Marketing Management, 16th Edition

Consumer Psychology and Pricing

Many economists traditionally assumed that consumers were “price takers” who accepted prices at face value or as a given. Marketers, however, recognize that consumers often actively process price information, interpreting it in the context of prior purchasing experience, formal communication (advertising, sales calls, and brochures), informal communication (friends, colleagues, or family members), point-of-purchase or online resources, and other factors.4

Purchase decisions are based on how consumers perceive prices and what they consider the current actual price to be—not on the marketer’s stated price. Customers may have a lower price threshold, below which prices signal inferior or unacceptable quality, and ...