How to Get Your Consumers Pay More
It’s no revelation that every consumer wants the premium quality products atcheap prices. Often entrepreneurs ponder over what matters most to consumers when they buy a product. How the willingness to spend more can increase and what is their choice and mindset, are a few questions that keep lingering in an entrepreneurial mind.
A study by University of Technology Sydney named Putting Price on Reputation states, “Consumers are willing to pay more for products that not only have the features they want but also are delivered by businesses with a good reputation.”
The study underscores how being social and environment friendly act as an advantage in getting consumers to pay more for your product.
Image is “Everything”
It reveals that a company evaluated by consumers as better than its competitors in terms of corporate reputation commands around a 9 percent premium for its products, and an even higher premium when there are desirable extra features.
The study was conducted by experts and professors at University of Technology Sydney, which is based in Australia. Paul Burke, associate professor of marketing and the co-author of the studycites the reasons why is it so important to have a good reputation of your brand in the highly competitive world today. Burke says, “The impact of corporate reputation on consumer choices is substantial compared to the competitive advantage offered by varying product features.”
“Marketing managers need to be concerned about corporate reputation not only because it builds loyalty and trust but also because product features appear more valuable, so consumers are willing to pay more,” he adds.
Be Socially Responsible
Corporate reputation encompasses a range of dimensions including how people feel about the company, the quality and innovativeness of its products, its workplace environment and workforce, its vision and leadership, financial performance and social and environmental responsibility.
Conversely, brand damage occurs when companies become embroiled in scandals and crises such as financial corruption, leadership failure or environmental destruction, says the study.
Commenting on this, Burke says, “Companies need to work hard to communicate that they are environmentally and socially responsible, support good causes, have a positive work environment, and excellent leadership and financial performance, and do their best to mitigate brand damage.”
Where Consumers are Willing to Pay More?
In the research paper titled Journal of Marketing Management, the co-authors Professor Grahame Dowling and Dr Edward Wei, explains this through an example of consumer behavior buying TV sets. It was focused on consumers in the market for televisions. The televisions were made by Sony, Panasonic or Toshiba.
While conducting the study, participants were first asked to give an evaluation of the corporate reputation of each of the TV makers.
Separately, the were asked to choose between televisions based on fairly standard features such as warranty, price or size, and in addition by novel features such as backlight control or dynamic range control.
The research showed consumers were willing to pay extra for a product with important features and a good brand reputation, but less willing to pay a premium for products with novel features regardless of reputation.
For example, in the case of screen size, consumers were willing to pay $121 more for a television that was 55” over one that was 50”. This amount increased by a further 22 percent to $147 for a company that was one standard deviation higher on the corporate reputation measure.
“Corporate reputation is not something that can be readily controlled by marketing managers, but it is definitely something that should command their attention,” says Burke.