Customized Pricing Programs May
May 23, 2017
walking down the peanut butter aisle at your local grocery store. As you
reach for your favorite peanut butter, your phone buzzes. You check it
and see that you’ve received a personalized discount coupon for the
store brand of peanut butter.
This is called customized pricing. It’s tailored for the individual
consumer, and more and more companies are including customization in
their marketing mix. Customized pricing takes pricing strategies a step
further than traditional dynamic strategies by basing prices on
individual consumers’ unique purchase patterns, rather than more typical
bases for changing prices, including known customer group, time and
It seems like a win-win. Everyone likes a discount, right? And a
discount tailored to your specific purchase patterns sounds even better.
But is this approach effective?
A new Baylor University Hankamer School of Business study published in
the Journal of Consumer Behavior shows that many consumers have a
positive view of these tactics, but “positive assumptions regarding the
benefits of customized programs could be costly to firms.” Among the
findings, the researchers discovered that the mere presence of a
customized pricing program may serve to lower consumers’ satisfaction
with the shelf price, said lead author Meredith David, Ph.D., assistant
professor of marketing at Baylor.
David and her team conducted three studies and surveyed more than 700
adults, looking specifically at how consumers’ “interpersonal attachment
styles” impact their responses to customized pricing.
Securely attached individuals, according to the study, are people who
expect others will be available and supportive when needed. Anxiously
attached individuals have less positive expectations about
interpersonal-related situations and constantly worry about
relationships. David explains that demographic correlates of attachment
style can be used to segment markets, as securely attached individuals
tend to be older and have higher incomes as compared to anxiously
“Among securely attached individuals, customized pricing programs may
well create an expectation of receiving advantaged, discounted prices.
Thus, these programs may result in a large portion of consumers being
dissatisfied paying the shelf price,” David said. “They like it, but
they expect it every time they go to the store. If they visit and don’t
receive a specialized discount, it becomes an unmet expectation and
attached individuals, David said, “get excited about the attention”
because they don’t expect it.
Additionally, the study reveals that, in the presence of a customized
pricing program, anxiously attached consumers, unlike their securely
attached counterparts, are generally OK with paying the shelf price or
receiving the same discounts as other shoppers.
David said the study yields some practical implications for marketers.
The research provides a deeper understanding of which market segments
may be more or less receptive to customized offerings, and it offers
some guidance to help marketers develop communication strategies to
promote those offerings.
“Given the global shift toward a more ‘social’ and interconnected world,
we believe that attachment theory will continue to emerge as a useful
theory underlying many consumer behavior phenomena,” researchers wrote.