What is price vocabulary?
The price of an item is not just a number that shows the item’s value but contains unique information.
A price vocabulary is a unique and consistent set of prices, particularly price endings, plus other symbols such as glyphs, numerical codes, and sale tags of specific colors that a seller can use to convey customers’ informational cues.
Price vocabularies leverage our understanding of how to price endings work.
How the price endings work
As an example, it’s generally the regular price if a product’s prices end with .99 ($8.99, say).
It means that the product is not a limited-time promotion.
However, when the price ending with .97 means that unique, limited time promotions probably sell slow-moving or seasonal items. Of course, there are other specific connotations for price endings.
Why companies need price vocabulary
Price tags have some symbols that form a price vocabulary providing customers potentially useful information for their purchase decision.
A price vocabulary offers an inexpensive way to create sustainable differentiation and increase customer engagement.
How price vocabulary delivers powerful marketing benefits for retailers in 3 ways
1. Price vocabularies create sustainable differentiation
Retailers have unique price vocabularies. When used consistently, this kind of pricing differentiates them from their rivals. Such differentiation can be durable because as the vocabulary develops a history with shoppers, it becomes a brand association and improves core customers’ experience.
2. Price vocabularies increase customer engagement
Price vocabularies are like secret restaurant menus. They remain mostly unacknowledged by the company, and it is often unclear whether they exist at all. Most customers are unaware, but those who know it feels special. The menu’s undercover aspects can generate excitement and actively engage customers.
3. Price vocabularies reward loyal customers
Price vocabularies are not quite the same as secret menus in one crucial way. Customers who are aware of price vocabulary can derive economic advantages. For example, if they see a price that says a price cut is coming, they may not purchase. On the other hand, a final clearance signal may prompt them to buy now. Because of the direct link between the information communicated by the price vocabulary and the customer’s buying behavior, a well-designed price vocabulary can effectively function as a loyalty reward program.
In a nutshell, the price vocabulary has lots of benefits for retailers when it is well-planned and communicated to customers with care.
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