Financial or monetary risk which is the risk that the product will not be worth its cost.If the prices for different alternatives are perceived as similar, then price is unlikely to influence the choice between these alternatives.Ĭonsumers may face several different types of risks in making purchase decisions.Factors such as a brand image or store image can soften the strength of the perceived price-quality relationship.Prices above or below the reference price are likely to be judged as unsuitable and may lead to decreased willingness to purchase the product. Consumers tend to develop a range of acceptable prices around the reference or standard price.Their exposure to price higher or lower than reference price is likely to result in upward or downward movement of the reference price.

Consumers’ reference prices are not constant and get modified by shopping experiences.Consumers appear to develop reference prices as standards for evaluating prices they see in the marketplace.Consumers seemingly use price as an indicator of product quality as well as an indicator of the purchase cost.Kent B Monroe and Susan B Petroshius have summarized research findings to show how consumers react to price variable: Plausible low prices are considered well within the range of acceptable market prices plausible high prices are close to outer limits of the range but still not beyond the limits of believability and implausible high prices are definitely beyond the limits of acceptable range of prices. Researchers have investigated the effects of three types of consumer price perceptions communicated through advertising. Whether a consumer perceives the price of a product or service as high, low, or fair has significant influence on buying intentions and post-purchase satisfaction. Some products seem to match this self-image of an individual while others do not.Īccording to Russell W Belk, consumers attempt to enhance or preserve their self-images by purchasing products that they believe correspond to or agree with their self-images and avoid buying products that do not fit their self-images. Individuals develop a self-image of themselves and certain brands carry a symbolic value for them. Consumers may associate Patanjali with ayurvedic quality because of their advertising or wordof- mouth communications from friends/family.

Price perception definition