Annexure-1

MINOR PROJECT REPORT

ON

STUDY ON CONSUMER PERCEPTION OF PRICE

AND PURCHASING PATTERNS

SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE

DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION (2023-26)

UNDER THE GUIDANCE OF: SUBMITTED BY:

Dr. Anju Bharti. Khushi Das
Professor, MAIT. 05214801723
BBA 2nd Sem

Maharaja Agrasen Institute of Technology (Size 18, caps) Affiliated to Guru

Gobind Singh Indraprastha University, Delhi PSP Area, Plot No. 1, Sector 22,
Rohini Delhi 110086

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 ANNEXURE-2

STUDENT UNDERTAKING

This is to certify that I have completed the minor project report “Study On
Consumer Perception Of Price And Purchasing Patterns” under the guidance of
Dr. Anju Bharti in partial fulfilment of the requirement for the award of degree
of Bachelor of Business Administration at Maharaja Agrasen Institute of
Technology (MAIT), Delhi. This is an original piece of work & I have not
submitted it earlier elsewhere.

Signature of Student:

Name of Student:

Enrolment No.:

Date:

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 ANNEXURE-3

CERTIFICATE FROM FACULTY GUIDE

This is to certify that the minor project report titled “Study On Consumer
Perception Of Price And Purchasing Patterns“ is an academic work done by
Khushi Das submitted in the partial fulfillment of the requirement for the award
of the degree of Bachelor of Business Administration (BBA) from Maharaja
Agrasen Institute of Technology (MAIT) , Delhi, under my guidance &
direction. To the best of my knowledge and belief the data & information
presented by him/her in the report has not been submitted earlier.

Signature of Faculty Guide:

Name of Faculty Guide:

Designation:

Date:

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 ANNEXURE-4

Acknowledgement

I take the opportunity to express my gratitude to all of them who in some or

other way helped me to accomplish this challenging report. No amount of
written expression is sufficient to show my deepest sense of gratitude to them.

I am very thankful to Dr. Neelam Sharma, Director, MAIT, Dr. Amit Gupta
HOD, BBA, MAIT and my Guide, Prof. Anju Bharti BBA, MAIT Maharaja
Agrasen Institute of Technology, Rohini for their everlasting support and
guidance on the ground of which I have acquired a new field of knowledge. The
course structure created for this curriculum has benefited with the inclusion of
recent development in the organizational and managerial aspects.

I express my sincere thanks to all people who participated and helped me in

successfully conducting minor project. I am thankful to all the members who
gave valuable information in the part of my minor project

Name of Student:

Signature of Student:

Date:

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 ANNEXURE-5

FORMAT OF CONTENTS

TOPICE Page No.

CHAPTER 1 - Introduction 8
33
CHAPTER 2 – Theoretical Framework
46
CHAPTER 3 – Research Methodology

CHAPTER 4 – Conclusions and Recommendations

Bibliography

Attendance Sheet

LIST OF FIGURES

Fig No. Title Page No.

1.1 Consumer behaviour in India
1.2 Review of literature
1.3 Determinants of consumer perception of price
1.4 Strategies to influence consumer perception of
price
2.1 Consumer perception theory
2.2 Theoretical support
3.1 Objectives of the study
3.2 Methodology

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 ANNEXURE-6

EXECUTIVE SUMMARY

This study explores the relationship between consumer perception of price and
purchasing patterns. The aim is to understand how consumers perceive prices
and how this perception influences their purchasing behaviour. The study is
based on a comprehensive review of existing literature, as well as primary
research involving surveys and interviews with consumers.

Key Findings:

 Price Perception Factors: Consumer perception of price is influenced by

various factors, including reference prices, price-quality relationship,
price fairness, and psychological pricing strategies.

 Impact on Purchasing Patterns: Consumer perception of price has a

significant impact on purchasing patterns. Consumers are more likely to
purchase products they perceive as offering good value for the price.

 Influence of Marketing Strategies: Marketing strategies, such as pricing

promotions and discounts, can influence consumer perception of price
and drive purchasing behaviour.

 Cultural and Social Factors: Cultural norms and social influences play a
role in shaping consumer perception of price. For example, consumers in
some cultures may be more price-sensitive or value-conscious.

 Personal Factors: Individual characteristics, such as income, education,

and past experiences, can also influence consumer perception of price and
purchasing patterns.

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Implications:

 Marketing Strategies: Marketers should consider the impact of pricing

strategies and promotions on consumer perception of price. They should
also tailor marketing messages to appeal to consumers' price sensitivity
and value perceptions.

 Product Packaging: Packaging plays a crucial role in shaping consumer

perception of price and value. Marketers should design packaging that
communicates value and quality to consumers.

 Cultural Sensitivity: Cultural differences in perception of price should be

taken into account when developing marketing strategies. Marketers
should be sensitive to cultural norms and values regarding pricing.

 Consumer Education: Educating consumers about the value of a product

can help shape their perception of price and influence their purchasing
decisions.

Overall, this study highlights the importance of understanding consumer

perception of price in shaping purchasing patterns. By understanding the factors
that influence price perception, marketers can develop more effective strategies
to attract and retain customers.

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 CHAPTER-1
INTRODUCTION

8
Background of the topic

Consumer perception of price plays a crucial role in determining purchasing patterns and
behaviour. It influences on how consumers evaluate products, make purchasing decisions,
and perceive value. This study aims to explore the relationship between consumer perception
of price and purchasing patterns focusing on factors that influence perception and how it
affect consumer behaviour.

Consumer perception of price and its impact on purchasing patterns is a well-researched area
in marketing and consumer behaviour. Numerous studies have explored how consumers
perceive price and how this perception influences their purchasing decisions.

One study, for example, found that consumers often use price as an indicator of product
quality. Higher prices can lead consumers to perceive a product as being of higher quality,
which can positively influence their purchasing intention, especially for products where
quality is a key consideration, such as electronics or luxury goods.

Another study focused on the role of price in consumer decision-making processes. It found
that while price is an important factor, it is often evaluated in conjunction with other factors
such as product features, brand reputation, and personal preferences. Consumers may use
price as a cue to infer other aspects of the product, such as its durability or reliability.

Additionally, research has shown that consumers' perception of price can be influenced by
various factors, including marketing strategies, such as discounts or promotions, as well as
external factors such as economic conditions or social influences.

Overall, these studies highlight the complex relationship between consumer perception of
price and purchasing patterns, and the importance of understanding these dynamics in
developing effective pricing and marketing strategies.

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1.1 CONSUMER BEHAVIOUR IN INDIA

Indian Consumer

The vastness of India's landmass means that the country's population is dispersed throughout
a large area. As the nation is distinguished by a wide range of climates, religions, languages,
literacy levels, traditions and calendars, lifestyles, and economic statuses, customers here are
a complicated and odd population. For a marketer, particularly one who plans to do
nationwide marketing, the heterogeneity has several ramifications. Indian customers aren't all
the same. Great variety distinguishes them. When we look at Indian customers, we are struck
by their variety in religion, language, culture, tradition, social norms, and clothing and eating
preferences. 1.4 billion people in India belong to seven distinct religious groups. With time
and experience, every religion has developed an own hierarchical structure. Diversity may be
seen in terms of language as well. According to the Indian constitution, sixteen languages are
designated as national ones. Hundreds of dialects also exist. As the population shifts,
a variety of new languages have been developed. The language variety of India is a
major obstacle for a marketer trying to reach the whole country. Indian fashion is a
diverse representation of the country's people. Dress has a long history in almost every
state and religious group in the country. Jewellery and ornaments are the same. For food, the
South relies heavily on rice whilst the North relies on wheat. Wheat is already a common
dietary staple in many southern states, so this is not surprising. Many northerners have
discovered the joys of southern cooking. The fundamental difference in eating patterns still
exists. Vegetarians may be found in certain societies

Changing Profile of Indian Consumers

India's enormous population and rising disposable incomes provide marketers a lucrative
investment opportunity. How marketers should adapt to the changing Indian consumer. The
Indian consumer is no longer isolated. He's social media-savvy and well-connected. This may
signify to marketers to focus more on social media promotion. Social media boosts word-of-
mouth. Indians are more educated and environmentalist. They're conscious of environmental
risks. Marketers should invest in environmental research and give consumers an eco-friendly
marketing mix. Developed nations are ageing faster than emerging ones like India. Younger
Indians exposed to global media and social networking want style. Marketers must
mix function and elegance. Many companies provide identical items to Indian consumers.
Brand rivalry delivers clients better discounts and sales promotions. Today's consumers have
several options, which reduces brand loyalty. Since comparable items are available, people
seek the best bargain. To separate themselves from competition, marketers must constantly
inventing. Indian consumers no longer rely on marketing information. Before buying, today's
consumer reviews all accessible information sources to evaluate and contrast product
alternatives. Marketers must be open and give as many product facts as feasible across
channels. Indian consumers now have more money in their pockets as a result of declining
family numbers and rising family incomes. Consumers in India's newest generation have no
qualms about taking vacations on the backs of future earnings. International marketers
have a lot of opportunity to invest in the Indian hotel business. Marketers might
interpret this as the requirement to provide customers with a seamless purchasing
experience. Despite a rise in their personal wealth, Indian consumers are finding themselves
more pressed for time as a result of longer workweeks. In today's India, it is extremely usual
for households to have two earners. Consumers value time over money. Marketers must
provide fast, convenient delivery.

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MANEGERIAL IMPLICATION

Marketers must have information about their consumer’s buying behaviour and media
preferences in order to create effective marketing campaigns. Marketers may better
understand how consumer behaviour ideas affect the creation of marketing communication
strategies by evaluating a variety of consumer behaviour models. They may examine the
information required to discover and choose target markets by using these models. Different
marketing methods, such as positioning and market segmentation, benefit from these models.

Consumer buying behaviour in India has several managerial implications for businesses
operating in the country. Here are some key implications:

1. Understanding Cultural Factors: India is a diverse country with varied cultural

influences. Managers need to understand the cultural nuances that influence buying
behaviour, such as the importance of family, festivals, and traditions. This
understanding can help businesses tailor their marketing strategies to resonate with
Indian consumers.

2. Price Sensitivity: Indian consumers are often price-sensitive and value-conscious.

This means that pricing strategies need to be carefully considered. Offering discounts,
promotions, and competitive pricing can be effective in attracting Indian consumers.

3. Preference for Value: While price is important, Indian consumers also value quality
and value for money. Businesses need to focus on offering products that meet
consumer expectations in terms of quality and features.

4. Social Influence: Social factors play a significant role in influencing buying behaviour
in India. Word-of-mouth, recommendations from friends and family, and social media
influence can impact purchasing decisions. Managers should consider these factors in
their marketing and advertising strategies.

5. Changing Demographics: India has a young population with changing demographics.

This means that there is a growing segment of young, urban consumers with different
preferences and buying habits. Businesses need to adapt to these changing
demographics and tailor their products and services accordingly.

6. Digital Transformation: With the increasing use of smartphones and the internet,
Indian consumers are increasingly shopping online. This shift towards digital
channels presents opportunities for businesses to reach a wider audience and improve
their customer engagement strategies.

7. Regulatory Environment: The regulatory environment in India can impact consumer

buying behaviour. Managers need to be aware of regulations related to pricing,
advertising, and product labelling to ensure compliance and avoid any negative
impact on consumer perception.

Overall, understanding consumer buying behaviour in India is crucial for businesses to

effectively target and engage with Indian consumers. By considering the cultural, social, and
economic factors that influence buying behaviour, businesses can develop strategies that
resonate with Indian consumers and drive growth in the market.

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1.2 RELATIONSHIP BETWEEN PRODUCT PRICING AND PRODUCT
PACKAGING

Product pricing and product packaging are intricately linked in marketing strategies. Pricing
often reflects the perceived value of a product, and packaging plays a crucial role in
influencing this perception. The design, materials, and aesthetics of packaging can suggest
the quality, exclusivity, and functionality of a product, which in turn can influence the price
consumers are willing to pay. Premium packaging, for example, can create a sense of luxury
and justify a higher price point. Conversely, budget-friendly packaging can signal
affordability and attract price-conscious consumers. Additionally, packaging can
communicate important product information and benefits, further influencing pricing
decisions. Ultimately, the relationship between product pricing and packaging highlights the
importance of aligning these elements to effectively communicate value to consumers.

In the competitive market of commodities, products, varieties, consumers, ethnicities, and

preferences, product pricing and product packaging information descriptions have a
considerable influence on the buying behaviour of consumers. To explore the cumulative
effects of product pricing and packaging on the buying behaviour of consumers of different
ethnicities, it is essential to research these aspects of marketing. It is worth mentioning that
consumer satisfaction also plays a decisive and mediating role in the development and
melding of buying behaviour of consumers. It is believed that pricing has a significant effect
on the buying behaviour of consumers because the higher a product is priced, the fewer units
are sold. By contrast, products selling at prices lower than the market rate are assumed to sell
at a higher volume. Several studies have shown that pricing is more critical and relevant to
consumer buying behaviour.

When discussing the combined effect of product pricing and packaging relationships on
consumer buying behaviour, pricing alone plays a more critical role than packaging, which
has a partial role in buying behaviour. Thus, using this analogy, products can be sold,
surprisingly, at a much higher volume. One can increase the prices of the products if the
competitor products are scarce in the market or if the manufacturers are low in number. This
behaviour may not affect the number of sales or the attitude of the consumer toward buying.
If the product is already in abundance in the market, then pricing will definitely play an
important role because the increase in price will discourage customers from buying it.
Similarly, if prices are lowered under such market conditions, then consumers will increase
the amount that they purchase significantly. Even though product pricing has a great
influence than product packaging on the decision process of a buyer, high prices in a highly
competitive market can lose customers permanently due to the effect of increased pricing
However, super packaging or labelling of products may not attract the consumer for several
reasons.

One of the primary reasons may be the high price and packaging, announcing the excellent
quality of the product. In such cases, there may be a lack of interest by the consumer toward
attractive packaging; instead, they may prefer to buy local products that are cheap and readily
available in the market. According to, consumer satisfaction is another aspect of product
selling and consumer buying behaviour. It also plays a mediating role in product buying
behaviour, pricing, and packaging. Even though a price might be negotiable and the product
is provided with helpful information and good, decent packaging, there is a lot to do to satisfy
a consumer. All of these factors are correlated with consumer satisfaction. If the consumer is

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satisfied with all these, they may buy the product, but there is no guarantee of this. Thus,
consumer buying behaviour is also influenced by satisfaction. This study seeks to answer
several questions to explain consumer buying behaviour in relation to product pricing and
packaging, with consumer satisfaction as a mediating factor. In this work, we first present a
brief review of this research, which differs from the current literature in various respects. The
research has generated several findings.

• Product prices significantly correlate with consumer buying behaviour.

• The product information available on packaging influences the consumer’s buying
behaviour.
• Satisfaction plays a mediating role in consumer buying behaviour.
• Pricing of the product plays an essential role in customer satisfaction.
• Product information available on labels plays a significant role in customer satisfaction.

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1.3 Review of Literature and Hypothesis Development
Definition of Consumer Perception Of Price

Product pricing seems to be the only direct element that generates revenue and indicates the
success or failure of a product or service. As a result, the researchers in this study chose to
emphasize this aspect. Carried out research into the theoretical dimensions of consumer
purchasing behaviour and the factors that affect it. He analysed the relationship between
consumer buying behaviour and factors affecting the buying process and decisions of the
consumers. His research provides enough evidence to show that the internal and external
influences of a consumer have a major relationship with their purchasing behaviour.
According to good prices of well-known brands negatively affect the purchasing process.
Young people are eager to buy brands, but their low income hinders them from doing so. The
only aspect of the marketing mix that generates revenue is price, whereas the others generate
costs. The authors also noted that the purchasing decisions of consumers focus on their price
perception and what they think about the actual price of a product. The main goal of
marketing is to understand how customers move toward their price perception. We are all
customers, no matter how old, educated, wealthy, or talented. Understanding customer
behaviour thus becomes a critical challenge for advertisers, distributors, and salespeople.

1. Reference Prices: Consumers often compare the price of a product to an internal

reference price or an external reference price (such as the price of a similar product
from a competitor) to assess its value.

2. Price-Quality Relationship: Consumers may use price as a cue for quality. They
might perceive higher-priced products as being of higher quality and lower-priced
products as being of lower quality.

3. Price Fairness: Consumers evaluate the fairness of a price based on factors such as
the perceived cost to produce the product, the seller's profit margin, and the prevailing
market price.

4. Psychological Pricing: Pricing strategies such as charm pricing (e.g., pricing a

product at $9.99 instead of $10) and prestige pricing (setting a high price to convey
exclusivity) can influence consumer perceptions of price.

5. Price Presentation: The way prices are presented (e.g., as a single price, with
discounts or promotions) can affect how consumers perceive the price and value of a
product.

6. Social and Cultural Influences: Social norms and cultural values can influence how
consumers perceive prices. For example, in some cultures, bargaining is common, and
consumers expect to negotiate prices.

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1.3 Product Packaging and Consumer Buying Behaviour
Packaging a product with relevant product details contributes positively to consumer buying
behaviour. Names, features, and product packaging attract consumers. Many people are
influenced by the packaging and marketing of items. While a product may be of any quality,
the impact on customer purchasing is essential. The aim of this study was to determine the
effect of product pricing and information about product packaging on the buying behaviour
of consumers. Innovation in product labelling and packing often has a major relationship with
demand, which is why there are many methods for this type of action plan if a company
wants to pursue this strategy with regard to its product packaging. When it comes to
packaging, many buyers want a range of product choices. Therefore, marketers should pay
high prices for innovative and exclusive packaging that differentiate their products from the
competition in terms of size, guidance, functionality, product innovation, and shape. For the
target consumer, product packaging acts as an outstanding networking tool, ultimately
increasing their awareness levels. Packaging must highlight key aspects of the product and
brand, such as material composition, purpose, and quality. To show respect for customers,
packaging should include all of this information in regional languages. Not only is efficient
packaging important for storing and preserving products, but it is also important for creating
an interest in and generating actions toward purchasing the product. Packaging that is
environmentally friendly has become increasingly important. As a result, marketers should
place a high priority on this aspect and use best practices to the greatest possible extent,
including the use of environmentally friendly recycled materials.

Product packaging plays a crucial role in consumer buying behaviour. It is often the first
point of contact between a consumer and a product, and it can have a significant impact on
the consumer's decision-making process. Here are some ways in which product packaging
influences consumer buying behaviour:

1. Attracts Attention: Eye-catching packaging can grab the consumer's attention and
make the product stand out on the shelf or in online listings. Bright colours, bold
designs, and unique shapes can all help draw the consumer's eye.

2. Communicates Information: Packaging communicates important information about

the product, such as its features, benefits, ingredients, and usage instructions. Clear
and informative packaging can help consumers make informed decisions about
whether to purchase the product.

3. Creates Perceived Value: The quality and design of the packaging can create a
perception of value in the consumer's mind. High-quality, well-designed packaging
can suggest that the product is also of high quality, even if the consumer has not yet
tried it.

4. Builds Brand Identity: Packaging is an important part of a brand's identity and can
help differentiate a product from its competitors. Consistent branding across
packaging can help build brand recognition and loyalty.

5. Influences Emotions: Packaging can evoke emotions in consumers, such as nostalgia,

excitement, or happiness. Emotionally appealing packaging can create a positive
association with the product and increase the likelihood of purchase.

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 6. Facilitates Convenience: Packaging that is easy to open, use, and store can enhance
the overall user experience and make the product more appealing to consumers.

7. Promotes Sustainability: Environmentally friendly packaging can appeal to

consumers who are concerned about the environment and sustainability. Packaging
that is recyclable, biodegradable, or made from recycled materials can help attract
environmentally conscious consumers.

Overall, product packaging is a powerful tool that can influence consumer buying behaviour
in various ways. It is essential for marketers to carefully consider the design, messaging, and
functionality of packaging to effectively engage consumers and drive purchase decisions

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1.4 Satisfaction of Consumers and Their Buying Behaviour

Customer value and customer satisfaction are considered important parameters for the
relationship between customer value and the willingness to sacrifice. This sacrifice is made in
accordance with an exchange mechanism that includes transaction costs and the risk of the
goods of the company. According to customers will be disappointed in the future if the ratio
value considered by the economic sacrifice of customers with the goods sold by the company
does not meet their expectations. Customers will be satisfied if the ratio value is sufficient or
exceeds their expectations. Another analysis of consumer value examines the understanding
of customers of the quality and benefits of toothpaste in relation to price sacrifice. Social,
emotional, and functional values are all aspects of customer value .

Customer satisfaction is evaluated by obtaining feedback from customers after purchasing

products or services, and then comparing it with their expectations. Customer satisfaction is
calculated using the performance requirements of products or services that are capable of
satisfying the needs and desires of customers. A satisfied consumer is a consumer who
believes that the products or services were worth purchasing, which would encourage them to
buy the products again. On the other hand, a frustrated consumer will persuade other
consumers not to buy the same brand, which ultimately causes switching to rival brands.
According to, “customer satisfaction is perceived as affecting repurchasing intentions and
actions, which, in turn, contributes to an organization’s potential sales and income.”

Satisfaction plays a crucial role in shaping consumer buying behaviour in several ways:

. Repeat Purchases: Satisfied customers are more likely to make repeat purchases of a product
or service. This is because they have had a positive experience with the product or service in
the past and are confident that it will meet their needs again.

. Word-of-Mouth: Satisfied customers are also more likely to recommend a product or

service to others. Positive word-of-mouth can significantly influence the buying behaviour of
others, leading to increased sales.

. Reduced Switching Behaviour: Satisfied customers are less likely to switch to competing
brands or products. This is because they have developed a level of trust and satisfaction with
the current brand, making them less receptive to alternative options.

. Higher Spending: Satisfied customers tend to spend more on products or services. They are
willing to pay a premium for brands that consistently meet or exceed their expectations.

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1.5 Determinants of consumer perception of price

Consumer perception of price is influenced by a variety of factors. Personal factors, such as

income, preferences, past experiences situational factors and external factors play a
significant role in how consumers perceive price

Personal Factors:

a. Income: Consumer perception of price is heavily influenced by their income level.

Consumers with higher incomes may be less price-sensitive and more willing to pay higher
prices for perceived quality or convenience. On the other hand, consumers with lower
incomes are likely to be more price-sensitive and may seek out lower-priced alternatives.

b. Preferences and Values: Consumers’ personal preferences and values play a significant
role in how they perceive price. For example, some consumers may value luxury or premium
products and be willing to pay higher prices for them, while others may prioritize
affordability and seek out lower-priced options.

c. Past Experiences: Previous experiences with similar products or brands can also influence
consumer perception of price. Positive experiences may lead consumers to associate higher
prices with better quality, while negative experiences may make them more price-sensitive.

d. Perceived Risk: Consumers’ perception of the risk associated with a purchase can impact
how they perceive price. Higher-priced products may be perceived as less risky in terms of
quality or performance, leading consumers to justify the higher price.

External Factors:

a. Marketing and Branding: Marketing and branding strategies can significantly influence
consumer perception of price. Brands that are perceived as premium or luxury may be able to
command higher prices, while brands that are perceived as lower quality may need to price
their products lower to attract consumers

b. Competition: The level of competition in the market can also influence consumer
perception of price. In a competitive market with many alternatives, consumers are likely to
be more price-sensitive and seek out the best value for their money.

c. Pricing Strategies: The way a price is presented or framed can impact consumer
perception. For example, a product priced at $9.99 may be perceived as significantly cheaper
than a product priced at $10, even though the difference is minimal.

d. Economic Conditions: Economic conditions, such as inflation or recession, can also

influence consumer perception of price. During times of economic uncertainty, consumers
may be more price-sensitive and seek out lower-priced options.

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Situational Factors:

Consumer buying behaviour is influenced by a variety of situational factors that can impact
the decision-making process. One of the key situational factors is the purchase occasion,
which refers to the specific circumstances or events prompting a purchase. For example,
consumers may be more likely to purchase gifts during holiday seasons or special occasions,
leading to a different buying behaviour than during regular times.

Another important situational factor is the physical environment in which the purchase takes
place. Factors such as store layout, lighting, music, and even the presence of other people can
influence consumer behaviour. For example, a crowded and noisy store may lead to a quicker
decision-making process, while a well-organized and pleasant environment may encourage
consumers to spend more time and make additional purchases.

Time is also a critical situational factor. Consumers may make different purchasing decisions
based on whether they are in a hurry or have ample time to shop around and compare options.
Additionally, the time of day or week can influence buying behaviour, with consumers being
more likely to make impulse purchases during certain times.

Other situational factors include the consumer's mood and emotional state, which can impact
their decision-making process. For example, a consumer who is feeling happy and relaxed
may be more open to trying new products or making impulse purchases, while a consumer
who is feeling stressed or anxious may stick to familiar products or brands.

a. Purchase Context: The context in which a purchase is made can influence consumer
perception of price. For example, a product may be perceived as more valuable if it is
purchased for a special occasion or as a gift.

b. Availability of Alternatives: The availability of alternatives can also impact consumer

perception of price. In a market with limited alternatives, consumers may be more willing to
pay higher prices for a product.

c. Time Pressure: Consumers under time pressure may be more likely to make quick
decisions without carefully evaluating the price, leading to different perceptions of price
compared to when they have more time to consider their options.

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1.6 Impact of perception on purchasing patterns
Consumer perception of price has a significant impact on purchasing patterns and behaviour.
How consumers perceive the price of a product or service can influence their decision-
making process and ultimately determine whether they make a purchase. The impact of
perception on purchasing patterns can be seen in several key ways:

 Purchase Intention:

Consumer perception of price directly affects their intention to purchase a product or service.
A positive perception, where consumers believe they are getting good value for their money,
is likely to increase purchase intention. Conversely, a negative perception, where consumers
believe the price is too high for the value offered, can decrease purchase intention.

 Influencing Price Sensitivity: Purchase intention can influence how sensitive

consumers are to price changes. Consumers with a strong intention to purchase a
particular product may be less sensitive to price and more willing to pay a higher
price to acquire the product. On the other hand, consumers with a weaker intention to
purchase may be more price-sensitive and seek out lower-priced alternatives.

 Driving Purchase Decisions: Purchase intention can also drive purchase decisions
and behaviours. Consumers who have a strong intention to purchase a product are
more likely to actively seek out information, compare prices, and make a purchase
decision. This can lead to more frequent and higher-value purchases, impacting
overall purchasing patterns.

 Creating a Sense of Urgency: Purchase intention can create a sense of urgency in

consumers, especially when coupled with limited-time offers or promotions.
Consumers who have a strong intention to purchase may be more motivated to make a
purchase quickly to take advantage of the offer, leading to changes in purchasing
patterns.

 Impacting Brand Loyalty: Purchase intention can also impact brand loyalty.
Consumers who have a strong intention to purchase a particular brand’s products are
more likely to develop loyalty to that brand and continue purchasing from them. This
can lead to repeat purchases and consistent purchasing patterns over time.

 Affecting Perception of Value: Purchase intention can influence how consumers

perceive the value of a product or service. Consumers who have a strong intention to
purchase may perceive the price as more reasonable and the product as more valuable,
leading to a positive impact on purchasing patterns.

In conclusion, purchase intention has a significant impact on perception of purchasing

patterns. It influences price sensitivity, purchase decisions, sense of urgency, brand loyalty,
and perception of value, all of which can impact how and when consumers make purchases.

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  Repeat Purchase Behaviour:

Consumer perception of price also influences repeat purchase behaviour. If consumers

perceive a product or service to be reasonably priced and of good value, they are more likely
to make repeat purchases in the future. On the other hand, a negative perception may lead to
hesitation or avoidance of future purchases.

 Confirmation of Value: Repeat purchases confirm to the consumer that the product or
service provides value for money. This confirmation strengthens their perception of
the product’s quality, benefits, and overall value proposition, leading to a positive
perception of the purchasing decision.

 Brand Loyalty: Repeat purchases are often a result of brand loyalty, where
consumers prefer a particular brand over others due to positive experiences. This
loyalty can be influenced by various factors, including product quality, customer
service, and brand image, all of which contribute to a positive perception of the brand
and its products.

 Reduced Perceived Risk: Repeat purchase behaviour can reduce the perceived risk
associated with buying a product or service. Consumers who have had positive
experiences with a product or brand are less likely to perceive future purchases as
risky, leading to more confident and frequent purchasing behaviour.

 Habit Formation: Repeat purchases can also lead to habit formation, where consumers
develop a routine or preference for a particular product or brand. This habit reinforces
their perception of the product’s value and can lead to long-term loyalty and
advocacy.

 Word-of-Mouth and Social Proof: Consumers who repeatedly purchase a product or

service are more likely to recommend it to others, leading to positive word-of-mouth
and social proof. This external validation further strengthens the consumer’s
perception of the product’s value and can influence the purchasing patterns of others.

 Price Sensitivity: Repeat purchase behaviour can also impact price sensitivity.
Consumers who are loyal to a brand or product may be less price-sensitive and more
willing to pay a premium for the perceived benefits and value they receive.

In conclusion, repeat purchase behaviour can have a significant impact on consumer

perception of purchasing patterns. It can confirm the value of a product or service, strengthen
brand loyalty, reduce perceived risk, lead to habit formation, and influence price sensitivity.
Marketers can leverage these insights to cultivate repeat purchase behaviour and build long-
term relationships with customers.

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  Brand Loyalty:

Perception of price can impact brand loyalty. Consumers who perceive a brand’s products or
services to be fairly priced and of good value are more likely to develop loyalty to that brand
and continue purchasing from them. Conversely, a negative perception of price may lead
consumers to switch to competing brands offering better value.

 Perception of Quality: Brand loyalty often leads consumers to perceive the quality
of a brand’s products or services as higher than that of competitors. As a result, loyal
customers may be more willing to pay a premium price for the brand’s products,
believing that they are getting a superior product in return.

 Price Sensitivity: Brand loyal customers are generally less price-sensitive than non-
loyal customers. They are more willing to pay higher prices for their preferred brand’s
products, as they place a higher value on the brand and its perceived benefits.

 Repeat Purchases: Brand loyalty often results in repeat purchases, as loyal customers
are more likely to choose their preferred brand over others. This repeat purchase
behaviour contributes to the brand’s profitability and market share.

 Resistance to Competitor’s Promotions: Brand loyal customers are less likely to be

swayed by competitor promotions or discounts. They are more likely to stick with
their preferred brand, even when competitors offer lower prices or incentives.

 Positive Word-of-Mouth: Brand loyal customers are more likely to recommend their
preferred brand to others, leading to positive word-of-mouth marketing. This can
attract new customers who value the opinions of existing loyal customers.

 Emotional Connection: Brand loyalty is often driven by an emotional connection

that customers feel towards a brand. This emotional bond can influence how
customers perceive the brand’s products and prices, leading to a more positive
perception overall.

 Brand Trust: Loyal customers tend to trust their preferred brand more than others.
This trust can influence how customers perceive the value of the brand’s products or
services, making them more willing to pay higher prices.

In conclusion, brand loyalty has a significant impact on consumer perception of price and
purchasing patterns. Loyal customers are more likely to perceive their preferred brand’s
products as higher in quality and value, leading to a willingness to pay higher prices and
repeat purchases. Understanding the impact of brand loyalty can help marketers develop
strategies to build and maintain brand loyalty, ultimately driving sales and profitability.

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  Price Sensitivity:

Consumer perception of price can also influence their price sensitivity. Consumers who
perceive a product or service to be highly valuable may be less sensitive to price changes and
more willing to pay higher prices. Conversely, consumers who perceive a product or service
to be of lower value may be more price-sensitive and seek out lower-priced alternatives.

 Purchase Frequency: Price-sensitive consumers are more likely to adjust their

purchase frequency based on price changes. For example, they may wait for sales or
promotions to purchase a product, or they may purchase less frequently to save
money. This behaviour can lead to fluctuations in demand based on pricing strategies.

 Brand Loyalty: Price-sensitive consumers may be less loyal to brands and more
likely to switch to lower-priced alternatives. They are more inclined to compare prices
and seek out the best deals, which can impact brand loyalty and repeat purchase
behaviour.

 Product Substitution: Price-sensitive consumers are more likely to substitute one

product for another based on price. For example, they may switch to a different brand
or a lower-priced product category if they perceive the price difference to be
significant.

 Sensitivity to Discounts and Promotions: Price-sensitive consumers are more

responsive to discounts, promotions, and sales. They are more likely to take
advantage of these offers and may stock up on products when they are on sale.

 Perceived Value: Price sensitivity can also influence consumers’ perception of value.
Price-sensitive consumers are more likely to equate lower prices with higher value
and may perceive higher-priced products as overpriced or not worth the cost.

 Impulse Purchases: Price-sensitive consumers are less likely to make impulse

purchases, as they are more deliberate in their buying decisions and are more likely to
weigh the cost against the perceived value.

 Price Negotiation: Price-sensitive consumers may be more inclined to negotiate

prices, especially for big-ticket items or services. They are more likely to shop around
and compare prices to get the best deal.

In conclusion, price sensitivity can have a significant impact on consumers’ perception and
purchasing patterns. Marketers must understand the level of price sensitivity among their
target audience and tailor their pricing strategies accordingly. By offering competitive prices,
discounts, and promotions, businesses can attract price-sensitive consumers and influence
their purchasing behaviour.

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  Perception of Quality:

Consumer perception of price is often linked to their perception of quality. Consumers may
use price as a heuristic for quality, assuming that higher-priced products are of higher quality.
This perception can influence their purchasing patterns, with consumers willing to pay more
for products they perceive to be of higher quality.

 Price Sensitivity: Consumers’ perception of quality can affect their price sensitivity.
When consumers perceive a product to be of higher quality, they may be less sensitive
to price and more willing to pay a premium. On the other hand, if they perceive a
product to be of lower quality, they may be more price-sensitive and seek out lower-
priced alternatives.

 Brand Loyalty: Perception of quality is closely linked to brand loyalty. Consumers

who perceive a brand’s products or services to be of high quality are more likely to
develop loyalty to that brand and become repeat customers. They may be willing to
pay higher prices for the brand’s products based on their perception of quality.

 Purchase Intention: Perception of quality can also influence consumers’ intention to

purchase a product. If consumers perceive a product to be of high quality, they are
more likely to purchase it, even if it is priced higher than competing products.
Conversely, if they perceive a product to be of low quality, they may be hesitant to
purchase it, regardless of price.

 Word-of-Mouth and Reviews: Perception of quality can impact consumers’

willingness to recommend a product to others or leave positive reviews. Consumers
who perceive a product to be of high quality are more likely to share their positive
experiences with others, which can influence the purchasing decisions of others.

 Product Expectations: Consumers’ perception of quality is often influenced by their

expectations. If a product meets or exceeds their expectations, they are more likely to
perceive it as high quality and be satisfied with their purchase. However, if a product
fails to meet their expectations, they may perceive it as low quality, leading to
dissatisfaction and potentially negative word-of-mouth.

In conclusion, perception of quality has a significant impact on consumer purchasing

patterns. Consumers’ perception of quality influences their price sensitivity, brand loyalty,
purchase intention, and willingness to recommend a product to others.

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1.7 Strategies to influence consumer perception of price

There are several strategies that marketers can use to influence consumer perception of price
and create a positive impression that drives purchasing behaviour. These strategies leverage
various psychological and marketing principles to shape how consumers perceive the value
of a product or service relative to its price. Some of the key strategies include:

 Price Anchoring:

This strategy involves presenting a higher-priced option next to the target product to make
the target price seem more attractive. By anchoring the price comparison, consumers perceive
the target price as a better deal, even if it is higher than they initially intended to pay.

 Presenting the Anchor: The first step in the price anchoring strategy is to present
consumers with a higher-priced option. This could be a premium version of the
product, a larger quantity, or a bundled package that includes additional features or
services.

 Establishing Value: The anchor is used to establish a reference point for consumers.
By presenting a higher-priced option, marketers are implicitly suggesting that the
target price is a better value in comparison. Consumers tend to anchor their perception
of value to the initial price they see.

 Perceived Value of the Target Price: After establishing the anchor, the target price
is presented to consumers. Because consumers have anchored their perception of
value to the higher price, they are more likely to perceive the target price as a good
deal or a better value, even if it is higher than they initially intended to pay.

 Influence on Purchasing Behaviour: The price anchoring strategy is designed to

influence consumer purchasing behaviour by shaping their perception of value.
Consumers are more likely to perceive the target price as fair and reasonable when it
is presented alongside a higher-priced option, leading to increased likelihood of
purchase.

 Application in Marketing: Price anchoring can be applied in various marketing

contexts, such as retail sales, online shopping, and service industries. For example, a
clothing retailer may display a high-end designer outfit next to a more moderately
priced outfit to make the latter seem like a better value. Similarly, a software
company may offer a premium package alongside a basic package to anchor the
perception of value for the basic package.

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  Price Bundling:

Bundling involves offering multiple products or services together at a discounted price

compared to purchasing them individually. This strategy creates a perception of value for
consumers, as they perceive the bundle as a better deal than buying each item separately.

 Pure Bundling: In pure bundling, products or services are only available as part of a
bundle and cannot be purchased separately. This strategy encourages consumers to
buy the bundle to get the desired product or service, even if they may not be interested
in all the items included in the bundle.

 Mixed Bundling: Mixed bundling involves offering products or services both

individually and as part of a bundle. This allows consumers to choose whether to
purchase the bundle or select individual items based on their preferences. Mixed
bundling can appeal to a wider range of consumers by offering flexibility in
purchasing options.

 Joint Bundling: Joint bundling involves bundling complementary products or

services together. For example, a mobile phone company may offer a bundle that
includes a phone, a case, and a screen protector. Joint bundling can increase the
perceived value of the bundle by offering everything a consumer needs in one
package.

 Leader Pricing: Leader pricing is a strategy where one product in the bundle is
priced lower than its standalone price to attract consumers. The lower-priced item acts
as a “leader” to draw consumers’ attention to the bundle and encourage them to
purchase.

 Volume Bundling: Volume bundling involves offering discounts based on the

quantity purchased. For example, a consumer may receive a discount for purchasing a
larger quantity of a product. This strategy encourages consumers to buy more to take
advantage of the discount, increasing sales volume.

Overall, price bundling is an effective strategy to influence consumer perception of price by

offering bundled products or services at a price that is perceived as a better value than
purchasing each item individually. By understanding consumer preferences and behaviours,
marketers can use price bundling to create attractive offers that drive sales and increase
revenue.

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  Loss Leader Pricing:

This strategy involves selling a product at a price that is below its cost to attract customers to
the store or website. While the retailer may incur a loss on the initial sale, the goal is to
generate additional sales of higher-margin items once customers are in the store.

 Perceived Value: Consumers perceive the discounted item as having a higher value
than its price, creating a perception of getting a good deal. This perception can
influence their overall perception of the retailer, making them more likely to make
additional purchases.

 Foot Traffic: Offering a loss leader can drive foot traffic to physical stores or
increase visits to online stores. Once in the store, consumers are likely to browse and
purchase other items, increasing the overall sales volume.

 Brand Loyalty: Loss leader strategy can help build brand loyalty as consumers
associate the brand with good deals and value for money. This can lead to repeat
purchases and long-term customer relationships.

 Cross-Selling and Up-Selling: Once consumers are in the store or on the website,
retailers have the opportunity to cross-sell or up-sell other products with higher profit
margins. This can significantly increase the average transaction value.

 Competitive Advantage: By offering compelling discounts on popular items,

retailers can gain a competitive advantage over rivals. This can attract customers
away from competitors and help increase market share.

 Clearance of Excess Inventory: Loss leader strategy can also be used to clear out
excess inventory or slow-moving items. By offering these items at a steep discount,
retailers can free up space for new products and reduce carrying costs.

It’s important for retailers to carefully plan and execute the loss leader strategy to ensure it
generates the desired results. Factors such as the selection of the loss leader product, pricing
strategy, advertising, and inventory management all play crucial roles in the success of this
strategy.

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  Psychological Pricing:

Psychological pricing tactics involve setting prices that end in 9, 99, or 95, as these prices are
perceived as being significantly lower than they actually are. For example, a product priced at
$9.99 may be perceived as being closer to $9 than $10, leading consumers to perceive it as a
better deal.

 Charm Pricing: Charm pricing involves setting prices that end in 9, 99, or 95. For
example, pricing a product at $9.99 instead of $10.00. This strategy is based on the
idea that consumers perceive prices ending in 9 as significantly lower than they
actually are, leading them to perceive the product as a better value.

 Prestige Pricing: Prestige pricing involves setting prices at a high level to create a
perception of exclusivity and luxury. This strategy is often used for luxury and high-
end products, where a higher price is associated with higher quality and status.

 Price Framing: Price framing involves presenting the price of a product in a way that
emphasizes its value. For example, instead of presenting the price as a standalone
number, marketers can frame it as a daily cost or as a percentage discount off the
regular price. This framing can influence how consumers perceive the price and its
value.

 Decoy Pricing: Decoy pricing involves introducing a third, less attractive option to
make a target option seem more appealing. For example, a movie 28heater might
offer a small popcorn for $3, a medium popcorn for $6, and a large popcorn for $7.50.
The large popcorn acts as a decoy to make the medium popcorn seem like a better
value.

 Reference Pricing: Reference pricing involves highlighting a comparison price, such

as the manufacturer’s suggested retail price (MSRP) or a competitor’s price, to create
a perception of value. Consumers are more likely to perceive a product as a good deal
if they believe they are getting a discount off a higher reference price.

 Odd-Even Pricing: Odd-even pricing involves setting prices that are just below a
round number (e.g., $99.99 instead of $100). This strategy is based on the idea that
consumers perceive prices that are just below a round number as significantly lower
than the round number itself.

 Bundle Pricing: Bundle pricing involves offering multiple products or services

together at a discounted price compared to purchasing them individually. This
strategy creates a perception of value for consumers, as they perceive the bundle as a
better deal than buying each item separately.

These psychological pricing strategies can be effective in influencing consumer perception of

price and driving purchasing behaviour. However, it’s important for marketers to use these
strategies ethically and transparently to avoid misleading consumers.

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  Reference Pricing:

This strategy involves highlighting a comparison price, such as the manufacturer’s suggested
retail price (MSRP) or a competitor’s price, to create a perception of value. Consumers are
more likely to perceive a product as a good deal if they believe they are getting a discount off
a higher reference price.

 MSRP Comparison: One common use of reference pricing is to compare the current
price of a product to the manufacturer’s suggested retail price (MSRP). By showing
that the current price is significantly lower than the MSRP, marketers can create a
perception of value and encourage consumers to make a purchase.

 Competitor Comparison: Another approach is to compare the price of a product to

that of a competitor. This can be done by highlighting the lower price of the product
compared to a similar product from a competitor, or by showing that the product
offers better value for money compared to the competition.

 Historical Price Comparison: Marketers can also use historical price comparisons to
influence consumer perception of price. For example, they can highlight that the
current price is a limited-time discount or promotion, or that the price has been
reduced from a higher price in the past.

Overall, reference pricing is a powerful strategy for influencing consumer perception of price
and creating a sense of value. By highlighting comparison prices, marketers can encourage
consumers to perceive the price of a product as fair and reasonable, leading to increased sales
and customer satisfaction.

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  Limited Time Offers:

Creating a sense of urgency by offering limited-time discounts or promotions can influence

consumer perception of price. Consumers are more likely to make a purchase if they believe
they are getting a special deal that is only available for a short period.

 Sense of Urgency: By setting a deadline for the offer, such as “limited time only” or
“offer ends soon,” LTOs create a sense of urgency. Consumers feel compelled to act
quickly to take advantage of the offer before it expires, driving them to make a
purchase decision sooner than they might have otherwise.

 Perceived Value: LTOs create the perception of a special, time-limited opportunity to

save money or gain additional benefits. Consumers perceive the offer as a better value
compared to regular prices or standard promotions, making them more likely to make
a purchase to take advantage of the perceived savings or benefits.

 Scarcity: LTOs also leverage the principle of scarcity, where limited availability of a
product or service increases its perceived value. When consumers believe that the
offer is only available for a limited time, they may perceive the product or service as
more desirable and be more motivated to make a purchase to avoid missing out.

 Behavioural Influence: LTOs can influence consumer behaviour by encouraging

immediate action. The fear of missing out on a good deal can override other
considerations, such as price sensitivity or budget constraints, leading consumers to
make impulsive buying decisions.

 Brand Loyalty and Engagement: LTOs can also help build brand loyalty and
engagement. Customers who take advantage of a limited-time offer may develop a
positive association with the brand and be more likely to make repeat purchases in the
future.

 Competitive Advantage: LTOs can give businesses a competitive advantage by

attracting customers away from competitors who do not offer similar promotions.
They can also help businesses increase market share and drive sales growth in the
short term.

Overall, limited time offers are a powerful marketing strategy that can effectively influence
consumer perception of price and drive purchasing behaviour. By creating a sense of urgency
and scarcity, LTOs can increase perceived value, encourage immediate action, and ultimately
lead to increased sales and customer engagement for businesses.

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  Value-Added Pricing:

Instead of focusing solely on the price, marketers can emphasize the value-added benefits of
a product or service to justify a higher price. Highlighting features, quality, or convenience
can help consumers perceive the price as fair and reasonable.

 Emphasizing Unique Features: One way to implement value-added pricing is by

emphasizing the unique features or characteristics of a product that set it apart from
competitors. For example, a smartphone manufacturer might highlight advanced
camera technology, longer battery life, or exclusive software features to justify a
higher price.

 Quality Assurance: Another aspect of value-added pricing is emphasizing the quality

and reliability of a product. By highlighting superior craftsmanship, durable materials,
or rigorous quality control processes, marketers can create a perception of higher
value and justify a premium price.

 Convenience and Ease of Use: Value-added pricing can also be based on the
convenience or ease of use that a product offers. For example, a food delivery service
might justify higher prices by emphasizing fast delivery times, easy ordering
processes, and a wide selection of restaurants.

 Bundling Value: Value-added pricing can also involve bundling additional products
or services with the main offering to create a perception of greater value. For
example, a software company might offer training, support, and regular updates as
part of a premium package to justify a higher price.

 Brand Reputation: A strong brand reputation can also be a key driver of value-added
pricing. Consumers may be willing to pay more for products or services from a
trusted and reputable brand based on the perceived value of the brand itself.

 Perceived Value vs. Cost: Ultimately, value-added pricing is about shaping

consumers’ perception of value relative to cost. By highlighting the additional
benefits and advantages that a product or service offers, marketers can create a
perception of higher value, making the price seem more justified and reasonable.

In conclusion, value-added pricing is a strategy that focuses on emphasizing the additional

value or benefits that a product or service provides to justify a higher price. By highlighting
unique features, quality, convenience, and brand reputation, marketers can influence
consumer perception of price and create a perception of higher value, ultimately driving
purchasing behaviour.

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 CHAPTER-2
THEORETICAL FRAMEWORK

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2.1 Consumer Perception Theory

Merchants aim to increase their sales by determining what drives their customers' purchase
decisions. Consumer perception theory attempts to explain consumer behaviour by analyzing
motivations for buying -- or not buying -- particular items. Three areas of consumer
perception theory relate to consumer perception theory: self-perception, price perception and
perception of a benefit to quality of life.

Definition

Consumer perception applies the concept of sensory perception to marketing and advertising.
Just as sensory perception relates to how humans perceive and process sensory stimuli
through their five senses, consumer perception pertains to how individuals form opinions
about companies and the merchandise they offer through the purchases they make. Merchants
apply consumer perception theory to determine how their customers perceive them. They also
use consumer perception theory to develop marketing and advertising strategies intended to
retain current customers -- and attract new ones.

Self-Perception

Self-perception theory attempts to explain how individuals develop an understanding of the

motivations behind their own behaviour. Self-perception by customers relates to values and
motivations that drive buying behaviour -- which is also an important aspect of consumer
perception theory. For instance, a study by researchers at the University of Massachusetts at
Amherst addressed how self-perception shaped consumers' buying behaviour. The study
considered the question of whether consumers believed their buying decisions had a real
effect on issues such as environmental impact. The researchers concluded that consumers
‘self-perception was a driving factor in whether or not they placed a priority on socially
conscious purchase and consumption practices. Consumers who viewed themselves as
socially conscious tended to place more weight on issues such as environmental impact when
making buying decisions than consumers who did not hold similar views of themselves.

Price Perception

While mass merchandisers such as Wal-Mart emphasize low prices as an inherent virtue,
upscale merchants attempt to emphasize quality and value for money to appeal to potential
customers. Researchers at the School of Business Administration at LaSalle University and
Lebow College of Business at Drexel University considered several factors, including price
perception -- whether consumers believed they were being charged fair prices -- in
determining whether online shoppers would make repeat purchases through the same
website. The researchers concluded that price perception strongly influenced whether
customers were satisfied with their purchases and whether they would make future purchases.
Two factors that shaped price perception were the perceived quality of the merchandise or
service in question and price comparisons with merchants offering similar merchandise or
services.

33
Benefit Perception

"It's good, and it's good for you." Many consumers are familiar with this phrase frequently
associated with food advertising. Researchers from Marquette University, Louisiana State
University and the University of Arkansas surveyed customers to determine how nutrition
claims associated with food affected their perception of that food's nutritional value. The
researchers found that consumers tend to reject general, unsupported claims of enhanced
nutrition, especially concerning high nutritional value for foods that are traditionally viewed
as unhealthy. The researchers also theorized that consumers would demonstrate a trend
toward applying more scrutiny to nutrition claims and would demand more specific
information about the foods they purchase.

34
35
2.2 Buyer behaviour: stimulus-response model:

A well-developed and tested model of buyer behaviour is known as the stimulus-response

model, which is summarised in the diagram below

In the above model, marketing and other stimuli enter the customers “black box” and
produce certain responses. Marketing management must try to work out what goes on the
in the mind of the customer the “black box”.
The Buyer’s characteristics influence how he or she perceives the stimuli; the decision
making process determines what buying behaviour is undertaken. Characteristics that affect
customer behaviour The first stage of understanding buyer behaviour is to focus on the
factors that determine the “buyer characteristics” in the “black box

To study consumer perception of price and purchasing patterns, you can consider using a
theoretical framework that integrates concepts from psychology, economics, and marketing.
Here is a simplified framework that you could adapt and expand upon for your study:

1. Consumer Behaviour Theory: Begin with foundational theories such as the Theory of
Planned Behaviour or the Behavioural Economics theory. These theories emphasize
the role of attitudes, subjective norms, and perceived behavioural control in
influencing consumer decisions.

2. Perception of Price: Incorporate theories related to how consumers perceive price,

such as Prospect Theory or Reference Price Theory. These theories suggest that
consumers compare prices to internal reference points and are influenced by how
prices are framed.

3. Purchasing Patterns: Explore theories related to purchasing patterns, such as the

Consumer Decision-Making Process (including need recognition, information search,
evaluation of alternatives, purchase decision, and post-purchase behaviour) or the
Loyalty Loop (awareness, consideration, purchase, loyalty).

4. Cultural Influences: Consider Hofstede's Cultural Dimensions Theory or Hall's High-

and Low-Context Cultures theory to account for cultural influences on price
perception and purchasing patterns.

5. Marketing Mix: Include elements of the marketing mix (product, price, place,
promotion) to understand how these factors interact with consumer perception of
price and influence purchasing patterns.

6. Consumer Segmentation: Use theories of consumer segmentation to explore how

different consumer segments perceive price and exhibit different purchasing patterns.

7. Technology and E-commerce: Consider how technology, especially in the context of

e-commerce, influences price perception and purchasing patterns. This could include
theories related to online consumer behaviour and digital marketing strategies.

36
 8. Environmental Influences: Lastly, consider external factors such as social, economic,
and environmental influences that may impact consumer perception of price and
purchasing patterns.

By integrating these theoretical frameworks, you can develop a comprehensive understanding

of how consumer perception of price influences purchasing patterns, and how various factors
interact to shape consumer behaviour in different contexts.

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2.3 THEORETICAL SUPPORT OF THE STUDY

The following research was conducted to investigate underlying issues. This study is a
continuation of expectancy disconfirmation theory (EDT) and social cognitive theory (SCT).
Both theories provide a strong background for conducting this research. According to EDT,
the satisfaction of consumers is linked to the expectation and perception of product quality. A
consumer sets an expectation before examining a product in real time. This comparison of
present expectations with real-sense performance is the basis of EDT. In this study, consumer
satisfaction plays a mediating role between product pricing, product packaging, and
consumer buying behaviour. The expectations of consumers are based on the price of the
product, information on product packaging, and perceived quality.

The other central backbone of this research is SCT, developed by Bandura (2012), which
explains that learning takes place in a social context with a complex and reciprocal
relationship between the individual, their environment, and their actions. The emphasis on
social relationships, and also external and internal social reinforcement, is a distinctive
feature of SCT. SCT considers the specific ways in which people maintain their behaviour
and interact with others. It also considers the specific ways in which people learn and sustain
behaviours and the social context in which they do so. According to this theory, past
experiences strengthen ideas and expectations, all of which affect whether a person maintains
his/her attitudes. Many behavioural models that are used in studies related to health do not
include behaviour maintenance; instead, they focus on behaviour initiation. This is a shame
because the real purpose of public health is to maintain conduct rather than initiate it. SCT
aims to illustrate how people monitor and reinforce their actions to achieve goal-directed
behaviour that can be managed. Thus, the product pricing and packaging of a product with
useful information on labels will surely correlate with consumer buying behaviour that will
persist. The customer will buy or not buy in the future on the basis of the expectations and
perceptions of the product once his behaviour about the product has already been initiated. A
conceptual framework was developed to focus on the specific variables. The framework
consists of the hypotheses shown in Figure

re

38
2.4 THEORIES OF CONSUMER BUYING BEHAVIOUR

Theory of Reasoned Action (1975) :

The Theory of Reasoned Action was proposed in 1975 by Martin Fishbone and Ice Janzen.
This approach was claimed as being superior than information integration theory. Two key
modifications are noticeable. First, Reasoned Actions adds a behavioural intention as an
additional component to the concept of conviction. As does Information Integration theory
(along with numerous others), Reasoned Action is only focused on behaviour rather than
attempting to anticipate attitudes. Additionally, this strategy acknowledges that there
are frequently circumstances (or other factors) that restrict the impact of attitude on
behaviour.

Howarth Plan:

The strategy is simple yet exposes a deep understanding of consumer knowledge, judgement
and beliefs. This resolution building is significant to responses. This has: Inputs, perceptions,
outputs, and exogenous variables. People need certain facts to make decisions. Buying
behaviour studies show that it's vital because people like communal and public support.
These characteristics, such as objectives, beliefs, and understanding, influence
consumers' decision-making. Perceptual preference occurs when a person compresses
knowledge according on his needs and actions. Contentment or dissatisfaction follow
shopping. Redemption boosts brand understanding and approach. Negative attitudes
emerge from unhappiness. Exogenous variables don't affect the choice technique. They
indirectly impact consumers and vary by user. Character, social class, marketing, and
economic standing. All four criteria stated affect decision-making

Maslow's Hierarchy of Needs Theory (1943):

Maslow said that a person's efforts to meet five basic needs—physiological, security, social,
and, Regards, self-realization—are what lead to inspiration. According to Maslow, certain
wants might result in bodily weights that can affect a man's behaviour. Physiological needs
include those that are necessary for human survival, such as air, food, drink, shade, clothes,
and rest. Security needs include those that endow an identity with a sense of wealth and
security. Security requirements include private protection, healthy finances, excellent health,
and insurance against errors, harm, and their negative effects. Social needs are also known as
connection, having a place, the desire to perceive an emotion having a place, and recognition.
In order for people to not feel alone, friendless, or helpless, human needs are vital.
Relationships, friendships, and kinships all serve to meet social demands. Regard needs relate
to the need for respect and dignity, with the former being considerably more important than
receiving respect and adulation from others. Self-realization needs relate to a person's need
to touch their entire torpid. Anything that is incredibly particular is the necessity to organize
what one is capable of. Maslow was confident that these needs exist in a multi-
leveled hierarchy. This movement strategy implies that lower priority demands must be
satisfied before higher priority needs in terms of amount. Since it takes effort to
satisfy unmet obligations, the lack of legislation mandates that once a need is met, assistance
ceases to be provided.

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Hawkins Stern Impulse Buying (1962)

Hawkins Stern had complete faith in the concept of motivational behaviour. According to
Stern, irrational buying reasons can be illustrated by the typical buyer as being near
to rational buying decisions. Impulsive buying are mostly sparked by external shocks and are
unrelated to core leadership principles. Consumer behaviour hypotheses predict the decision-
making processes of consumers and outline the most effective strategies for advertising to
profit in predictable ways. Drive purchases are, in any event, the fundamental component of a
buyer's buying strategies; standard basic leadership forms stifle consumer behaviour
and affect marketing hypotheses.

Pavlovan Learning Model (1897)

Ivan Pavlov, a Russian physiologist, is depicted the learning model. A change in behaviour
that comes as a result of repetition and experience is what we mean when we say
that something has been learned. Drive, Cues, and Response are the components of the
learning process. If you're motivated by a powerful internal sensation that causes you to take
action, you're motivated by a drive-reducing item. A person is propelled to action in order to
fulfil his or her aspirations as a result of the drive. Drives derived from physiological needs,
such as hunger, thirst, suffering, cold, sex, and so forth, can be inherited. Cues are only
weak stimuli. The buyer's response time is determined by cues. It's the customer's reaction to
the product or service.

Fishbeins Multi-attribute Model (1973)

Fishbeins Multi has information about the qualities and advantages of the brand. This model
does a great job of explaining how consumers assess brand alternatives and crucial qualities.
A user begins by examining certain product attributes before forming a belief about whether
or not an object possesses those traits. The single characteristic, but for all pertinent
attributes, is attitudes toward the object. A compensating model of brand attitudes is the
Fishbeins model

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2.5 CONSUMER BEHAVIOUR MODELS

Nicosia 1966, Engel et al. 1968, and Howard and Sheth 1969 offered the three most complete
models for consumer decision making. Individual consumers' psychological states are tracked
in this study from the moment they realize they can fulfill a material demand by buying and
eating a product until the moment they evaluate the effects of their buying. According to
Engel and colleagues (1986), strong product engagement leads to a protracted issue
resolution process that begins with the awareness of the problem and progresses
through information search, assessment of alternative products and purchase, and post-buy
activities. Active information processing, including as exposure, attention,
understanding, yielding/acceptance, and retention, aids this process in the learning process.
An information process-aided decision sequence may lead to a conclusion that is both
pleasing and dissonant: Festinger (1957) was the first to convey the concept of cognitive
dissonance, which effects future purchases, to the general public. In addition, according to
Engel and Blackwell (1982), environmental influences can influence the decision-making
process based on the motivation and intention of the consumer, and unpredictable factors
(such as the absence of a desired brand or a lack of funds) can lead to a change in the
final choice made by the consumer. Observed consumer behaviour is predicated on the
consumer's internal psychological moods and experiences (attitude intention- purchase
sequence). This information-seeking and information-using behaviour is assumed to be a
normal aspect of rational decision-making and problem-solving for consumers in the model.
There are several models that explain how consumers make their decisions. The Nicosia
model, Howard Seth model, Sheth family decision making, Bettman information processing
model, and the Sethnew- Gross model are some of the most comprehensive models
of consumer behaviour available

 Stimulus-Response Model (1967)

There are many things that might influence a buyer's decision-making process, but marketing
is one of the most common. Marketers need to understand out what goes on inside the "Black
Box" of the buyer and how stimuli are transformed into reactions in the buyer. In Sandhusen,
2000, (Sandhusen, 2000) The black box model depicts how stimuli, consumer traits, decision
processes, and consumer reactions all interact. Interpersonal and intrapersonal stimuli are two
distinct types of stimuli that may be found in the environment. This concept is similar to the
black box theory of behaviourism, where the emphasis is on the interaction between stimuli
and consumer reactions rather than on the internal processes of the consumer. Marketing
stimuli are created and planned by companies, while environmental stimuli are the result of
societal elements based on economic, political, and cultural situations in a community. The
buyer's black box includes the buyer's attributes and the buyer's decision process,
which influences the buyer's reaction. When marketing and other stimuli enter the "black
box" of a client, they create specific reactions

 Stimulus-Response Model (1967)

There are many things that might influence a buyer's decision-making process, but marketing
is one of the most common. Marketers need to understand out what goes on inside the "Black
Box" of the buyer and how stimuli are transformed into reactions in the buyer. In Sandhusen,
2000, (Sandhusen, 2000) The black box model depicts how stimuli, consumer traits, decision
processes, and consumer reactions all interact. Interpersonal and intrapersonal stimuli are two
distinct types of stimuli that may be found in the environment. This concept is similar to the

41
black box theory of behaviourism, where the emphasis is on the interaction between stimuli
and consumer reactions rather than on the internal processes of the consumer. Marketing
stimuli are created and planned by companies, while environmental stimuli are the result of
societal elements based on economic, political, and cultural situations in a community. The
buyer's black box includes the buyer's attributes and the buyer's decision process,
which influences the buyer's reaction. When marketing and other stimuli enter the "black
box" of a client, they create specific reactions

 Sheth-family decision making model (1969)

According to the Sheth family decision-making model, families in the middle class
including newly married and those that are well linked with few set family roles – are more
likely to practice collaborative decision-making. Buying decisions are more likely to be made
jointly when the stakes are high, the stakes are clear, and there is adequate time to analyze all
the options before making a choice

 Howard – Sheth Model (1969)

There are three degrees of learning in the model: extended issue solving; limited problem
solving; and routionized behaviour. Consumers engage in extensive problem-solving (EPS)
when their knowledge and opinions about brands are restricted and they actively seek
information about a variety of other brands. There is a limited amount of problem solving
(LPS) that occurs when the consumer's knowledge and perceptions about brands are only
partly formed. Consumers engage in routineized response behaviour (RRB) when they are
inclined to making a purchase at a certain brand because of their knowledge and views about
the brand and its alternatives.

 Bettman’s information processing model of consumer choice (1979)

This approach introduces the idea of consumer process information. The concept underlines
that consumers' information processing ability is limited and they seldom perform
comprehensive investigation of available options. Consumers are more likely to use basic
decision-making methods, according to this model (heuristics). The consumer will be able to
make an informed decision based on all of the available options, as a result of this. As a
marketing manager, you may utilize the Bettman approach to generate fresh ideas about your
consumers

 Nicosia Model (1966)

Consumers and future buyers are at the heart of the model. Consumers may affect
the company via their activities (or engagement), which indicates an interactive design

 Engel Kollat Blackwell Model (1968)

Consumer Buying Behaviour was studied by Engel, Blackwell, and Kola (1968). When
it comes to acquiring a product or service, they said, the consumer buying behaviour is a sum
total of the buyer's views and choices. Pre- and post-buying choices are affected by several
variables. Individual consumer behaviour is broken down into four sections by this model.
These are Decision process stage, Information input stage, Information processing stage and
Variable influencing the decision process. Problem identification, search, alternative

42
assessment, buy and consequences were all included in this model's depiction of the
decision-making process. The model's Information processing portion, which has its first
impact at the issue identification stage of the decision making process, receives information
from marketing and non-marketing sources. The consumer's reaction, attention,
cognition, perception, yielding/acceptance, and retention of incoming marketer or
dominated and non-marketing information are all components of the consumer's
information processing. Individual traits such as values and life style and personality,
as well as societal elements such as culture, reference groups and family and situational
influences such as consumers' financial circumstances are all aspects that impact the
decision-making process.

The Global Consumer Insights Pulse Survey:

India perspective highlights why companies need to connect with consumers very early in the
purchasing process and address their point of decision.

 Around 5 in 10 India consumers almost always or frequently use their smartphone in-
store for price comparison or to view live product reviews via social media before
they make a purchase.

 For 5 in 10 India consumers, e-commerce websites and search engines are the top
sources of pre-purchase information, while 3 in 10 check in with their family, friends
and colleagues before deciding on a purchase.

 For nearly 4 out of 10 India consumers, traditional TV and sponsored social media
advertisements influence a purchase decision.

These are among the key findings from the June 2023 Global Consumer Insights Pulse
Survey: India perspective which amplifies the voice of the consumer, calling out factors that
influence the point of decision in the consumer’s pre-purchase journey.

While the February 2023 Global Consumer Insights Pulse Survey1 showed the way for
brands to reduce friction at the point of sale (PoS), this report focuses on ways of reaching
the consumer prior to a purchase being made, at the point of decision making. It provides
insights into consumer behaviour patterns and, based on the findings, outlines how to address
the consumer’s requirements and expectations at crucial points of decision.

The findings indicate that:

 e-commerce websites and search engine optimisation are key to targeting and
influencing pre-purchase behaviour

 smartphones catalyse smart shopping by consumers

 traditional TV ads and sponsored social media ads play a pivotal role in shaping
consumer actions.

43
As consumers increasingly turn to the internet to research products before buying them,
businesses now need to manage the pre-purchase consumer experience. By investing in
search engine optimisation techniques, retailers can ensure their products are visible and
drive organic traffic. Market leaders also need to prioritise online presence to adapt to
changing consumer expectations. They should leverage emerging technologies such as the
metaverse and generative artificial intelligence (AI) in customer relationship management
(CRM) and meet consumer expectations on environmental, social and corporate governance
(ESG) issues and sustainability. Millennials and Gen Z, who typically espouse social
consciousness and environmental justice, were the most open to spending more for the sake
of sustainability.

Chapter two
Key findings on consumer preferences
In-store retail experience trumps online shopping: Consumers are not willing to trade the
experience of in-store shopping for online shopping, convenient as it may be. Both globally
and in India, people prefer to shop at physical stores.
In the last 12 months, 49% of consumers in India and 41% of consumers globally preferred to
shop for items such as clothes, books and electronics from a physical store.
About 39% of Indians used their smartphones, as opposed to 33% globally, while 33% used
their PC to shop in India and 23% used it globally.

44
 CHAPTER-3
RESEARCH METHODOLOGY

45
3.1 OBJECTIVES OF THE STUDY

➢ To detect the different customer categories and communicate accordingly.

➢ To discover the aspects that determine their purchase habit.

➢ Understand customer purchasing behaviour and the decision-making process.

➢ To know what techniques the marketer may employ to impact customer purchase
behaviour.

➢ To determine the primary competitor qualities towards the items. to forecast customer
purchase behaviour on web sites, giving to a better

46
3.2 METHEDOLOGY

Define the Research Objectives: Clearly define what you aim to achieve with
your study, such as understanding how consumers perceive price or how pricing
affects their purchasing decisions.

 Literature Review: Conduct a thorough review of existing literature on

consumer perception of price and purchasing patterns. This will help you
understand the current state of research, identify gaps, and develop your
research hypotheses.

 Research Design: Decide on the research design based on your

objectives. You can choose between qualitative, quantitative, or mixed
methods. Qualitative methods, such as interviews or focus groups, can
help you explore consumer perceptions in-depth, while quantitative
methods, such as surveys, can help you collect and analyze data from a
larger sample.

 Sampling: Determine your target population and sampling method.

Ensure that your sample is representative of your target population to
generalize your findings.

 Data Collection: Collect data using your chosen methods. This may
involve conducting surveys, interviews, or experiments, depending on
your research design.

 Data Analysis: Analyze your data to draw meaningful conclusions. Use

statistical analysis techniques to test your hypotheses and identify
patterns in consumer perception and purchasing behaviour.

 Interpretation and Discussion: Interpret your findings in the context of

existing literature and discuss their implications. Consider how your
findings contribute to the understanding of consumer behaviour and
pricing strategies.

 Conclusion and Recommendations: Summarize your findings, draw

conclusions, and make recommendations for businesses or policymakers
based on your research.

 Report Writing: Write a detailed report documenting your research

methodology, findings, and conclusions. Ensure that your report is well-
structured and clearly communicates your research process and outcomes.

47
  Ethical Considerations: Ensure that your research complies with ethical
guidelines, such as obtaining informed consent from participants and
maintaining their confidentiality.

 Timeline: Create a timeline for each stage of your research, from data
collection to analysis and reporting.

 Budget: Estimate the costs associated with your research, including

participant incentives, data collection tools, and analysis software.

 Reporting: Decide how you will report your findings. This could be in the
form of a research paper, presentation, or other format.

 Pilot Study: Consider conducting a pilot study to test your research

instruments and methodology before conducting the full study.

By following these steps, you can conduct a rigorous study on consumer

perception of price and purchasing patterns and contribute valuable insights to
the field of consumer behaviour.

48
Hypothesis Development

Based on the literature reviewed, the following hypotheses can be formulated regarding
consumer perception of price:

 Hypothesis 1: Consumers' perception of price is influenced by their reference prices.

They are more likely to perceive a price as fair if it is close to their internal or external
reference price.

 Hypothesis 2: There is a positive relationship between price and perceived quality.

Consumers are more likely to perceive higher-priced products as being of higher
quality.

 Hypothesis 3: Pricing strategies such as charm pricing and prestige pricing can
positively influence consumer perception of price and value.

 Hypothesis 4: The presentation of prices (e.g., with discounts or promotions) can

influence consumer perception of price and value.

 Hypothesis 5: Social and cultural factors play a significant role in shaping consumer
perception of price. Cultural norms regarding pricing and bargaining influence how
consumers perceive prices.

 Hypothesis 6: Personal factors such as income, education, and past experiences can
influence consumer perception of price. For example, consumers with higher incomes
may be less sensitive to price.

These hypotheses provide a framework for understanding consumer perception of price and
can help guide future research in this area.

49
 CHAPTER-4
CONCLUSIONS AND RECOMMENDATIONS

50
CONCLUSIONS:

Consumers' perception of price is influenced by various factors such as product quality, brand
reputation, and personal beliefs about value. These factors play a significant role in shaping
purchasing decisions consumers exhibit varying degrees of price sensitivity based on their
income level, cultural background, and past experiences. Understanding these differences can
help businesses tailor their pricing strategies.

The study results clearly show that both product pricing and packaging have a statistically
significant relationship with the buyer’s decision process. At the same time, the introduction
of satisfaction leads to the observation of full mediation in the case of product pricing and
partial mediation in product packaging. Consumers' purchasing patterns are influenced by a
combination of rational and emotional factors. While some consumers prioritize price and
value, others may prioritize convenience or brand loyalty.

Marketing strategies, such as discounts, promotions, and advertising, can significantly

influence consumers' perception of price and their purchasing behaviour. These strategies can
create a sense of urgency or value, impacting consumer decisions. The rise of e-commerce
and digital platforms has reshaped how consumers perceive price and make purchasing
decisions. Factors such as online reviews, comparison websites, and social media play a
significant role in shaping consumer behaviour.

Cultural factors can also impact consumer perception of price and purchasing patterns. For
example, in some cultures, haggling is a common practice, while in others, fixed pricing is
the norm. Despite knowing that both the variables have a statistically significant relationship
with the consumer buying behaviour, it is essential to understand the managerial
implications. Suppose, we would like to report and recommend these findings to different
organizations looking to cut their operational costs in any possible way without
compromising product quality, we suggest in such cases that they focus on pricing strategies
for a better consumer response.

A focus on the product packaging design process, packaging material, or the information
available on product packaging positively influences consumer buying behaviour. However,
its effect is lower than product pricing. Therefore, it is recommended for managers that if
they want to connect with their target customers more efficiently and effectively, they should
focus on both product pricing and packaging options. However, if they can afford only one
option from the product’s operational cost perspective, they must focus on product pricing
strategies.

51
RECOMMENDATIONS

1. Segmentation: Conduct further research to segment consumers based on their price

sensitivity and purchasing patterns. This will help in targeting specific consumer
groups with tailored pricing and marketing strategies.

2. Personalization: Utilize data analytics and consumer insights to personalize pricing

and promotional offers. This can help create a sense of value for consumers and
increase loyalty.

3. Transparency: Be transparent about pricing strategies and avoid hidden costs. This
can help build trust with consumers and enhance their perception of value

4. Competitive Analysis: Continuously monitor competitors' pricing strategies and

consumer perception. This will help in staying competitive and adjusting strategies
accordingly.

5. Digital Engagement: Invest in digital marketing strategies to engage with consumers

online. This can include social media campaigns, influencer partnerships, and targeted
advertising.

6. Cultural Sensitivity: Consider cultural factors when developing pricing and marketing
strategies. This can include adapting pricing formats and promotional offers to align
with cultural norms and preferences.

7. Post-Purchase Engagement: Focus on post-purchase engagement to enhance

consumer satisfaction and loyalty. This can include follow-up emails, surveys, and
loyalty programs.

8. Continuous Improvement: Continuously gather feedback from consumers and analyze

purchasing patterns. Use this information to refine pricing strategies and improve
overall customer experience.

52
 ANNEXURE-8

BIBLIOGRAPHY

 https://www.frontiersin.org/journals/psychology/articles/10.3389/fpsy
g.2021.720151/full

 https://www.sciencedirect.com/science/article/pii/S240584402308825

 https://www.researchgate.net/publication/362760297_THEORY_AN
D_MODELS_OF_CONSUMER_BUYING_BEHAVIOUR_A_DESC
RIPTIVE_STUDY

 https://www.pwc.in/industries/retail-and-consumer/global-consumer-
insights-pulse-survey-india-perspective.html

 https://ijcrt.org/papers/IJCRT_192976.pdf

 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8710754/

 https://www.sciencedirect.com/science/article/abs/pii/S096969891931
5383

 https://journals.sagepub.com/doi/10.1177/002224379303000208

53
 MAHARAJA AGRRASEN INSTITUTE OF TECHNOLOGY

Department of Management, BBA

ATTENDANCE OF MINOR PROJECT REPORT

Name of Student:

Class:

Enrolment No. :

Name of supervisor :

Sr No. Date Time Progress Signature Signature

report of the of the
Student Supervisor

54