Name your price

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Perceptions of value matter. The lure of a bargain, the offer of a discount or the belief that the price you are paying for something is better than expected are all important when buying things.

When exact prices are stated – £15.99 for instance – there is no ambiguity, but generic price terms are commonplace in marketing with terms such as ‘cheap’ or ‘not cheap’ or ‘expensive’ and ‘not expensive’ much less precise.

It was this vagueness that led a team of researchers – Bert Weijters, Elke Cabooter and Hans Baumgartner – to investigate how shoppers process price information.

“I have always been interested in the interface between language and quantification,” says Weijters, associate professor of market research at Ghent University. “Researchers (and managers) often have a more quantitative mindset so they make simplified assumptions of what certain expressions mean. Especially with negations (such as ‘not cheap’), things often turn out to be more complicated than expected, with variables ranging from low to high or negative to positive. Language often has subtleties that are hard to quantify.”

So, does ‘not cheap’ mean the same as ‘expensive’ and ‘not expensive’ equal ‘cheap’? Consider the context of customer restaurant reviews and how you’d interpret ‘good food, not cheap’ or ‘tasty and not expensive’. Should marketers notice when these phrases are used for their products or services?

The premise of this research was that marketers need to know how consumers interpret generic price terms – and their negations – so they can apply them appropriately in their communications and market research.

In general, consumers use these terms to refer to prices below or above a reference price but only limited previous research has been carried out on the mental representation of (reference) prices.

Cheap and expensive are gradable antonyms – words that name opposite ends of a single dimensional scale. The researchers pointed to psycholinguistic literature suggesting there are four possible patterns according to which the four generic price terms – cheap, not expensive, not cheap, expensive – can be mapped onto the price continuum.

The researchers looked at previous research on these four mapping patterns and proposed that the most common interpretation of generic price terms meant cheap<not expensive<not cheap = expensive; their hypothesis being that in most circumstances, consumers will interpret not cheap as expensive.

The study involved multiple tests using data from global online panels of Dutch-speaking consumers and covered categories including music, beer and hotels.

“Some product categories were picked because we were studying them for other projects (music), others were selected because most consumers would be familiar with them and would have an opinion on their price (for instance, hotels),” says Weijters. “And beer is just a favourite product of at least two of the authors – we also wanted some variation for generalisation”.

While quantifying language is always a challenge, he says with pricing, it is relatively easy. “Respondents seem to like the topic; consumers think about price quite spontaneously, so it was easy to get them involved,” he adds.

What were the benefits and what were the limitations of using panels for this research?

Weijters says: “If it comes to linking words and perceptions/quantifications, surveys are ideal because only the respondents know how they interpret certain words. The main downside of survey experiments is that they don’t show potential effects on behaviour and sales figures – but that was not our focus.”

Overall, from its studies, the team found that in typical consumer contexts, where lower prices are preferred, not cheap means essentially the same as expensive. However, not expensive does not mean the same as cheap – cheap is associated with lower prices, so it is seen as of less value than not expensive.

Although cheap is associated with lower prices than not expensive, this doesn’t necessarily translate into products described as cheap (versus not expensive) being preferable, because cheap can also evoke the perception of poor quality.

Communicating price 

The paper states that: “In marketing communications, our findings suggest using the wording cheap when the goal is to explicitly refer to and draw attention to a low, attractive price. But cheap may also connote lower quality. If the goal is to assuage worries that prices maybe high, although low prices are not the key selling proposition, it may be preferable to use the term not expensive.”

Weijters also advises thinking twice about using negations. “I’m not saying we shouldn’t use negations, but rather use them with caution and check that people interpret them the way you intend them.”

And what should market researchers heed from their findings? “Although bipolar rating scales seem to imply that variables are simply bipolar continuums (for instance, ranging from low to high prices), language is often more subtle and, if it comes to negations, you cannot simply assume that a negation of a word is equal to its antonym. As a result, some survey responses might appear to be inconsistent at first glance but might make sense from a more pragmatic-linguistic perspective. Market researchers need to remember that our quantified responses are simplifications of reality that may lack some of the nuance of day-to-day language,” says Weijters.

This article was first published in Impact.