Psychology of pricing: Unleashing the power of price anchoring and perception

As a writer and an enthusiast of marketing and consumer psychology, Subhankar Chakraborty,  student at the Apeejay Institute of Management and Engineering Technical Campus (AIMETC) in Jalandhar, has always been intrigued by the intersection of consumer psychology and marketing. As he describes that these two fields are intricately connected that provide invaluable insights into human behaviour and decision-making processes. And by understanding how consumers think, feel, and make choices, businesses can tailor their strategies to meet their customers’ needs effectively. “I am fascinated by the intricate interplay between marketing and consumer psychology as it uncovers the underlying motivations and influences that drive consumer behaviour. It allows brands to comprehend why people prefer certain products, how they respond to marketing stimuli, and what factors impact their decision-making process,” he emphasises while further adding, “This knowledge empowers businesses to create targeted marketing campaigns, develop innovative products, and build lasting relationships with their customers. The ever-evolving nature of these fields ensures that there is always something new to learn, keeping me engaged and eager to explore the latest research and trends.”

The AIMETC student also wrote an article highlighting how pricing plays a pivotal role in shaping consumer decisions. In the article, he explains the fascinating science behind pricing, with a focus on two powerful concepts: price anchoring and perception. In the Scholear-Journalist of the Week interview, the curious mind, who is constantly anxious to learn and experience new things, explains what inspired him to write on this trending topic. Read edited excerpts: 

What inspired you to write on ‘Psychology of pricing: Unleashing the power of price anchoring and perception’ ?

Pricing is a critical aspect of consumer behaviour, and understanding its underlying psychological principles fascinated me. The power of price anchoring and perception in influencing consumer buying habits is an area that offers immense potential for businesses. I wanted to delve deeper into this subject and share my insights to help both marketers and consumers make informed decisions.

In your article you have mentioned ‘Utilising price anchoring can be highly effective in driving consumer buying habits’. Please explain how?

Price anchoring taps into the cognitive bias of individuals relying heavily on the first piece of information they receive when evaluating a product’s value. By strategically setting a higher-priced option as an anchor, businesses can shape consumers’ perception of subsequent pricing options. When presented with multiple choices, consumers tend to gravitate towards the mid-range option because their perception is anchored to the higher-priced option. The middle option then appears more reasonable and attractive in comparison. By skilfully utilising price anchoring, businesses can guide consumers towards purchasing higher-priced products or services while still providing a sense of value.

In simple terms, can you define for our readers the meaning of ‘psychology of pricing’? Does this keep evolving with changing times?

The psychology of pricing refers to the study of how consumers perceive and respond to prices, and how businesses can strategically leverage these perceptions to influence consumer behaviour. It involves understanding the cognitive biases, heuristics, and emotional factors that affect consumers’ decision-making process when it comes to pricing.

Also Read: Psychology of pricing: Unleashing the power of price anchoring and perception

The concept of psychology of pricing is dynamic and does evolve with changing times. Consumer preferences, societal values, and technological advancements, all play a role in shaping the psychology of pricing. As consumer behaviours and expectations change, businesses must adapt their pricing strategies accordingly. Factors such as the rise of e-commerce, increased transparency, and the influence of social media have all contributed to the evolving landscape of pricing psychology. Staying updated with the latest research and consumer trends is crucial for businesses to effectively leverage the psychology of pricing in a rapidly changing market.

Is AI playing a role in driving consumer buying behaviour?

Absolutely. AI has significantly influenced consumer buying behaviour in recent years. With the advent of advanced algorithms, machine learning, and big data analytics, businesses now have access to vast amounts of consumer information. AI-powered systems can analyse consumer preferences, browsing habits, purchase history, and social media interactions to understand individual preferences and deliver personalised recommendations.

Additionally, AI has transformed the shopping experience itself. Virtual assistants, chatbots, and recommendation systems powered by AI are becoming increasingly prevalent in e-commerce platforms. These technologies provide tailored product suggestions, answer customer queries, and streamline the purchasing process. By leveraging AI, businesses can enhance the customer experience, offer personalised offers, and anticipate consumer needs, influencing buying behaviour.

You have shared quite a few articles with Apeejay Newsroom. What inspires you to write on such interesting topics?

Writing allows me to share my passion for marketing, psychology, and business strategy with a wider audience. Apeejay Newsroom provides a platform to engage with readers who are eager to explore these fascinating topics. I find inspiration in the opportunity to educate and empower others through my writing.

I am motivated by the desire to bridge the gap between academic research and practical applications. By presenting complex concepts in an accessible and engaging manner, I aim to help readers gain valuable insights that they can apply to their personal and professional lives. Moreover, the diverse readership of Apeejay Newsroom presents a chance to connect with individuals from various backgrounds and foster a broader understanding of these subjects.

Read This: Scholar-Journalist of Week – ‘The power of word-of-mouth marketing’

What is your future plan?

My future plan is to continue exploring the realms of marketing, consumer psychology, and writing and contribute to the field of marketing and consumer psychology. I plan to further explore the dynamic nature of these disciplines and stay updated with the latest research, trends, and technological advancements. My aim is to create impactful content that helps businesses navigate the ever-changing landscape of consumer behaviour.

Additionally, I plan to collaborate with industry leaders, academic institutions, and organizations to conduct research and contribute to thought leadership in the field. By sharing my insights through various mediums such as articles, research papers, and speaking engagements, I hope to inspire and educate others about the fascinating world of marketing and consumer psychology and I aim to deepen my knowledge in these areas, stay updated with the latest trends and research, and contribute to the industry through my insights, articles, and consultancy work. Overall, my future revolves around continuous learning, knowledge sharing, and making a meaningful contribution to the understanding and practice of marketing and consumer psychology.