Pricing and the Psychology of Consumption

Businesss try to maximize consumption is a variety of different ways. equipment casualty bundling can damage the loyalty that a node has with a particular business. Maintaining customer loyalty through consumption is directly correlative to the success of the business. If a business can non establish a relationship with the customer and create a demand for the customer, the likelihood of that customer returning is very slim. The example that the article used was related to fitness memberships.If the fitness centralize charges an annual fee at the initial registration, it is attendming that the customer testament use the membership less frequently throughout the socio-economic class. The downfall to this uprise is that the customer will seeming not renew its membership in the following year. An different option a fitness club may offer would be to have the customer sign a year rent and bill the customer monthly instead of one intumescence some annually. This method is m ore effective because the customer is aware on a monthly basis of what he or she paying.This creates loyalty amongst the customer and the fitness center and studies suggest that the customer is more than credibly to renew at that place contract the following year. The fitness center that I att give the axe has you sign a contract at the time you immortalise and charges you on a monthly basis. After looking at the contract I noticed that, although they bill me monthly throughout a schedule year, I would have to pay cancellation penalty 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. determine and payment terms can help a businesss hide the actual cost of a particular product and or service. Cash, confidence humours and charge directs are the three main methods of buy among most consumers. The fact of the matt er is that a customer is less likely to be price sensitive if they either purchases with a credit card or use there charge account. Customers that purchase with cash see the immediate impact financially speaking.The challenge most marketing managers brass is developing a marketing action plan to capitalize on increasing consumption while maintaining customer loyalty. This may sound easier give tongue to than done especially after considering that most often decisions are aquiline 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 money 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 buy now, pay later. The pros and cons of consumption on the basis of pricing vary from industry to industry. For instance, the marketing team for a semi-pro baseball team decides to pre-sale all there ticket s at the beginning of the year. They chose to reflect a professional baseball team because of there success in pre-selling tickets. The pros they had was that they secured the money upfront for the entire indurate. This was an increase in tickets sales than they had from the following year, so in the first quarter of the period 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 problem at first because the constitution 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 important for marketing managers to understand there customers needs. Increased customer consumption can be rewarding in some businesses and detrimental to the success of others.