Packaging creates price perceptions of a product, claims insight agency Engage

Redesign to clarify price points

Redesign to clarify price points

Packaging can set up consumer perceptions of a product, according to customer insight agency Engage Research.

Commenting on the announcement by wine brand Hardy’s that it is repackaging its products to give consumers a clearer understanding of the price tiering within the range highlights the role of consumer insight in setting up expectations of price and quality, said Engage. 

Hardy’s owner Accolade Wines has said the new packaging has been designed to better reflect the quality of wine inside the bottle and highlight to consumers a clear progression up the tiers. The redesign is also intended to help mitigate the effect of promotional mechanics which could see high-quality wines being sold at the same price as less premium ones.

“Consumer insight can play a vital role in creating and redeveloping a product proposition,” said Engage Research director Deborah Sleep. “Price, name and packaging are such an integral part of the product mix that from an early stage of development they should be considered as part of the process. No one wants to stop a great idea progressing because it is tested at too high a price or with a weak name, but conversely the market success of a product will depend on the mix of these elements.”

It is a widely seen in research, Sleep says, the same product at a higher price point is expected by consumers to be higher quality (for example, a vodka brand priced at £18 rather than £12 is not only higher quality but seen as being for more special occasions). 

“More interesting is the evidence the price also impacts on perceptions of product delivery. In tests those who are told a particular wine is more expensive think it tastes better than those who are testing the same wine but who were told it was less expensive. More interesting still is evidence that not only is the more expensive wine rated more highly but it produces a more pleasurable experience in the consumer’s brain when MRI scanned. This is not simply the consumers rationalising their experience; they have been conditioned at a subconscious level by the price.”

A key factor in getting the pricing strategy right at launch is where the proposed price point sits relative to competitors, said Sleep. This is because consumers will consider the price in relation to other products, either directly because the prices are displayed together or indirectly by using the nearest available benchmark. This relational way of viewing prices can be exploited by marketers. For example, the launch price may be set at a premium to the competition in an attempt to establish high quality credentials even if the typical selling price would be lower. The idea is to “anchor” a price point in the consumers’ minds and then the lower price will appear good value in relation to the anchor price. 

In reality, there may be a number of different price settings for different retail environments ega large discount retailer and a small local shop. Consumers will tend to respond to the relative differences in price between products in the same retail environment rather than differences in absolute prices between retailers. This demonstrates the case for always testing price within a relevant context.  

“Packaging design and merchandising also provide key consumer cues about the product,” said Sleep. “In a crowded retail environment, consumers use short cut reference points to navigate through the complexity. For example, where a product sits in store can have a profound impact on what people think about it. The placement of the product and what surrounds it will have an impact on consumer perceptions.”