With so many brands and retailers vying for a place in customers’ lives and shopping carts, retailers must understand how to crack the code and unlock the secret of what consumers want. With several companies offering similar products, distinguishing oneself from the competition has never been more critical.
Price vs. quality…which one is more valued by consumers? Both are assessed for products before a customer plans to make a purchase, but in the past, quality has been the winning influence for shopping. According to our recent research, it turns out that consumers may have had a change of heart.
Historically speaking, quality has been top of mind for consumers and was more important than price. In 2021, we conducted consumer research to temperature check market behavior, and consumers ranked the quality/value of a product (51%) higher than the price (30%). Outside influences such as COVID-19, a recession, and inflation have changed how customers perceive value.
When asked what influences consumers to shop in-store or online for the Holiday 2022 season, more than half (55%) of shoppers with an average HHI of $200,000+ responded that deals influenced them to shop in-store while the same number (55%) said that quality influenced them to shop online.
Broken down by generations, we saw that three-quarters of Baby Boomers shop in-store for deals, 71% for Gen X, 68% for Gen Z, and 67% for Millennials. We saw a similar result for online shopping as well. Over half (68%) of consumers in rural areas are most influenced to shop online due to deals. Overall, in-store and online shoppers are influenced most by price/deals, with loyalty programs being the least influential.
How to Have the Best of Both Worlds
It’s important to note that price and quality are not mutually exclusive. In fact, there is a direct correlation between the two. The more thorough your understanding of buyers’ needs and preferences, the better positioned you will be to create a product that meets those criteria.
This will lead to less time and money wasted on development, which means you can offer a higher-quality product at an affordable price. This allows you to create a product that meets and exceeds expectations. Not only does this increase the likelihood of repeat purchases from satisfied customers, but it also enables you to command a higher price for your products.
Here are a few ways to ensure that price and quality are equal players in your business model:
1. Pay Attention to the Voice of Your Customers
Make sure that you have a clear understanding of your customers' needs and wants. Incorporating Voice of Customer technology can help improve your product before going to market so you can anticipate and improve product success. This will give you the tools to identify what they want at a high level, so you can focus on providing it through your product or service.
2. Price Smart With Data
Pricing can be one of the most challenging aspects for retailers and brands.
Forward-thinking retailers use data-driven software to understand optimal price points and markdown strategies before their products hit the marketplace. These tools are more effective, quicker, and less expensive than traditional methods of determining pricing strategies. They also provide recommendations for value-add features backed up by cost-benefit analysis—and can even be used to develop new products or services.
3. Foster Brand Loyalty and Trust
We know that price is important because it affects sales, but the quality is just as important because it affects customer satisfaction and loyalty. Customer loyalty increases profits, improves sales success, and allows for growth. Increasing customer loyalty and customer retention helps provide a great experience to the consumer while building and offering value.
Brand trust is built over time, but it can be destroyed in a second by launching items and campaigns that would negatively impact brand reputation, revenues, and profitability. First Insight’s Risk Alert capability helps brands and retailers minimize risk by identifying potentially offensive products or messaging before they’re launched, and the damage is done.
Price and quality will continue to be the top deciding factors for consumers, so businesses must keep a pulse check on their customers to ensure they offer the optimal price and value.
In today's economy, where consumers are looking for ways to stretch their dollars further than ever before, retailers need a solution that can help them deliver competitive pricing without sacrificing quality, convenience, or service. Ultimately, businesses must continue their quest for constant improvement to provide the best products and services possible. Leveraging Voice of Customer and data-driven tools can show you which new products will be successful and which to avoid.
First Insight utilizes real-time data analytics and customer feedback to enable retailers and brands to optimize product assortments and identify quality-winning products and design elements before costly investment decisions are made. We help retailers and brands maximize revenue, margins, and customer satisfaction by identifying the right product assortment, optimal price points, and best-in-class quality.