Many consumers are price shoppers. They shop first for price and then for other attributes or factors such as benefits, reputation, warranty, brand, and the like. For some, price is the chief – if not the only – consideration when they decide to purchase or acquire something.
In fact, many people are sleeve shoppers when picking out the latest fashion to wear. They see something they like. Then they look at the price tag hanging from the sleeve. Then they decide how much they “really” like it after they factor in the price. They are deciding if they like something based on its price first and the utility of the item second.
On purchases that don’t have to made immediately, people often do extensive research to determine where the lowest price can be found. They may try out various versions of a solution, look at them online, read reviews about them, and talk to friends for their opinions before determining which one they want. Then they will purchase that one at the lowest price they can find.
The internet has made this a lot easier than ever before. It used to be that someone would have to visit several establishments, request brochures, and make phone calls to learn about a particular product, service, or solution they were considering. Now comparisons can be made relatively quickly and easily online. For the price-sensitive shopper, they can readily see which company offers what they want for the lowest price.
Of course, price isn’t everything. There is shipping, availability, extras, experience, reputation, and other factors that aren’t strictly a dollars and cents issue but factor into the value nevertheless.
Whether someone is shopping for insurance, real estate, stocks, office supplies, cameras, a new car, or anything else, price is definitely a factor. Brand and store loyalty have taken a backseat to finding the best price for something.
Of course price isn’t the only consideration for most people, but it’s right in there. Often, it overshadows or filters the other factors so that we think that price is just one of the considerations when it’s really the dominant one.
As we sell and promote the features and benefits of what we are offering, we must do this in terms of how our consumer is evaluating this in terms of the price we charge. We might be able to adjust our
fixed costs and overhead downward, or look at other ways to lower our costs, to make us more competitive.
People notice price, but they also are aware of value. In the value proposition that people evaluate when they decide which company to use or what product or service they want – or can live without – they are analyzing the value proposition. This means they are concerned with how something performs for them, solves an immediate issue they have (or perceive they have), is available when and how they want it, and that they can justify the price for what they are getting.
They might be able to get something for less money, but they are evaluating the combined factors involved to determine if what they are being asked to pay for something (even if it is available in exactly the same way or relatively similar) is worth it to them. This is the true value proposition – quality for the money spent – and only the consumer can answer this question for themselves based on their intended purchase. We can help educate and persuade them, but this is something they determine for themselves.