From the environment of conventional economic theory it is a notion that markets are efficient and participants are deemed to be rational. However, differences in the behavior of the consumers can be seen and sometimes even illogically when presented with a variety of stimuli. Therefore it is important to appreciate and acknowledge that perception has a larger role to play in customers’ purchasing decisions.
Keywords: Psychological pricing, consumer behaviour; Purchasing power, pricing policy
JEL Classification: M31
Suggested Citation: Suggested Citation
Ibukun Iwalewa (Contact Author)
University of ibadan - faculty of public health ( email ).
University of Ibadan Ibadan, OR Oyo Stase 10001 Nigeria
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It is believed that pricing has a significant effect on the buying behavior of consumers because the higher a product is priced, the fewer units
It is believed that pricing has a significant effect on the buying behavior of consumers because the higher a product is priced, the fewer units
Our research also suggests that consumption is driven not so much by the actual cost of a paid-for product as by its perceived cost. This perception is
Some research papers have been published so far which are devoted to different aspects of bundle pricing. Linde (2009) studied and compared three pricing.
The main purpose of this research is to measure the impact of pricing strategies on consumers' psychology and on their buying behavior accordingly.
Abstract ; The paper shows that the impact of pricing plays a. significant role in the consumer purchase decision. ; Customer's expectations
The relationship between product pricing and product packaging plays an important role in the buying behavior of consumers, whereas customer satisfaction
The review that follows highlights some of the key issues and problems suggested by these papers, offering ideas for the further development of research and
Psychological pricing has been used by marketers over the years to manipulate buying behavior of consumers.
In contrast to past research, the current study focuses on the role of self- control in consumer behaviour when price framing is used. H2: A state of self-
behavior, by research and analysis. 1-3 The questions of the study. 1. Does the consumer think that purchasing the high-priced commodity (prestige pricing)