Is the water in a 350ml bottle better than water in a 600ml bottle or even a 1.5l bottle? You would hope so considering in some cases you are paying 50% more for this convenience. Let’s looks at the price of buying water at Coles in Australia at the moment. A 600ml is twice as much per litre as a 1.5l, yes double the price for a lesser quantity.
And yes it doesn’t stop there. Packaging in smaller quantities increases the price further with the most expensive bottle for standard natural spring water being sold for nearly 15 times the price of a 1.5l bottle.
So why do we buy for convenience and how do retailers get away with charging so much?
When choosing products consumers make a decision between functionality and usage convenience. This is interesting as those who are focused on the health benefits of water care about the functionality of a product while those who are simply thirsty are buying for convenience. A further willingness to pay a price premium for water being chilled, a matter of convenience or just taking advantage of the Queensland summer heat?
So what would you pay more for?
When consumers buy for convenience they are not giving much consideration to the purchase process. They are not interested in the best deal or negotiating, some buy impulsively and some on regular basis. Some research even suggests that for convenience items, consumers pick the store to buy from then decide what to buy afterwards (Feichtinger, Luhmer and Sorger, 1988). Is this why retailers can get away with charging so much for so little and are they taking advantage?
One could argue the company is there to make a profit and provided there is consumer demand, no advantage is being taken. It is the consumer’s choice to buy the product after all. At what point does demand decrease as price increases, how much are you really prepared to pay for convenience?
The other side of the argument could conclude that organizations are explicitly building their advertising and pricing strategies to take advantage the ‘psychology’ of consumers. They know that convenience is a growing trend and they exploiting this by market skimming simply to make more margin.
Are you prepared to pay more for convenience items if so why? What do you think about the pricing strategies for convenience products, should we really be paying more for less?
Sharon Jones and Helen Drijfhout
Feichtinger, G, Luher A and Sorger, G (1998) Marketing Science, Optimal Pricing and Advertising Policy for a convenience goods retailer 7(2)(P 187- 201)
Iacobucci, D.F (2014), Market Management (MM), Student Edition, South-Western Cengage Learning