Is technology hindering price recall?
Do consumers really recall prices?
Can you recall the price you paid for your last coffee, rent or mortgage payment, or your shoes?
What about the price you paid for a bus or train, your lunch, or a motorway toll?
Traditionally, price recall was determined by many factors including time of last purchase, purchase frequency, switching cost and the importance of price when weighing up a purchase. However, although most of the theories are still applicable today, as consumers spend less and less physical cash, is their ability to recall prices reducing, even with many frequent purchases?
On the way to work, you tap your card at the train station, pick up a coffee and tap again, and arrive at work, log onto your bank site and find you have no money left. You realise that you have morphed into a world where you are not paying as much attention to the prices you are paying, especially for everyday purchases.
In the old cash dominated world, we would be very careful to plan out our day and ensure that we had the cash for each item we were thinking of purchasing. Then with the increased availability of credit and cash cards, over time, the payment method and process became more efficient (remember when the salesperson had to manually fill out a credit card duplicate or triplicate form to transact a credit purchase?).
Our attention to the price being paid was still high, but as transaction technology evolved, it slowly dwindled for many purchases.
Now, not only are we paying less attention to prices, in particular for everyday purchases, we are also purchasing other items which would not have been on our old cash list, because just tapping a card or paying with your mobile is so easy.
Pricing is extremely complex and price recall is just one of the many considerations a business has to consider when setting prices. The less attention customers pay to the price of a purchase, the less they can recall prices. The end result is that payment technology can assist businesses in setting and increasing prices, particularly for regular customers. Are you a regular loyal customer?