Media Releases

Price highlighting helps consumers stick to longer-term product preferences, Rotman research reveals

January 28, 2014

TORONTO, ON – Just when that new gym mem­ber­ship is look­ing like a mis­take, recent mar­ket­ing research shows that remind­ing con­sumers of the price strength­ens their pur­chase choic­es and leads to long-term sat­is­fac­tion.

New research from the Uni­ver­si­ty of Toron­to’s Rot­man School of Man­age­ment says that even though most peo­ple val­ue high­er func­tion­al­i­ty over the long-term, they tend to pre­fer no-has­sle con­ve­nience in the short-run. If it’s a dig­i­tal cam­era they need in a hur­ry, they may buy the easy-to-use ver­sion, only to lat­er regret that it does­n’t have the fea­tures they’d like.

When it comes to health clubs, con­sumers may for­get or ignore the many long-term ben­e­fits that made them sign up in the first place, in favour of the eas­i­er choice of stay­ing on the couch and avoid­ing the short-term incon­ve­nience of work­ing out.

In both cas­es, researchers say that high­light­ing and remind­ing con­sumers of the pro­duc­t’s price helps them stick to their long-term pref­er­ences by prompt­ing them to think about val­ue. And those pref­er­ences tend to val­ue greater func­tion­al­i­ty, or over­all use­ful­ness, instead of con­ve­nience.

“This has been a big prob­lem for con­sumers’ sat­is­fac­tion and then their repeat busi­ness,” says Min Zhao, an asso­ciate pro­fes­sor of mar­ket­ing at Rot­man. She co-wrote the paper with Kel­ly Kiyeon Lee, a post­doc­tor­al fel­low of mar­ket­ing at Wash­ing­ton Uni­ver­si­ty. “Once you’ve con­clud­ed you’ve made a bad choice, you’re not hap­py with the prod­uct, and you may not want to go back to that com­pa­ny again.”

Prof. Zhao sug­gests that gym man­agers could get new mem­bers out more, and increase their over­all sat­is­fac­tion, by send­ing them a week­ly or month­ly email remind­ing them how much they’ve paid.

The find­ings are based on a series of exper­i­ments in which par­tic­i­pants were giv­en a choice among sim­i­lar prod­ucts and were either told the pro­duc­t’s price or not.  Par­tic­i­pants giv­en price infor­ma­tion pre­ferred the high­er func­tion­al­i­ty prod­ucts even in the short-term, while those who had no price infor­ma­tion opt­ed for more con­ve­nient prod­ucts in the short-term, despite a longer-term pref­er­ence for greater func­tion­al­i­ty.

Even being exposed to mon­ey and not actu­al prices made a dif­fer­ence. In one exper­i­ment, par­tic­i­pants who were asked to count out $1 bills, but were not shown prices for soft­ware pack­ages, also opt­ed for the high func­tion­ing prod­uct in the short-term, sim­i­lar to those who had been giv­en price infor­ma­tion.

The paper will be pub­lished in the Jour­nal of Con­sumer Research.

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Ken McGuf­fin
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Rot­man School of Man­age­ment
Uni­ver­si­ty of Toron­to
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