11/25/2005

Price Matters but May Not be the Deciding Factor

Many discounters are trying to stock their shelves with higher quality products such as high-definition TVs at extremely low prices. Many experts were staring to panic that the discounters would be able to squeeze consumer electronic retailers out of the market. But, with high end products, there may be less emphasis placed on price. This article said that “some of the cheapest prices [were] found at Wal-Mart, but product selection and presentation of the televisions at the discount retailer left much to be desired when compared to [the] experience at Best Buy and Circuit City.” This means that people may be willing to pay higher products if they feel that they are receiving a better product.

4 comments:

Morgan said...

I think that price can be a determining factor in whether or not to purchase something, but its degree of importance is based on a consumer's price elasticity. Some are rather indifferent, or inelastic to price, and will buy something because they like it, regardless of its price, while others behave just the opposite. It is somewhat a matter of psychology, and how people value things such as money, quality, or instant gratification from material goods, etc.

Tyler said...

The concept seems to follow closely with personalized pricing as we discussed in class. The authors used the example in the book which stated different magazines with different prices for the same item were sent out to different zip codes. Marketers that have surveyed areas and determined they are more "free spenders" tend to get the advertisements which have a higher price. In relation to higher prices in different stores, that makes complete sense to me. You go in expecting better service and a better experience and in turn end up paying a higher price.

maddy said...

I agree with morgan, some people seem to be immune in some ways to price elasticity. If they like it they buy it, if they don't then they never will. However I do think that as I've studied economics that these people still fit into the "norms" and at certain extremes they would follow the same patterns as other consumers.

Dr. Tufte said...

-1 on Maddy's comment for poor capitalization.

I think Tyler has given a good summation of this issue.