Written form of the video above:
As marketers, we tend to want to put the consumer into price buckets.
I’ve had conversations where the marketer would say: our target audience are retired people, or our target audience are people who make over $130k.
This implies an affluent shopper who is price insensitive is price insensitive for ALL purchases. And someone who is price sensitive is also sensitive under ALL scenarios.
Price sensitivity is situational. Here is my story. I use a marketing tool for work and spend several hundred dollars on it each month. It doesn’t bother me at all.
I also have an iPhone app called AnyList.com which we use maintaining our grocery store. It’s great and I’ve been on the free plan for years.
I recently wanted to add a picture of a food item to the app so I could identify it at the store. That required moving to the paid plan for $11.99 / year for a family. The moment I upgraded I realized I had made a mistake because their individual plan for $7.99 / year was a better fit (since we have just one account). I immediately emailed their customer service team. It took a few minutes to locate their contact info and compose an email to explain my situation. Keep in mind the difference was $4 / year. Four dollars a YEAR. In other words, I spent more time writing the email. So, what happened here? What happened is that I was being situationally price sensitive. I didn’t care about the few hundred I spend a month on the marketing tool because I’m primed to pay for those “types” of services. But paying an extra $4 a year for an app that I’ve been using for 6 years didn’t seem like a good deal. Why? It’s because in my mind apps are free.
I’m the same person, yet I’m behaving in two completely different ways, simultaneously.
My point is that affluent customers can be super price sensitive depending on a situation, and lower earning buyers can be super price insensitive depending on the situation.
Marketers can influence the situational price sensitivity of the shopper. How? By telling better stories.