Unit pricing is a system of showing the cost of a commodity
Unit pricing is a system of showing the cost of a commodity in terms of a unit of measure in addition to the price per piece or bottle. Prices of products are indicated based on standard units to enable comparison of various brands. The unit pricing scheme was introduced in Australia in 2009. This system mandated that retailers show price details in standard metric
Across items to facilitate comparison of prices by the consumers. Unit pricing was introduced since it was believed it would be beneficial to the consumers. However, many individuals have claimed that unit pricing was not helpful to them in influencing their buying decisions.
Unit pricing is beneficial since it assists consumers in making comparisons of packaged items when they are not sold in equal quantities. Also, unit pricing can be utilized as a representation of quality. Consumers can save money when they depend on unit pricing in determining the products they want to buy. This is because the consumers will compare different brands of products in different volumes and decide to buy the brand sold at a lower cost per unit and make optimum purchases. The highlighted benefits show that unit pricing is an opportunity that can be used by consumers to assist in making appropriate purchasing decisions. Besides, there are no disadvantages of unit pricing with the consumers who do not use the system reporting other reasons for their reluctance to use the system. For instance, some consumers have reported that they do not use unit pricing because they did not understand how the scheme facilitated the comparison of products, and others claimed that they ignored the unit pricing information on products. This shows that creating awareness of the importance of unit pricing and explaining to consumers how they can use it will serve as an opportunity that will benefit the consumers in making appropriate purchasing decisions.
Literature Review
Unit pricing is beneficial as it enhances consumer price sensitivity. Besides, unit pricing influences consumer decisions, and even commodity options have identical sizes. A group of researchers performed a study to establish the benefits of unit pricing (Yao & Oppewal, 2016). The study revealed that unit pricing enables customers to pick lower unit priced commodities. Besides, the display of unit prices enhances the importance of considering price in making decisions, which in turn makes the customers more price sensitive. As a result, the price sensitivity motivates consumers to choose cheaper items (Yao & Oppewal, 2016). The study also revealed that the motivational influence among customers is sustained when there is a minimal cognitive effect, such as when commodity options have the same sizes. Thus, unit pricing enhances consumer price sensitivity.
Moreover, unit pricing is beneficial to consumers since it facilitates the quick completion of the shopping task. Also, when consumers are under time pressure, unit pricing serves as a tool they can use to make appropriate purchasing decisions within a limited time. A study revealed that unit pricing enables the consumer to choose cheap brand options (Yao & Oppewal, 2016). Also, unit pricing was found to demonstrate more substantial influence when customers are under time pressure. The respondents in the study claimed that unit pricing enabled them to do their shopping quickly hence saving time. The study also discovered that unit pricing increases consumer satisfaction, which in turn benefits the retailers by enhancing the reputation of their stores. Also, the respondents claimed that it did not affect their shopping negatively since they increase their information overload.
Besides, unit pricing enhances customers’ satisfaction, which in turn improves a retail stores’ image and the customers’ shopping intentions in specific stores. A group of researchers aimed to establish the impact of unit pricing on consumers’ perception, and it influences a store’s image.
From the study, the researchers found out that retail stores that adopt the use of unit pricing increase shopping intentions of consumers who, in turn, opt to buy from the same retail shop numerous times when the need arises (Roth, Himbert & Zielke, 2017). As a result, the presence of unit pricing impacts numerous store price image features positively. These features include evaluation certainty, price perceptibility, and price processibility. Moreover, the store’s value for money perception is impacted positively. Unit pricing prominence increases customers’ intentions to go shopping at a specific retail shop through the store’s price image.
Furthermore, when unit pricing is more beneficial to consumers when compared to other price reframing strategies. A study was conducted to draw comparisons between unit pricing and temporal reframing of pricing on various customer perception. The two systems are almost similar, but each has a different unit that is used to present the prices (Shirai, 2017). The study established that unit pricing presented the most necessary details for the consumers. This is because unit pricing facilitates easy comparison of products.
Unit pricing affects consumers’ buying decisions in various ways. A study was carried out by a group of researchers to variations of unit pricing on purchase intentions. The researchers discovered that there is flexibility involving how retailers can present the unit prices of their products. For instance, the cost can be displayed per 100g or kg (Fecher, Robbert & Roth, 2019). The study revealed that large unit price measures such as per kg resulted in higher perceived prices and, consequently, lower buying intents when compared to smaller measures such as per 100g. The study also revealed that the measurement-unit influence decreases when sellers present more pricing information, such as both retail and unit price. Furthermore, the measurement-unit influence is dependent on the size of packages with the influence on consumers decreasing for packages of medium-sized.
In addition, the use of unit pricing in advertising increases consumers’ perception of the product being displayed (McQuilken et al., 2016). A group of researchers performed a study to evaluate the effectiveness of revealing unit pricing and increasing the font size of the terms used during advertising. The study revealed that providing additional information such as unit pricing during advertising creates a positive effect on customers’ value perception (McQuilken et al., 2016). Also, increasing the font of the terms used in labeling unit prices increases usage of the scheme by consumers.
There are vital factors that affect consumers. Such factors include a lack of understanding of how to use unit pricing. Besides, lack of awareness about unit pricing has led to little use of the system among consumers. A review of past evidence has shown that several barriers hinder the usage of unit pricing by some consumers. A group of researchers discovered that such barriers include a lack of understanding and unawareness of unit pricing. Besides, some consumers receive no guidance on how to use unit pricing (Bogomolova & Jarratt, 2016). Also, poor perceptions among consumers, such as unit pricing being associated with wastage of time during shopping. The cost of implementing unit pricing by some retailers is also a barrier. The study also discovered that these barriers could be addressed by providing education programs to consumers to enhance understanding of unit pricing. The government can subsidize the cost of implementing unit pricing in retail shops to increase usage. Also, unit pricing details can be marked and presented at points that be seen quickly by consumers.
Moreover, some consumers have reported that poor printing and labeling of the unit prices is a barrier that has reduced their ability to use the scheme. For instance, some consumers have reported that they feel frustrated when the unit prices are displayed using small print (Esser, 2017). Also, the inability to locate information on the labels easily has reduced the use of unit pricing by some consumers. Besides, the lack of consistency of the unit used for the unit pricing involving different brands of the same products creates difficulties for consumers to understand how they can make comparisons. Best practices involving unit pricing should ensure usability, accuracy, readability, and proper presentation of unit pricing details.
In addition, some consumers have claimed that forgetting is the main reason why they do not use unit pricing. A study in Australia that included 400 individuals revealed that the majority of the consumers who did not use unit pricing claimed to have forgotten if labels existed on the shelf (Johnston & Cortez, 2018). Besides, since the introduction of unit pricing into Australia, little has been done to sustain its use. After the first educational sessions on unit pricing, many people in Australia forgot about its importance due to habituation. Habituation refers to ceasing to pay attention to the unit pricing. As a result, the tendency of the utilization of unit pricing decreased.
Labeling and design of the unit pricing determine whether or not customers will usage the unit pricing when purchasing products. A study revealed that the design factors of the price label influence customers’ eye movements when making decisions regarding the purchase of products (Bogomolova et al., 2018). The design factors included color highlighting of the price tag, signposting, font size, and positioning. The researchers also discovered that eye fixations by consumers on products increases when the unit pricing designing and labeling are improved. Colour highlighted labels attract attention from the consumers who, in turn, consider the unit prices when making buying decisions.
Several factors face marketers. Such challenges include the inability to secure enough budget. Hence, these markets lack the ability to market the use of unit pricing to significant populations of consumers. The inability to recognize the right technology is also a factor that affects marketers. As a result, they fail to use techniques that address their needs. For instance, some marketers lack appropriate technology to display unit prices on products effectively. In addition, some marketers experience the inability to identify new customers for their products. Also, the inability to track performance metrics precisely is an issue that affects some marketers. For instance, some lack of metrics to assess the effectiveness of unit pricing on customer experience and business performance.
Additionally, providing consumer education increases the usage of unit pricing by customers. A study was conducted by a group of researchers to determine how the provision of education on unit pricing impacted consumers over time (Weeks, Mortimer & Page, 2016). The study revealed that consumers who received education on the importance of unit pricing were able to select cheaper grocery products, which in turn increased their level of savings. Consumers from all income levels were able to increase their savings, which was further enhanced by the provision of feedback.
Several strategies have been adopted that have assisted in increasing the use of unit pricing by consumers. For instance, the provision of unit pricing by retailers consistently has been found to increase understanding and easy use of the system by consumers (Sefcik, 2014). Also, the provision of guidelines to consumers has been to be effective in increasing the adoption of unit pricing by consumers. Besides, the visual display of unit pricing increases the ability of customers to locate and utilize unit pricing details. Also, the positioning of the unit pricing details in a prominent location increases its utilization by consumers. In addition, the use of media is effective in increasing the use of unit pricing by consumers. A study found out that mass media increases awareness of the system among consumers, which in turn increases their tendency to use unit pricing.
Theory, Model Framework
Classical Conditioning Theory
Ivan Pavlov introduced classical conditioning. The theory involves forming a connection between two stimuli leading to a learned reaction. The two stimuli, in this case, include a naturally occurring one and an environmental stimulus. The theory has three principal phases that describe the learning process and associated consumer behaviour. The three phases include:
Phase 1: Before Conditioning
The first part of classical conditioning involves a natural stimulus that inevitably brings about a response. The unconditioned stimulus (UCS) causes an unconditioned response (UCR). Besides, a neutral stimulus also exists that provokes no response. The neutral stimulus can be a place, object, an individual. The neutral stimulus only produced a response after it has been combined with UCS. The UCS is responsible for triggering a response automatically. The UCR is an unlearned reaction that comes about after being elicited by the UCS.
Phase 2: During Conditioning
In this phase, the neutral stimulus is recurrently combined with the UCS. As a result of this combination, a connection is created between the neutral stimulus (NS) and the UCS. After the connection is formed, the NS is referred to as a conditioned stimulus (CS). In this case, conditioning of the subject is achieved, and it can respond to the stimulus. The CS, which resulted from the pairing of UCS and the neutral stimulus, ultimately produces a conditioned response (CR).
Phase 3: After Conditioning
Once a connection has been created between the UCS and the CS, staging the CS alone will result in the production of a response even without the UCS. The resultant response is known as the conditioned response (CR). The CR is the learned reaction to the initially neutral stimulus.
Principles of Classical Conditioning
There are several phenomena connected to classical conditioning. Some principles are based on the initial development of the response, while others elaborate on the disappearance of the response. The principles are essential in understanding the process of classical conditioning. The five principles of the conditioning include:
- Acquisition
Acquisition occurs during the first phase of learning when a response is first developed and slowly reinforced. It is during acquisition that the neutral stimulus is recurrently combined with a UCS. The UCS produces a response automatically without any learning. After a connection is established, the subject starts to produce behaviour in reaction to the neutral stimulus, which is now referred to as the CS. It is at this stage that the response to have been acquired.
- Extinction
Extinction comes about when a conditioned reaction reduces or ceases to exist. In the conditioning, this occurs when the CS is no longer combined with the UCS. The cause of extinction comes about when CS is presented alone to the subjects. As a result, the behaviour that was initially portrayed as diminishes or stops. However, extinction does imply that the learned behaviour has disappeared entirely as it can reappear through spontaneous recovery.
- Spontaneous Recovery
At times the learned behaviour can suddenly reappear even after the extinction of the acquired response. This is the re-emergence of the conditioned behaviour after an interval of lessened response. In case the CS and UCS are no longer connected, another disappearance of the response will occur quickly after the spontaneous recovery. The re-emergence of disappeared behaviour is essential since it presents consumers with the ability to recall the importance of a certain practice.
- Stimulus Generalization
Stimulus generalization refers to the tendency for similar CS to produce the same reactions after the behaviour has been conditioned. For instance, if an individual or subject has been conditioned to respond in a particular way to a specific stimulus is likely to produce the same response when exposed to a similar stimulus. At times this can cause problems to an individual, especially when a person is required to differentiate between stimuli and react only to a particular one.
- Stimulus Discrimination
Discrimination refers to the capacity to distinguish between a CS and other stimuli that have not been combined with a UCS. In this case, an individual is able to differentiate between the causative agent of the desired behaviour and other similar agents. As a result, the individual responds only to the original stimulus and avoids producing behaviour against other similar stimuli.
Application of Classical Conditioning to Unit Pricing
Classical conditioning can be used to explain various consumer behaviour. This is because customers can be conditioned to demonstrate behaviours Purchasing decisions made by customers are influenced by certain stimuli, which include advertising and marketing. Besides, classical conditioning can be used to explain unit pricing and how it influenced their consumption and buying habits. Also, the theory can be used to describe the strategies that can be used to enhance the use of unit pricing among customers. Besides, classical conditioning is based on the foundation that the environment of individuals influences their behaviour. The following section describes how classical conditioning can increase the usage of unit pricing among consumers.
Phase 1: Before Conditioning
During the first stage, the UCS contributes the UCR. In this case, the unconditioned stimulus is the presentation of the unit pricing to the consumers who see the labels displayed on various products. Besides, during the first phase, the UCS is responsible for triggering a response automatically. In the case of unit pricing, the consumers see the unit price labels of products on retail stores, which provokes an unconditional response. In this case, the unconditional response that consumers experience is the desire to purchase cheaper products and make savings. The desire to make savings and purchase cheaper products is a preference and wish for many consumers and occurs naturally. It occurs naturally since minimizing costs will enable the consumers to use the money for other essential things in life.
Phase 2: During Conditioning
During the second phase, the neutral stimulus is connected with the unconditioned stimulus giving rise to the conditioned stimulus. The pairing of the UCS and the CS results in a conditioned response. In the case of unit pricing, the conditioned stimulus involves the provision of consumer education on the importance and how to use unit pricing. The provision of education to consumers reinforces the usage of unit pricing every time they shop in retail stores. Therefore education is an environmental factor that influences consumer behaviour. Pairing the use of labels to display unit prices and providing consumer education increases the tendency to use unit pricing every time they shop. In this case, the conditioned response that emerges after pairing UCS and CS is the continuous use of unit pricing to determine consumption and facilitate the making of appropriate buying decisions.
Phase 3: After Conditioning
During the third phase, presentation of the conditioned stimulus alone without the pairing it with the other stimuli results in the production of the conditioned response. In the case of unit pricing, provision of consumer education, which is the conditioned stimulus, produces the conditioned response. In this case, the conditioned response is the continuous use of unit pricing by consumers to determine consumption and facilitate the making appropriate buying decisions without forgetting the practice or stopping its use. Therefore, the provision of consumer education increases the usage of unit pricing.
Principles of Classical Conditioning
Acquisition
Acquisition occurs during the first phase of learning when a response is first developed and slowly reinforced. The CS and UCS combine to produce a conditioned response, which in the case persistent use of unit pricing by consumers. Through the provision of consumer education and displaying labels, consumers end up acquiring the tendency to use unit pricing when making buying decisions.
Extinction
Extinction comes about when a conditioned response reduces or ceases to exist. In the conditioning, this occurs when the CS is no longer combined with the UCS. This results in the disappearance of the initially acquired behaviour. In the case of unit pricing, failure of retailers to display unit prices results in the extinction of the practice since customers may forget the importance of the system in influencing purchasing. Besides, the lack of additional education to reinforce the usage of unit pricing may result in extinction.
Spontaneous Recovery
At times the learned behaviour can suddenly reappear even after the extinction of the acquired response. This is the re-emergence of the conditioned behaviour after an interval of lessened response. In this case, unit pricing spontaneous recovery can be achieved through retraining the consumers on how to use unit pricing and the provision of other sessions of education to promote reappearance of the lost behaviour.
Stimulus Generalization
Stimulus generalization refers to the tendency for similar CS to produce the same reactions after the behaviour has been conditioned. In the case of unit pricing, education on other types of pricing techniques may produce the same response among consumers. In this case, the response will be the desire to save money and purchase cheaper goods.
Stimulus Discrimination
Discrimination refers to the capacity to distinguish between a CS and other stimuli that have not been combined with a UCS. In unit pricing, consumers may have the capacity to differentiate between the primary stimuli that produce the desire to save and other stimuli.
Recommendations
There are several marketing strategies that retailers and other business people can use to promote and improve the rates of usage of unit pricing among consumers. Unit pricing has been identified as an opportunity that can be used to improve the buying decisions of consumers. For instance, unit pricing enables consumers to compare several brands of products and select the cheapest ones. Therefore, there is a need to increase its usage among consumers. The creation of awareness of the importance and how to use unit pricing among consumers will enable them to make use of the opportunity and enjoy the associated benefits. Besides, barriers that have reduced the usage of unit pricing can be addressed through marketing strategies. The strategies that can be used to improve unit pricing usage are based on the 4Ps of product marketing. The 4Ps include:
Product
Products include tangible and intangible items that are designed to address the demand and needs of customers. All goods have a product life cycle in which retailers should strive to understand and engage in planning for the different stages and specific challenges. Retailers need to comprehend the issues that the product is trying to solve. Besides, the advantages arising from the product and its characteristics need to be understood. Also, potential buyers need to be recognized. Also, retailers should identify what makes the item unique.
Price
Price refers to the amount that the consumer is required to give exchange for the product. The pricing of products determines the amount sold in the market. Besides, the determination of prices influences marketing strategies, demand, supply, and profit margins. Prices should be determined to reflect the perceived or real value of the products. In addition, prices are set to include expenses and costs used to produce the product.
Promotion
Promotions refer to the approaches retailers, and other business people use to disseminate essential product details to the consumers and distinguish a specific service or product. Promotions involve aspects such as video marketing, email marketing, social media marketing, as well as advertising, among other elements. Promotion is often tied to other Ps to achieved the desired effects.
Place
Retailers are required to identify appropriate locations that will attract potential customers for the business. Placement enables retailers to present their products in front of their customers. The items may be positioned in certain stores or on online platforms such as webpages.
The Three Strategies to address Consumer Behaviour
Education Campaigns
Education campaigns serve as a promotion strategy that can be used to increase the rate of usage of unit pricing among consumers. Retailers and other businesses should provide education to consumers regularly. The education should be based on how the customers can apply the unit pricing when making purchasing and consumption decisions. Business people with retail shops should teach consumers how to use unit price labels. Also, comprehension and understanding should be enhanced through education. The education campaigns should target all consumer groups. However, the young consumers and low socioeconomic populations should be targeted by the education campaigns because they are the ones that have little probability of using unit pricing.
Furthermore, education campaigns should be used to inform consumers about the benefits of using unit practicing. Such benefits include the ability to select cheaper products after comparing several brands and the ability to save money when purchasing goods. Moreover, unit pricing enhances the ease, speed, and accuracy of making decisions regarding consumption. Also, unit pricing enables consumers to make well-informed decisions due to better price recall. Other benefits include reducing shopping time and assisting the consumers in shopping under time pressure. In this case, education campaigns increase understanding of the consumers about the benefits of unit pricing. Also, highlighting the benefits will convince the consumers always to use unit pricing as they will be guaranteed improved decision making relating to the purchase of products.
The provision of education to consumers serves to create awareness. This is essential since there is a significant percentage of people who have never heard of unit pricing and how it can assist consumers. Additionally, education should be provided to consumers frequently to reinforce the practice over time. This will assist in preventing the consumer from forgetting on the use to use unit pricing when purchasing products.
The use of education campaigns is supported by evidence derived from the literature review. For instance, previous studies have revealed education campaigns are beneficial since they increase price sensitivity and allow consumers to choose cheap products. Also, some researchers found out that education campaigns enable consumers to reduce shopping time and shop under time pressure. Another study also established that education campaigns enabled consumers in Australia to save 18% of their money after making ideal decisions when purchasing and consuming products. Also, education campaigns have been found to support the usage of unit pricing as it reduces the chances of forgetting.
The provision of education is likely to work and increase the usage of unit pricing among consumers. The classical conditioning theory has been used to explain how stimuli produce a conditioned response, which is the desired behaviour. Educations campaigns serve as the stimuli and, when combined with a neutral stimulus, produce the desired behaviour, which in this case is the improved usage rates of unit pricing among consumers. According to the classical conditioning framework, the presence of stimuli always produces a response. Therefore, the provision of education is likely to work and produce the desire response. Besides, the provision of education to consumers will be assisting in changing their perceptions of the unit pricing scheme.
Proper Labelling and Positioning of Unit prices at the right location.
This strategy can be used to improve the usage rate of unit pricing among consumers. This strategy is based on one of the 4Ps of marketing, which in this case, is place.
Retailers and other business people should use prominent locations to display the unit prices of products to consumers. Prominent locations can be easily spotted by consumers hence increasing the usage of the unit pricing among them when they are purchasing products. The shelves should display both the retail and unit prices to facilitate easy comparisons of products by consumers. Ideal locations are appropriate for whereby the retailers place the unit prices close to retail prices. This will provoke a natural response of the consumers who will naturally look at the area.
Additionally, the unit pricing details should be displayed in a legible, prominent, and consistent manner. All retailers should provide guidelines to the consumers that direct them on how to use the unit pricing. Besides, the unit price should be labeled positioned some inches away from the retail prices to avoid confusion.
Besides, proper labeling of the unit prices on the product should embrace the use of the practice. This includes adopting the most appropriate verbal signposting, colour, height, size, and font type that will attract consumers from a distance and hence increase the usage of unit pricing. Also, retailers should present the unit pricing information consistently to make it easy for the customers to learn and embrace the use of the unit prices when shopping. Consistency of presentation of unit prices promotes consumer education and decreases the adoption time.
Also, the retailers should use visual presentation when displaying the unit price labels that will enhance the clarity of the information and easy use by the consumers. The visual presentation should consist of the use of the larger font to improve the easy utilization of the unit prices by the consumers. Besides, retailers should colours such as red and yellow that are visible from far to encourage usage of the unit price on products by customers. The ideal colours attract the attention of the consumers. Also, the unit price colours should be different from retail prices. In addition, the term “unit prices” should be displayed to inform customers and enable them to locate the labels quickly. In addition, all retailers should adopt one style and design of presenting unit pricing across multiple stores to avoid confusing consumers who shop from different stores. This will promote easy understanding and adoption of unit pricing among consumers, which will, in turn, improve their ability to make appropriate decisions regarding the consumption of products.
Proper labelling and positioning of unit prices at the right location take into consideration the evidence from the literature review. For instance, evidence derived from past research recommended that best practices involving unit pricing should ensure usability, accuracy, readability, and proper presentation of unit pricing details. Another evidence that was taken into consideration includes the design factors such as colour highlighting of the price tag, signposting, font size, and positioning.
The researchers also discovered that eye fixations by consumers on products increases when the unit pricing designing and labelling are improved. Proper labelling and positioning of unit prices at the right location is a strategy that is likely to work and increase the usage rate of unit pricing by consumers. As described in the classical conditioning framework, stimuli such as proper labelling and positioning of unit prices produce responses that are desired behaviour. In this case, the desired behaviour is improved usage of unit pricing among consumers.
Media Marketing
Mass media marketing involves the use of media platforms such as television, magazines, newspapers, and radios to promote products. Retailers can adopt the use of mass media to advertise the unit pricing and its benefits to consumers. The mass media should be used to create awareness about the existence of unit pricing and encourage its use among consumers. Also, celebrities can be paid to emphasize on the importance of the unit pricing to consumers. The media platforms should demonstrate to the consumers on how they can locate the unit price labels in the retails and how they can differentiate them from the retail prices. Also, through mass media marketing, retailers should promote the use of the same design and labelling of unit pricing in all stores to promote consistency and avoid confusion to customers. Besides, some firms should use social media platforms to encourage the usage of unit pricing by consumers. A significant percentage of people have access to social media through their mobile devices. Thus, retailers should promote the use of unit pricing through platforms such as Facebook and Twitter.
The adoption of media marketing is supported by evidence collected by other researchers in the past. For instance, there is a study in Scotland that revealed how media promoted adherence and enforcement of the minimum unit pricing for alcohol. Therefore, retailers should be guaranteed that the media will improve the usage of unit pricing by consumers and thus improve their ability to make appropriate consumption decisions. In addition, media marketing is a form of the conditioned stimulus, as explained in classical conditioned, that evokes the desired response. In this case, media marketing will produce the desired behaviour, which is improved usage of unit pricing among consumers to enhance the ability to make appropriate consumption decisions.