Another study showing that size matters (at least when presented next to price).

Source: AI generated image (Dall-e).

Price perception is not only based on the number customers see but also on the way that price is presented, including the words and labels used to describe the product. This aspect is important to consider, especially when customers are shown several options of the same product varying some attributes, such as the size of each option on a restaurant menu.

The Effect of Descriptions

A study published a few years ago suggests that when words describing a product match its price, such as the word ‘low’ for a low price, people tend to see it as a good deal and are more likely to buy it. But if the words don’t match the price—for example, using the word ‘high’ for a low price—people do not see it as a good deal and are less likely to decide to buy it.

Let me explain it to you with an example. Pictured below are the prices of two cereal bars, one with a “low” price and one with a “high” price. However, if you analyze carefully, in the first case the lowest priced cereal bar is described as “high in protein” and the highest priced as “low in calories” which, despite being true, presents a cognitive incongruity. The opposite happens in the second case, where prices are accompanied by descriptions aligned with their magnitudes.

Source: Created by the author. Images from FreePik.es

On the other hand, this other research delves into how size labels such as ‘large,’ ‘medium,’ and more commercial terms such as ‘Venti’ or ‘Tall’, in the case of Starbucks, influence how consumers evaluate value for money. The results suggest that consistent, easy-to-understand labels can help consumers quickly form an opinion about the product’s value, affecting their purchasing decisions.

Starbucks Case

Starbucks is a prominent example of strategic use of size labels. By opting for unique terms like ‘Tall,’ ‘Large,’ and ‘Venti’ instead of the more common ‘small,’ ‘medium,’ and ‘large,’ Starbucks has created a distinctive brand identity that also makes direct comparisons with other brands difficult. This strategy can cause consumers to perceive greater value in the offer, regardless of the actual size of the product.

Source: Starbucks Menu, StarbMag.com

Practical Implications

For entrepreneurs, understanding and effectively applying pricing strategies can make the difference between a product that feels valuable and one that seems expensive. Here are some practical implications of these studies:

  1. Congruence of Representation: Make sure that there is a congruence between the magnitude of the price and the words that describe it. This improves the perception of value and can increase the likelihood of purchase.
  2. Label Innovation: Consider developing brand-sized labels that can evoke unique perceptions and differentiate your products from competitors.
  3. Market Testing: Conduct tests to see how consumers react to different price and size labeling strategies. These tests can reveal what’s most effective in your specific market.
  4. Consumer Education: Educate your customers on what your size labels mean, especially if you’re introducing new and unique terms.

Conclusion

In short, it’s not just about how much you charge, but how you present those numbers. Using the right words and tags can make your prices look like a bargain, or the other way around. And let’s not forget Starbucks’ trick with its ‘Tall’, ‘Grande’, and ‘Venti’ that shows us that a good play on words not only sounds cool but can also make people see more value in what they buy. So why not put this into practice? Experiment with different labels and descriptions on your products. See what works best and how your customers react. This may be what you need to boost your sales and make your customers feel more satisfied with what they get. Dare to try new strategies and see how you can transform a price into a much higher perception of value!

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