The Price-Matching Illusion: How Guarantees Trick Your Brain
Psych 🧠 - 357/500
Hello Reader,
This might spill some beans but learning about such stuff is what we do here :)
What is it?
This research paper explores how price-matching guarantees affect consumer perceptions of prices and stores.
These guarantees promise to match a competitor's lower price and are unique compared to typical price promotions which advertise a direct price reduction.
Major findings:
Price-matching guarantees raise perceived market prices: When consumers are unsure about the typical price range of a product, seeing a price-matching guarantee leads them to believe that the average and lowest prices in the market are higher than they actually are.
This leads to products and stores seeming less expensive: As a result of the raised perceived market prices, consumers see the store offering the guarantee, and the product itself, as less expensive, even though the actual price might not be particularly low.
The effect is stronger for higher priced items: When consumers can easily judge a product as inexpensive based on its price alone (e.g., a very low price for a familiar brand), the price-matching guarantee has little effect.
The influence is greater for higher-priced products where consumers are uncertain about the typical price range.
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What do I need to know:
Price-matching guarantees can influence price perception without actual discounts: This strategy can make products and stores seem more appealing by changing the reference point consumers use to evaluate prices, even if the actual price isn't exceptionally low.
Strategic use for high-priced stores: Price-matching guarantees might be more effective for stores with generally higher prices, as they help to reduce the perceived expensiveness of those products.
Transparency about market prices can reduce the effect: Providing consumers with clear information about the typical price range of products can diminish the influence of price-matching guarantees, potentially leading to more informed purchase decisions.
Source:
https://myscp.onlinelibrary.wiley.com/doi/10.1207/s15327663jcp1502_7
Very interesting and practical this insight, thanks for sharing!