Mastering Price Framing: Influencing Consumer Behavior
Mastering Price Framing: Influencing Consumer Behavior
Psychological Pricing (Part 5) : Mastering Price Framing and Influencing Consumer Behavior
In the dynamic marketing realm, comprehending consumer behaviour is pivotal for success. Among the myriad strategies employed by businesses to influence purchasing decisions, psychological pricing stands out for its ability to sway consumer perceptions. Lets look at some of the popular strategies used today,
1. Pennies a Day Strategy:
The pennies-a-day strategy is a pricing technique aimed at lowering the perceived barrier to purchase by breaking down the total cost into smaller, more manageable daily increments. Instead of presenting the price as a single lump sum, marketers frame it in terms of how much it would cost the consumer daily. For example, a product might be advertised as "Less than 50 cents a day!" rather than stating the total monthly cost upfront.
This strategy aims to shift the consumer's focus from the total price to the daily cost, making the purchase seem more affordable and attainable. By framing the price in terms of small, incremental amounts, such as pennies or cents, marketers aim to lower the price hurdle and encourage consumers to consider the purchase in terms of its daily impact on their finances.
For instance, when considering a subscription service priced at $180 per year, a consumer might hesitate about the upfront cost. However, if the same service is presented as "Less than 50 cents a day!", the daily expenditure seems much more reasonable, making the purchase more enticing.
2. The Spare Change Effect:
A psychological phenomenon known as the spare change effect manipulates people's perceptions of smaller amounts of money to larger sums. Prices look more manageable and less intimidating to customers when they are presented in smaller units, like quarters rather than dollars. This small change in presentation lessens the perceived importance of the purchase, which makes it simpler for people to defend their spending and eventually they end up spending much more.
The sense of magnitude is one of the causes of this. A price appears smaller and more insignificant when it is broken down into smaller increments, such as "Just 4 quarters" as opposed to "Only one dollar bill". This gives the overall cost a more reasonable and less intimidating appearance.
Additionally, the spare change effect increases people's propensity to spend less money. Because spare change is seen as less valuable than larger bills, people are likelier to spend it. Marketers take advantage of this tendency by framing prices in terms of smaller unit of currency (e.g. quarters or cents), which makes the purchase feel less like a major financial commitment and more like a minor inconvenience.
Expanding on this concept, consider a coffee subscription service marketed as
"$1 a day!" versus one advertised as "Only $30 a month!". The former presentation highlights the minimal daily expense, leveraging the spare change effect to make the purchase seem more affordable and justifiable. In contrast, the latter presentation focuses on the monthly cost, which may appear more substantial to consumers.
3. Gain Frame vs. Loss Frame:
The way messages are framed has a big impact on how customers behave. The purchase's advantages are highlighted by the gain frame, while the loss frame highlights any potential losses or lost opportunities.
For example, a gain-framed message like "Buy now and enjoy the savings of $0.99!" is more likely to resonate with customers than something like "Don't miss out on this deal". This strategy emphasizes the benefits of the purchase, maximizing the allure of 0.99 endings.
To further illustrate this idea, picture a clothes store giving a $19.99 t-shirt a discount. "Get this stylish t-shirt and save $4.99!" is an example of a gain-framed message that would highlight the savings. By appealing to consumers' desire for benefits and value, this framing raises the possibility that they will make a purchase. Conversely, a loss-framed message like "Hurry, don't miss out on this $4.99 discount!" may not be as effective, as it focuses on potential losses rather than gains.
To summarise, “Use gain frame message to maximise the benefit of 9 ending prices”.