Pricing and the Psychology of Consumption

Businesss try to maximize bustlesumption is a variety of different ways. Price bundling drop damage the allegiance that a guest has with a particular business. Maintaining node loyalty by means of consumption is directly cor cogitate to the success of the business. If a business cannot reach a relationship with the customer and create a demand for the customer, the likeliness of that customer returning is very slim. The example that the article used was related to fitness memberships.If the fitness center germinates an annual fee at the initial registration, it is likely that the customer will use the membership less ofttimes throughout the year. The downfall to this approach is that the customer will likely not renew its membership in the interest year. Another option a fitness club may offer would be to commence the customer sign a year start and bill the customer periodic instead of one lump some annually. This method is more legal because the customer is aw are on a monthly basis of what he or she paying.This creates loyalty between the customer and the fitness center and studies call down that the customer is more than likely to renew in that respect contract the following year. The fitness center that I attend has you sign a contract at the time you register and charges you on a monthly basis. later on looking at the contract I noticed that, although they bill me monthly throughout a calendar year, I would have to pay cancellation penalisation if I decided end the contract before the end of a specific calendar year.For example, if I cancelled my contract in May, I would have to pay a lump sum for the remainder of the months in that specific calendar year. Pricing and payment terms can jock a businesss hide the actual cost of a particular product and or service. Cash, credit cards and charge accounts are the three main methods of purchasing among just about consumers. The fact of the matter is that a customer is less likely to be price sensitive if they each purchases with a credit card or use there charge account. Customers that purchase with notes see the immediate impact financially speaking.The challenge most marketing managers face is developing a marketing achievement plan to capitalize on increasing consumption while maintaining customer loyalty. This may sound easier said than done especially after considering that most often decisions are dependent on price. One of my companys main goals is to open customer charge accounts. Research has shown that a customer is fives times more likely to spend more funds if they have a charge account rather than if the where going to purchase with cash or a credit card.This relates to the example in the article spoil now, pay later. The pros and cons of consumption on the basis of pricing vary from persistence to industry. For instance, the marketing group for a semi-pro baseball team decides to pre-sale all there tickets at the beginning of the year. They chose t o mirror a professional baseball team because of there success in pre-selling tickets. The pros they had was that they secured the money direct for the entire season. This was an increase in tickets sales than they had from the following year, so in the first quarter of the season they thought they had made the correct decision.The cons came as the season went on. They noticed the ticket holders attendance was decreasing. This may not seem to be a business at first because the organization already collected the money. What they came to realize was that they where losing money on all the other amenities that the stadium sold food, apparel, beer. It is all important(predicate) for marketing managers to understand there customers needs. Increased customer consumption can be rewarding in some businesses and detrimental to the success of others.