Today I read an article in the Journal of Marketing (November 2013 issue) titled “Low Prices are Just the Beginning: Price Image in Retail Management” by Ryan Hamilton and Alexander Chernev. The authors hypothesize that price image is more than just a function of actual prices – but rather formed by a myriad of price-related and non-price factors (price policies, price communication, service levels, and assortment characteristics to name a few).
In customer experience assessments, one area of evaluation is often price. Do consumers view you as low priced or high priced? Are consumers satisfied with your price or not? I think most of us are aware of some general price perception anecdotes in the marketplace: Walmart is less expensive than Target – Wholefoods is typically viewed as expensive, etc. The authors demonstrate that retailers struggle with these generalizations and often the generalizations are not necessarily accurate.
I think this idea of “price image” spans beyond the retail setting and some of the findings within the article are applicable and can provide learnings across the board. My key takeaway was the learning that moving your price image to “low priced” is much more challenging than moving to “high priced”. So take caution in actions that might increase perceptions of a higher price because they are likely to take hold much more quickly than actions aimed at increasing lower price perceptions. Increasing perceptions of a lower price is a much more uphill battle and will take patience and diligence.
Customer experience assessments could be used to assess the components of price image and trend your performance as well as the performance of your competitors.