Price May Matter Less Than You Think
Cara Wood | April 18, 2018
Competitive pricing wins the sale, right? Not on today’s digital shelf. More than ever, consumers make buying decisions due to their personal set of criteria – which is not always cost. Shoppers may choose a brand they love for its quality, the company’s values, or another factor entirely. It’s critical that you take control of your product experience and communicate each of the unique selling points of your brand.
For the Salsify 2018 Consumer Research Report, we surveyed 1000 U.S. consumers who shopped online at least once in 2017. Confirmed by both retail site behavior analysis and stated preferences, those respondents indicated they are willing to pay more, and are likely to buy more often, from brands that deliver plenty of positive reviews, answers to questions and concerns, and include three or more photos.
Competitive pricing no longer seals the deal for considered purchases
Take electronics for example. For consumers, positive reviews were most important when completing transactions 74% of the time and 62% of consumers read 5 or more reviews. In second, at 61% of the time, was manufacturers answering consumer questions. Lowest price was the most important factor 55% of the time.
While price is still more important when buying household goods, clothing is similar to electronics. Positive reviews on clothing are most important 66% of the time, with 68% of consumers reading three or more reviews. Lowest price is only most important 53% of the time.
When products are similarly priced, better reviews most persuasively sway consumers to purchase the higher ticketed item. Why is this important? Because such information could potentially improve your brand’s margins. Showcasing great reviews is far less painful to the bottom line than reducing prices or shipping costs, which, incidentally, influences consumers only 11% of the time.
Your brand can improve margins by investing in experience.
Consumers buy what they want. Thinking shoppers will always purchase the lowest-price product discredits the power today’s consumer wields. Options abound with the simple typing or utterance of a few keywords. Consumers feel less and less enticed by price, just as they are feeling less and less loyalty to brands that fail to deliver a good experience. Need more proof? A McKinsey study found consumers are equally willing to trade up to a more expensive brand or down to a less expensive brand or private label when they can’t locate their desired product.
Consumers will price check on the spot. Today’s shopper is well-informed and armed with mobile access. As consumers are shopping in-store, they will price compare. Given the facts outlined above – and that Think With Google found 51% of shoppers purchase from a different brand than expected based on the quality of product information they encountered – the experience and product content will be the deciding factor on whether or not consumers click buy.
Lowering prices is the short-term solution
Why lower prices when maybe the product experience is off? Harvard Business Review said it crisply and succinctly. Brands reduce “prices because they believe that will boost their perceived value to consumers. As pressure intensifies to reduce prices, either by cutting the list price or offering a discount, managers may act hastily, without the same rigor they apply to investments elsewhere, such as capital deployment or product enhancements.” We’d also add software and data improvements to that list.
Listen to your consumers and adjust the experience as necessary. Not only will margins be less impacted, but you’ll be syncing your brand with present and future consumer expectations.