“Impact of Product Pricing on Consumer Behavior”

 Literature Review:
The increased influence of marketing in this complex age of marketing revolution and in most of
the life activities of a common man, people have become more brand conscious in most of the
things that they are buying. Before choosing to buy a commodity, clients associate it with some
factors such as performance, quality, characteristics, and even country of origin.
Many researchers have done many surveys or researches on the reaction of consumer behavior
over the different product’s different prices. Like Hussain Al-Salamin 1* Eman Al-Hassan 2
(2016) states that there is a positive relationship between prices and consumer buying behavior
that means if the price of the product is suitable to consumer by considering other factors that
will more likely to make purchase decision faster.
Manali Khaniwale (2015) concludes that consumer’s buyer behavior is usually influenced by the
consumer’s internal and external factors such as their income/age/gender/interest/need etc.
According to H. Al-Salamin, J. Al-Baqshi, M. Al-Rassasi and H. Al-Salem (2015), the price of well-
known brand products affects the purchase process negatively because young people are
interested in purchasing brand products but their low income prevents them from the buying
process and they have to back up from the product.
Lefa Teng (2007) discussed that if you create some discount and offer it with the products you
may gain more customers and it will generate more and smarter revenue as people will be
more likely to easily make a purchase decision.
Junyean Moon, Doren Chadee, and Surinder Tikoo (2006) states that people make purchase
decision according to their cultural values. No matter what the price of the product is no matter
what is their income level, but if that particular product is prohibited in their culture they will
not buy it. On the other hand, if that product is necessary to buy to retain in their family then
they will immediately buy it.
According to Rigges (2008), pricing is the process of determining and applying prices to goods
and services. Prices are very important element as it is the only factor that generates revenue
to the company. Prices are determined by the balance of supply and demand and set with a
certain degree of confidence that consumers will pay it.
Dynamic pricing allows a consumer to make a decision over the price from a consumer's
viewpoint, so he or she can gain unique benefits from accepting constraints or making
reservations in advance. In the presence of strategic and myopic customers, Aviv and Pazgal
(2005) studied the optimal pricing of fashion products and found that in the case of myopic
consumers, the declared uniform-discount strategies work essentially the same as contingent
pricing policies.
Sahay (2007) observed that when they are more interested in the pricing process, customers
are more likely to embrace dynamic pricing. This finding argues that customers enjoy the
involvement and participation of the pricing process in order to respond more to dynamic
pricing than to simple pricing, as dynamic pricing allows customers to be more involved in the
processes of pricing.
Kotler & Keller(2012) stated that price is the one element of the marketing mix that produces
revenue; the other elements produce costs. They also stated that purchase decisions are based
on how consumers perceive prices and what they consider the current actual price to be.
Ismail Razak (2016) concludes that a better product quality by product and product
enforcement and competitive pricing can improve client value by affordable prices. It will
ensure the preservation of healthy teeth and freshness of the mouth by considering the
functional value of the product, and improve customer loyalty, so that consumers are
interested in re-purchasing. The key finding of their research is that the practical performance
of the toothpaste product is still not adequate to satisfy the customers with the right major
consideration. However, it is precisely the consistency of the item that complies with the
toothpaste standardization that could generate satisfaction.
 Independent Variable:
It is a variable that cannot be changed by other variables and having its own uniqueness. My
research Independent Variable is the price and its dimension are;
 Fair pricing
 Moderate pricing
 High pricing
Price is the only revenue-generating marketing mix variable; all others include funds' spending
(or likely investments). The consequences of price increases are more immediate and clear, and
it is the easiest to convey price-based appeals to prospective buyers. Competitors, however,
can respond more easily to price-related appeals than to those based on product benefits and
imagery. It can be argued that the price decision for a branded product is possibly the most
critical among the marketing mix (strategy) decisions. Conventional wisdom suggests that the
choice of prices should be made in line with those of other marketing campaign components.
Qualtrics suggested that company should not set their price on the basis of expected revenue
or cost to make it, but, in fact they should consider consumer behavior first and test their
willingness to purchase in the mentioned price. In short companies should have to meet
customer expectation regarding the product and its price.
A study of 2018 says any company needs customers and price determination. Since both
consumers and prices are closely linked to product demand. It would significantly impact the
market for the commodity and the benefit of the company, even though there is a slight rise in
price prices. The price dictates what products/services and in what quantities can be made.
Price is an incredibly sensitive aspect of an enterprise. The traditional economic pricing analysis
is based on the customer's preference for the commodity, which typically depends on the
customer's income and other factors, such as ethnic origin. Some customers can pay high
prices, while others are only able to pay lower prices. The company chose to charge different
rates for different customers instead of charging the same price to everyone, as that would
maximise business profit.
Fair Pricing:
A fair price is the price that everyone agrees on it and that is acceptable for the seller and the
buyer itself.
Moderate Pricing:
Moderate means middle. It is up to some extent a higher price that increases due to brand
loyalty and consumer purchase it as it have a unique identity.
High Pricing:
It is the price that consumer sees very high and he feels disable to buy it. It is a very high price
that is out of the consumer’s range. Also he can’t link the product with its price as the price is
too high for the product.
 Dependent Variable:
The dependent variable is the variable that is dependant on an independent variable and is
being tested and measured in an experiment. It can be changed whenever the independent
variable changes. My research dependent variable is the consumer behavior and its dimension
are;
 Consumer buying decision.
 Consumer’s attitude.
It should be noted that consumer buying behaviour is studied as part of marketing and its main
purpose is to understand how individuals, groups or organisations select, purchase and dispose
of products and the variables on which consumers base their purchasing decisions, such as their
previous experience, taste, price and branding (Kotler and Keller, 2012).
One of these customer purchasing behaviour experiments was carried out by Acebron et al
(2000). The purpose of the research was to examine the influence of previous experience on
the purchasing behaviour of fresh foods, particularly meat products. The authors used the
structural equation model in their studies to describe the relationship between habits and
previous experience in consumer purchasing decision-making. Their results indicate that, in the
case of buying fresh mussels, personal preferences and prior customer experience have a direct
effect on the purchasing decision of the consumer. They also noticed that the image of the
product had a crucial effect on the consumer's buying decision, and further recommended that
the image of the product should be constantly improved to inspire customers to purchase.
The effect of packaging on the mechanism of consumer decision making for Fast Moving
Consumer Products was explored in another study conducted by Variawa (2010). The goal of
the research was to examine the effect of packaging on low-income consumers' decision-
making processes in retail shopping. In order to achieve the research goals, a survey approach
was used. 250 respondents took part in a survey conducted at Star Hyper in the town of
Canterville. The research results show that low-income buyers have a greater preference for
quality packaging, as this can also be reused after consumption of the product. Although the
results show that the product packaging and brand experience have a poor relationship.
However, study results have shown that low-income buyers have greater brand experience
when buying 'premium' goods relative to their experience when buying 'cheap' brand products.
In the example of China, Lee (2005) carried out a study to learn the five stages of the process of
consumer decision making. The researcher focuses on the facts that influence the purchase of
imported health food products by the consumer decision-making process, in particular
demographic effects such as gender, education, income and marital status. In order to achieve
the objectives of the study, the author employed the questionnaire method. Study of five
stages of the consumer decision-making process suggests that the effect of family members on
the purchase of imported health food items was important in the consumer decision-making
process.
Consumer Buying Decision:
The process of consumer decision-making is the process by which consumers become aware of
their needs and recognize them; gather information about how to better address them;
analyses alternative solutions available; make a buying decision; and evaluate their purchases.
Consumer make purchases according to their age, gender, marital status, qualification, monthly
salary, culture, perceptions etc.
Consumer’s Attitude:
The consumer’s attitude is encouraged by direct personal experience and informed by friends
and family members' ideas and interactions and mass media exposure. Furthermore, it is
possible that the personality of an individual plays a major role in attitude formation.
 Conclusion:
A customer only purchase those items which satisfy him in terms of all factors such as quality,
price, fulfilling needs etc. Retailers and dealers are advised to carefully research customers on
the basis of the paper's conclusion, purchasing behaviour is one of the most important ways to
consider the desires of consumers when making a purchase, deciding to set reasonable prices
for their goods as pricing has a direct effect on the sales and revenue of a company to its
popularity as a result. In Pakistan there is always a direct relationship between the rpice and
the consumer behavior as the middle class people always check the price before buying it. If it
is come under their budget they will buy it if it not they didn’t buy it.