A price is the first thing a client notes when they shop around for items. This helps them make a decision of buying or leaving the item on the shelves. Psychological pricing is one of the strategies used by marketers to attract customers. The psychology of pricing helps position the product in the mind of the clients (Boone & Kurtz, 2013). For instance, customers would be ready and willing to buy a commodity priced as $9,000 as opposed to $10,000. This is despite the fact that it is a difference of about $1,000. In luxury items, customers are more likely to purchase items if there is a small reduction in price like the above as they consider the drop in prices as an incentive to afford the items (Kurtz & Clow, 1998). This decision by the organization to change the price at the end may lead to impulsive buying from the customers.
Prices in the products from the direct mailing products indicate marketers play around with the psychological wellbeing of the customers, as they are ware it has an effect on the decision they make to purchase an item. The necessities that customers buy for usage in the home like bread, milk, breakfast cereals, and vegetables are some items that marketers use psychological pricing to attract clients. For instance, they capitalize on selling items priced at 9 at the end. J.C Penney, which is one of the leading retailers in the country, would rather reduce the price of their products by $0.1. for instance, when other competitors like L.L Bean sell their products like a packet of milk at $25, J.C Penney is ready and willing to offer the same commodity at $.24.99. This registers in the mind of the customers that their products are cheaper when compared to the rest of organizations. The markets are also aware that prices on a product have a way to communicate to the consumers (Boone & Kurtz, 2013). One of the leading retail outlets in the world, Wal-Mart, has used the concept of psychological pricing on most of their products where they end their products with 7 or 4. This helps register in the minds of the customers when they compare the 9 with the 4 or 7 and assume their products are cheaper.
Competition is stiff among the retailers. Other supermarkets have realized the trick Wal-Mart uses to attract and retain their customers which is psychological pricing. They react by reducing their prices (Boone & Kurtz, 2013). This helps equalize the number of customers visiting their premises with those from Wal-Mart. For instance, when milk at Wal-Mart goes for $24.27, it may retail at $24.26 in the next store. For instance, Godiva sells their products like the smallest piece of chocolates at $39.00 while their competitors sell them at $40.50, which is a big difference when it comes to buying items in bulk (Kurtz & Clow, 1998). In conclusion, it is evident that psychological pricing has a positive effect on the number of purchases clients make as they term the reduced amount, which can be either a $0.1 or $0.3 as large. Sales are bound to increase at any time a marketer advertises they have reduced their products and have used the psychological pricing strategy. The advantage of psychological pricing is that different brands can use it for their sales.
References
Boone, L. E., & Kurtz, D. L. (2013). Contemporary marketing. Cengage learning.
Kurtz, D. L., & Clow, K. E. (1998). Services marketing. Wiley.
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