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I'm Just Here to Buy

April 7, 2010  
These days, retailers seeking to establish a thrifty-price image might want to ask one important question: Are customers here to browse or buy? That difference in customer intent could affect the overall impression of a store's pricing, according to one new research study. In a series of five experiments, researchers tested variations of consumer judgment on product price ranges when those consumers were either browsing or had an intent to buy.

In one experiment, for instance, participants shopped in two virtual grocery stores for the same nine items (detergent, canned tuna). They were assigned the task of either browsing or of buying. One store used upscale price extensions (where one high-priced item was added to the options list for each product), the other downscale (one low-priced item was added). After "shopping," participants were asked to select the store that they expected to have the lower overall prices.

Results: Among participants with a browsing goal, 79.3% chose the downscale store, compared with only 48.5% of participants with a buying goal.

The message for retailers here? When consumers are more likely to have a browsing goal (e.g., when checking out a range of items like wide-screen TVs), low-priced vertical extensions can lower a retailer's overall price image. But with brand-loyal or focused buyers, "a retailer seeking to lower its price image should consider extending assortments with high-priced options," the researchers write.

Why? Adding a higher price to a vertical range may subtly increase a buyer's sense of getting a good price on a favored product, they suggest.

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