Psychological Pricing Strategies and Consumer Behavior: A Report

This report examines psychological pricing, exploring its influence on consumer behavior and marketing strategies. It begins with an executive summary, followed by an introduction to the topic. The literature review analyzes two articles, one focusing on consumer behavior and the other on psychological pricing principles. The report delves into factors affecting consumer purchasing decisions, including cultural, social, personal, and psychological influences. It discusses framing principles like BOGO deals, the impact of market conditions, and price awareness. Congruency and contextual pricing are also analyzed, highlighting the importance of packaging and promotional strategies. The report concludes with the implications of these pricing strategies, emphasizing tactics like odd pricing and emotional pricing. The analysis provides insights into how firms can leverage psychological principles to maximize revenue and sales volume, ultimately improving marketing effectiveness.

Running head: PSYCHOLOGICAL PRICING
Psychological pricing
Name of the Student:
Name of the University:
Author note:

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Executive summary
The purpose of this report is to discuss and draw conclusions based on the literature that have
been review and discuss briefly at the beginning. There are two chosen article that have been
mainly discussed in the following. The chapter also includes the implications of the research.
The main purpose of the research is to discuss many aspect of psychological pricing. The
consumer behaviour is a much extended field of marketing, therefore, how the pricing strategy
works and what are different internal and external factors that works in mind of customers while
making a purchasing decision is discussed in the following.

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Table of Contents
Introduction......................................................................................................................................3
Literature review..............................................................................................................................3
Article 1...........................................................................................................................................3
Article 2...........................................................................................................................................6
Implication.......................................................................................................................................8
References......................................................................................................................................10

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Introduction
The following is the report on psychological pricing. The chapter gives an overview of
consumer behaviour and how it gets affected by different elements of psychological factor. The
report also discuss the different influencing factors of human, be it internal or external can affect
their purchasing behaviour. There are two different journal, one on consumer behaviour and the
other on consumer marketing is reviewed in the following paragraphs. The literature has been
reviewed and some implications on different scenarios has also been discussed (Orel and Kara
2014). The examples of such psychological pricing and real life examples has been drawn in
order to make a better understanding of the topic.
Literature review
Article 1
Marketing is diverse function that needs to include the consumer behavioural aspect. The
effort to minimise the cost and generate more revenue consumer-marketing concept was
developed. To predict one’s mind in order to predict their perspective of buying has been crucial
for marketers. The article that has been chosen for further discussion contains the marketing as
well as the consumer behavioural traits (Schütte and Ciarlante 2016). Consumers do not purchase
products to satisfy their need but also to reveal a piece of their mind and reflection of perception.
With the utility of the product, the importance of promotion of their brand has become necessary
for increase the sale. That is the ultimate goal of every firm that sales any product or services.
The article here analyses the different factor of buyer’s behaviour. The four identified factor of
consumer buying behaviour are culture, social, personal and psychological. The article also

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analyses the positive or negative effect of the four factors in purchasing decision. The Internal as
well as external factors in consumer buying behaviour (Armstrong et al. 2015).
The cultural factors are inclusive of buyer’s culture, subculture, and social class. As an
external factor, this buying behaviour factor helps marketers in segmenting, targeting and
positioning the products aligning with the consumer perception. Buyer culture incubates the
society, group, place, time and other indirect factors of consumer behaviour and purchasing
decision. The rituals, norms, languages, ethics, believes and lifestyle are one of the main items
that are included in the culture. The subculture factor includes the racial norms, goods and
services valued factor, festivals and religions of the consumers. These factors have long-term
effect in the consumer’s subconscious mind. The social class includes income, profession and
education of the buyers (Muehling et al. 2014).
The social factors include the four different factors that of human’s social life. The most
influential is reference group. The expert or opinion master is known as the most important part
of a reference group. The membership groups are also given preference. Next comes the family
and institutional influence. A purchaser always has institutional influence in their buying
behaviour. The Role and Status of the background of the buyer is also an extreme considerable
factor of affection (Barney 2014).
Internal factors are the last of the two identified factors. The personal factor of the
individuals includes all the demographic aspects of influence. Here the internal factors include
age, education, profession, personality and lifestyle of the individuals. Different aged people
have different needs and desires thus those clauses affect the buying behaviour. The education
and profession impacts individual is buying decision consciously or subconsciously. The income

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and personality of the person, which determines the impacts of the situation that they interact
with.
The psychological factors determines individual’s the person’s attitudes towards
purchasing their products. The psychological factors include perception, motivation, beliefs and
learning. The beliefs and attitude also has a positive effect on buying behaviour of the person’s.
The individual is learning and positive evaluation regarding some purchase decision must be
included in the concerns of marketers. Purchasers tend to go by certain beliefs and learning that
have nurtured them from childhood. The marketers exploit the perception and motivation in
order to exploit the internal and external information to gauge those factors. These are the
psychological factors that plays a definite role in one’s purchasing decision (Parment 2013).
Consumer behaviour acts as a reflection of all thoughts, actions and feelings in their
bought products and services. Be it internal or external factor the main concept that is reflected
in the products customer always focus on that individual product and services. The personal
factors are unique for individuals. Additionally, the social factors are general for a group or
society. The marketing professionals have these factors to consider as well as the affects of the
factors in different cluster. The sub factors of the internal and external factors have influence in
the buying behaviours. The research in the article suggests that these factors are the driving
elements of one’s purchasing decisions (Mele et al. 2015). Thus, the influential factors that they
must consider are backed with the substantial effect. There must be a good understanding of the
people’s choice too while implementing the marketing strategies. The most effective contribution
of this research is that a person’s of a cluster must be analysed before targeting them for
marketing segment. However, there is difficulty in predicting a human behaviour and the real
reason of the influential impact of purchasing decisions one must consider a skill that the

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marketers are trained to develop. Thus, it becomes easy for the organisation to take big decision
in a purchasing product. It also helps in maintaining the efficiency and effectiveness on
implementation of marketing strategy (Jussila et al. 2015).
Article 2
This article analyses the psychology principle of the purchasing behaviour. The principles
of psychology pricing are gathered in this article and conclusions are given with examples. The
framing principle that attributed the preferences of the customers helps sellers in stimulating the
buyers to buy the products. The most important part of framing principle of psychological
pricing is BOGO (BUY ONE GET ONE) (Kumar and Pandey 2017). The discount element
surpasses the psychological pricing. Buying a expensive product and gifts tends to generate more
sales. Retailers often seem to discount prices in order to generate sales. The metros and bulk
purchasing boost sales to a highest level, which is why the distributors are most preferable rather
than individuals. The market conditions always also influence product perception of the buyers.
In addition, price awareness is a salient feature of framing principle. Transparency while
payments like, paying with prepaid accounts increases the purchaser’s willingness to buy. Thus,
the loyalty programs and purchase function increases the buyer’s willingness to buy. Pricing for
any product or services are is a complex process. Therefore, the transaction must be smooth and
transparent. The emotional pricing can also boost sales is there are without lowering the prices. It
includes the instalment payments, with low interests or no interests, as well as the price decrease
over time (Nagle et al. 2016).
Congruency principles refer to the messages that are shared in terms of price communication.
However, the perceived price unfairness generates negative pricing in the subconscious mind of

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the consumers. The most important part of congruency principles are price influence of buyers.
This is most helpful pricing strategy is through packaging. The perspective changes with the
perception of the people and small variations catches attention of the buyers. This can be helpful
in gauging the negative or positive shift in accepting the attributes of the products. In case the
products contain the material attributes, it is required for the sellers to give a demo and use any
of the five senses to make them familiar with the product. It can include vision, touch, smell and
others that are required. Packages usually communicate the better messaging of the products as
well as the pricing (Jussila et al. 2015).
Contextual pricing does not consider the willingness of the buyers to pay. The usage of
retail pricing is to benefit the changes in the strategy. The promotional strategy must include the
value of the product. Consumers tend to compare the pricing of the products and take decision
according to that. Slightly low power tends to attract customers. Using percentage differences a
product must sold in retail. The price threshold exists to a specific level. If the response in a egg
price is seemed to be 10 or 20 times the price, the marketers should go for the demand curve
kink. For same products the monetary values comes in the same price (Agarwal and
Zeephongsekul 2013). Therefore, the offer must be attractive in order to sell the price of the
product. High price and low price are perceptive where the low quality products are of concern.
Product bundlers are reducing ordering cost as they get a heavy discount in bulk purchase
(Larson 2014). If a firm provides services to the customers, they list the prices according the
demand. The partitioning of the separately listed buying may list the prices of the cross price
elasticity. Benefit pricing is perceived to be more important for the customers. When lower tier
products are spread in the market, the market becomes asymmetric in nature. A higher tier

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product requires infrequent promotion of their prices. Buyer’s perceptions need to be deeply
analysed in the frequent and shallow perceptions of higher tier products.
Signalling pricing is known to influence the change in the people’s acceptance of
products. The symmetry, colour and preciseness influence the product choices. The non-
symmetrical prices of seems to effect higher-end products like houses. Prestige pricing is also a
part of psychology pricing. In different purchasing decision, the main idea that must be
considered is the placebo effect of pricing. The firms incorporate rather psychology pricing
based on their ultimate motive of recovery revenue. If the motive is to maximise the revenue or
volume sales, then it must be considered to include psychological pricing in their strategy
(Larson 2014.).
Implication
People found reasonability in perceiving less value of an amount after adding commas in
between. Thus, the process started using in other purposes. Demand function is used in positively
sloped cases. The odd pricing is perceived to be lower in customer’s perception rather than even
pricing. Therefore, pricing in odd numbers like $9 or $499 is perceived as making people seem it
cheaper and more willing in buying. The psychological principle for pricing are given more
emphasis these days (Hausman 2012).
For example, Anchors in framing principle goes by “buy 7 and save a trip”, “after 10
purchases win a voucher”. The emotional pricing tactics include “Pay less with every next
instalment”. This pricing strategy includes the more frameworks of tactics and lesser emotional
aspect of mind to explore on (Hinterhuber and Liozu 2015).

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The congruency principle includes perceives fairness, phonetic symbolism, label design and
package dimensions. For example, No change in price for a month, the low fonts of pricing to
catch lesser attention (Möhlmann 2015).
The context principle is needed when showing market value of the product. The currency sign
removal also symbolises the examples and tactics that really impacts the consumers’ minds while
buying. The psychology can also be applied in making consumers believe the alternative product
line is better option if the quoted price initially is higher than expected. The consistency must
remain while developing the pricing strategy and implementing. Primacy, recency and category
perception of pricing are most of the common in creating impression in buyers mind through
pricing. The customisation of the product must also be included in the building the pricing
strategy as well as for the implementation. According to Schiffman et al. (2013) the pricing for a
company is essential part as it ensures the return on investments. Therefore from the above
discussion on the article it can be concluded that psychological pricing is essential to consider for
marketing personnel’s. The different aspect of consumer behaviour requires to consider this
important factor to be considered thoroughly and effectively. The matter of return on investments
investments makes the marketers most effective part of organisation as they are in charge of
developing the pricing through market research and implement the strategized. This leads to the
factor of properly grooming them with the core psychological factors that ultimately impacts on
the customers mind (Agarwal and Zeephongsekul 2013).

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References
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prospect theory. Studies in Economics and Finance, 30(1), pp.22-30.
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
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Hinterhuber, A. and Liozu, S.M., 2015. Behavioral and psychological aspects of b2b
pricing. Industrial Marketing Management, 47, pp.4-5.
Jussila, I., Tarkiainen, A., Sarstedt, M. and Hair, J.F., 2015. Individual psychological ownership:
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Larson, R.B., 2014. Psychological pricing principles for organizations with market power. The
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Mele, C., Pels, J., Storbacka, K., Li, S., Sivadas, E. and Johnson, M.S., 2015. Discriminant
validity assessment has become a generally accepted prerequisite for analyzing relationships
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