Since consumers have a memory, the carrier of price is not only based on its absolute level, but rather on its deviation from some reference level resulting from the pricing history. As customers revisit the firm, they develop price expectations, which become a benchmark against which current prices are compared. A formulation that captures this effect is called reference price.( Gurumurthy et al 1995)

Reference pricing, in simple terms, is known as that price which users compare with the price of a competitor’s product or the previously advertised price. Usually, reference pricing can be Internal (developed in buyer’s mind through expereince with product) or External (comparison price provided by others).

For company who use reference pricing, they actually sell goods at a price which is below the main price of its competitor. This can be a key benefit as most rational shopper wants to buy a product or a service if its price first matches his or her perceived value.

You can really see the company ‘H&M’ utilize this strategy to sell its product:

H&M is a clothing retail company known for its fast-fashion clothing.The picture above shown that is an event called ‘$5 SUMMER SALE HAUL’ organized by the company. The main fuction of this event is to clear the outdated/ overstocked inventory from H&M. During the sales, every machandise in H&M has their original price and reduced price in the price tag.The reduced price is the amount that buyers need to pay.

In my opinion, this is the great use of reference pricing as H&M don’t need to tell buyers how much they save but the buyer can just subtract the new price from the original price. This would make the buyer feel like he/she is getting a bargain and intentionally influence in buyer’s purchase decision. In the meantime, buyer will feel earned and satisfied as H&M’s merchandises are reactively pricey if no discount is provided.

Another proninent examples concerns Tesco.

Pictures above is the latest promotion run by Tesco Malaysia in favor of Ramadhan Month. In the catalogue, Tesco has shown buyers the original price and reduced price simultaneously. This is to let buyer know how much they actually save if they buy it during the dates (16-29 May). If the price is below the reference price, the observed price is lower than anticipated, it will make the buyer resulting in a perceived gain. This would make a purchase more attractive and raise demand and result in the buyer make a decision to purchase it now.

Usually, Tesco like to set a high reference pricing for its product and later offer discount. This would make the consumers think they are getting a good deal because they have a disocunt on the reference price.

Another example which I can relates to is Zalora e-retailer.

Zalora is an online retailer which sells clothings on different brands and also its own brand. I found out the company has use the reference pricing succesfully in their websites. Zalora show buyers the original price and the ‘now’ price(which is the discounted price) .This action can stimulate buyers don’t hesitate and buy it now in order to enjoy the benefit of the lower price.Putting the ‘now’ price in red colours font is believe to catch the awareness of buyers.

After studying all of this, we can tell that reference pricing can be a good strategy to stimulate sales if marketer utilise it correctly.

References:

G. Giuliani, G. Selkeb, L. Garattini 1998 ‘The German experience in reference pricing’, vol. 44, issue 1, pp.73-85, accessed 22 May 2019 https://www.sciencedirect.com/science/article/pii/S0168851098000128

G. Kalynaram, R.S. Winer 1995 ‘Empirical Generalizations from Reference Price Research’, Vol. 14, No. 3, pp. 161-169, accessed 22 May 2019
https://www-jstor-org.ezproxy.uow.edu.au/stable/184158?Search=yes&resultItemClick=true&searchText=Empirical&searchText=Generalizations&searchText=from&searchText=Reference&searchText=Price&searchText=Research&searchUri=%2Faction%2FdoBasicSearch%3Ffilter%3D%26amp%3BQuery%3DEmpirical%2BGeneralizations%2Bfrom%2BReference%2BPrice%2BResearch&ab_segments=0%2Fdefault-2%2Fcontrol&refreqid=search%3A700cd71ddfb2978f181bc344b1aa2b56&seq=1#metadata_info_tab_contents

J.Blechar, I.D. Constantiou & J. Damsgaard 2006 ‘Exploring the influence of reference situations and reference pricing on mobile service user behaviour’ ,pp. 285-291, accessed 22 May 2019 https://www.tandfonline.com/doi/abs/10.1057/palgrave.ejis.3000618

L.G. Heersink 2009 ‘ Models in Marketing Literature’, pp. 41-52, accessed 22 May 2019 https://www-jstor-org.ezproxy.uow.edu.au/stable/j.ctv9hj8x8.5?Search=yes&resultItemClick=true&searchText=Models&searchText=in&searchText=Marketing&searchText=Literature&searchUri=%2Faction%2FdoBasicSearch%3FQuery%3D%2BModels%2Bin%2BMarketing%2BLiterature%26amp%3Bfilter%3D&ab_segments=0%2Fdefault-2%2Fcontrol&seq=1#metadata_info_tab_contents

I believe that everyone has hear about Munchy’s before. Munchy’s, the biscuits brand which you will not stop having once you “crunch”.

To stand out with another strong competitor like Julie’s, Munchy’s uses a number of consumer behavior strategies to market their brand. These strategies includes Just Noticeable Difference (JND) and Nutritional Labelling. This blog will explore Munchy’s use of these concepts.

According to Weber’s Law, an additional level of stimuli-known as the just noticeable difference or j.n.d.-is necessary for the majority of people to perceive that there is a difference between the resulting stimulus and the initial stimulus. This J.N.D, is not an absolute amount, but rather is relative to the intensity of the initial stimulus. (Steaurt et al 1976) Marketer often want to update their existing package design without losing the recognition of loyal customer. (Leon et al 2015）Therefore, they usually make a number of small change, each carefully desgined to fall below the JND so that consumers will preceive only minimal differences between succeeding versions.

You can clearly see this when looking at Munchy’s logo transmission.

In this picture, Munchy’s has updated the company’s logo carefully, with the JND in mind and without moving too drastically away from the previous logo that consumers readily recognized. This is to ensure customer still recognizes of their logo even they made a changes such as bold the company name and reduce the amount of circle which covered the Munchy’s logo.

Besides of putting effort in logo, Munchy’s does update their packaging to cater the current market preference. The pictures above demonstrate the new packaging of Munhy’s Muzic wafer cube are more colourful and attractiveness. Font is important element of packaging which attract the customer attention. Companies who use best font style have successful in the market. Therefore, Munchy’s has utilise latin font writing in their new packaging which shows more attractive compare to their old packaging.

In addition, Munchy’s also relates to nutritional labelling concept. Nutrition labelling is well-recognised as an important component in helping consumers make healthy food choices . ( G Sack et al 2010) Health and nutrition claims are another method used by manufacturers of delivering information on ‘healthier food’ options. (Alexandra et al 2015). In some cases, the guides are based on different dietary targets for various nutrients than the labels on specific foods.

Munchy’s has demonstrate this in the following video.

The video demonstrate the healthy ingredients used in Munchy’s Oat Krunch like blueberry, strawberry and 40% of oat. It’s obvious that Munchy’s has targeted their Oat Krunch products to health-care person. The people in advertisement apper to be happy and satisfied with simply has her healthy snack with a pack of Oat Krunch.Therefore, Munchy’s is using ‘ Health and nutrition claims ’ by portraying a sense of healthy snack in attempts to get consumers to purchase their products.

The nutrition claims on being lower cholesterol in Oat Krunch product can also become a benefit to Munchy’s in order to compete with market leader like Julie’s.

After learning all of this, it’s not hard to tell why Munchy’s is so success in today biscuit’s market!!!

Reference List:

A.J. Mayhew, K. Lock, R. Kelishadi, S. Swaminathan, C.S. Marcilio, R. Iqbal, M. Dehghan, S. Yusuf, C.K. Chow 2015 ‘ Nutrition labelling, marketing techniques, nutrition claims andhealth claims on chip and biscuit packages from sixteen countries’, accessed 21 May 2019 https://www.researchgate.net/publication/274260803_Nutrition_labelling_marketing_techniques_nutrition_claims_and_health_claims_on_chip_and_biscuit_packages_from_sixteen_countries_-_CORRIGENDUM

G Sack, J.L. Veerman,M Moodie & B Swinburn 2010 ‘‘Traffic-light’ nutrition labelling and ‘junk-food’ tax: a modelled comparison of cost-effectiveness for obesity prevention, pp. 1-9, accessed 21 May 2019 https://www.nature.com/articles/ijo2010228

L.G. Schiffman, J.L. Wisenblit 2015 ‘ Consumer Behavior Eleventh Edition’, accessed 21 May 2019

S. Henderson Britt, V.M. Nelson 1976 ‘The marketing importance of the “Just Noticeable Difference”’ , vol. 19, issue 4, pp. 38-40, accessed 21 May 2019 https://www.sciencedirect.com/science/article/pii/000768137690063X

March 19, 2019

For every happy shopping experience, you’ll easily find a bad shopping experience . You’ve probably dealt with your bad consumer experience not because of the performance of product but critically the customer service fails – At least I do.

As a general consumer in the market, we always expect a positive deliver of the product performance and the best consumer services and practices. But the truth is always set us out of the mind. Hence, I would like to share my worst consumer experience to all of you.

Here’s the story: A couple months ago, I received a call from TM regarding to my Internet plan promotion. I had a huge usage of Internet by watching movies and browsing some information as every teenager will do. When I get the call, I feel so pleased as I always getting trouble of low performance of TM. During the conversation, they offers me a tremendous update plan from 2 Mbps to 10 Mbps with only RM 20 extra add-ons of monthly bill. Without the doubt, I cut the deal and agree with the 1 year contract. My initial experience with the update is definitely a big thumb, it was faster and smoother than before. I was happy with the high Internet speed even though I get an extra money to pay for.

Then the things get worse in just a glimpse of eyes. After 1 month of  the smoothness Internet experience, my Internet connection is back to the slow running speed as before. Immediately, I dial a call to service center and asked for a solution. After torturing for a super long dialing queue, my line was successfully connected to the service counter. The person on the center, guiding me through a couple of steps that technically don’t work at all, and eventually ask me to wait for another 2 hours as they have to raise this concern to technical team.  But then after 2 hours, my problem still haven’t get fixed and my Internet speed still getting sucked until now even though I try to reconnect to them but what they provide me is the useless solution.

All I want to tell is, choose wisely your Internet subscription company and don’t ever go for TM as TM will always torture you .