3 people walk into a grocery store – only to find prices have increased. Naturally, all 3 immediately storm out and dramatically change their buying behavior… right?
And yet, as every CPG c-suite ponders the ‘inflationary pricing environment’ in which we find ourselves, the conversation is often that binary.
Last week, I conducted a little experiment, polling insights professionals with the following: Imagine you’re hiring an insights agency partner… which of the following is most frustrating when it comes to the price?
Unclear / inconsistent pricing
Work required to get the best deal
Not one person rated “the expense” as the biggest barrier. Instead, the other two factors are actually what hinders market research buying behavior. And bear in mind that these are often 5- or 6-figure decisions.
So why do we then automatically assume that all that matters to our consumers is the expense – the actual dollar price?
In fact, based on analysis of ~10,000 records in our database, when it comes to how consumers perceive price, there are actually 3 segments. So, in the analogy of grocery shoppers above:
Shopper 1 sees the increased prices and immediately starts trading down, making trade-offs, etc. – purely in response to the dollar price.
Shopper 2 is less concerned with the money, and more frustrated by the lack of transparency or perceived fairness in price increase.
Shopper 3 doesn’t care about either, and is simply frustrated by having to do more ‘work’ to make sure they’re not getting ripped off.
Most analysis I see assume that everyone is like Shopper 1 – but this mindset profile only represents one-third of the U.S. population.
So, just as insights professionals do in their everyday decision-making, consumers weigh factors well beyond actual price – and winning brands & retailers will serve Shoppers 2 and 3 above to serve what really matters, and win.