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Marketing Basics - Kotler Philip

Consumer reaction to price changes

Increasing or decreasing the price will certainly affect customers, competitors, distributors and suppliers, and may also cause interest from government agencies. In this case, we will focus on customer reactions .

Consumers do not always correctly interpret price changes6. They can consider the price reduction as 7: 1) the upcoming replacement of the product with a later model, 2) the flaws in the product, why it does not go well on the market, 3) evidence of the financial distress of the company, which can leave the market without providing future spare parts supplies, 4) a sign that the price will soon fall again and it is worth delaying the purchase; 5) evidence of a decrease in the quality of the goods.

The price increase, which usually restrains sales, can be interpreted by customers in a certain positive sense: 1) the product has become especially popular and should be purchased as quickly as possible before it becomes unavailable; 2) the product has a special value value, but 3) the seller is greedy and seeks to break the price that the market can only withstand.