How powerful do you feel today? This may seem like an odd question, but the answer could explain your reaction when you see something you just bought offered at a lower price elsewhere. According to a new study in the Journal of Consumer Research, self-perceived power plays a role in the way consumers compare prices of products.
Marketing professors Jin Liyin and He Yanqun of Fudan University in China and business professor Ying Zhang of the University of Texas suggest that consumers have two main ways of evaluating how fair a price is: self-comparison, or comparing a price to what they have paid for that item in the past, and other-comparison, or asking what others are paying for the item.
The authors conducted a series of studies to determine the reactions of individuals in high and low "power statuses" to price comparisons. Their research states that high-power consumers are ones whose sense of self-importance is linked to how much better off they are than others, while low-power consumers, who often lack the resources to surpass others, tend to base their self-importance on whether they are better off than they were before.
"The degree to which one feels powerful influences which type of price comparison threatens their sense of self-importance and, in turn, affects the perception of price unfairness," the authors explained.
In one of their studies, the authors found that high-power participants used other-comparisons and felt more unfairness when they appeared to be paying more than others. These individuals were more likely to become angry about this perceived unfairness and complain to others about it. Low-power participants, on the other hand, experienced more unfairness when they used self-comparisons, and were more likely to try to avoid thinking about the unfair price rather than complain.
Liyin, Yanqun and Zhang believe marketers can use the study's findings to improve customer engagement based on the power status of their target market.
"When marketing to high-power customers, one can better elicit preference by highlighting the special treatment that they are receiving in relation to other customers," the authors said. "When the target customers are relatively low in power, loyalty may be better cultivated by highlighting the consistency in service."
The study will be published in the February 2014 Journal of Consumer Research.
Originally published on BusinessNewsDaily.