The Purchasing Ability of A Consumer And Its Impact On Prices

Purchasing Ability of A Consumer

Consumer And Contemporary Business Environment

A consumer is the crux of business and marketing strategy. A consumer is a key factor that defines the marketing plan of any organization for its products or services. Therefore, it is vital to research and analyze customers before launching any product or service in the market. In addition to this, with the advent of globalization and digitization, the world of business and trade has been completely revolutionized. It has completely changed the traditional environment of business. Globalization has brought enormous platforms and opportunities for business organizations to expand their operations beyond the boundary of the nation. However, with immense opportunities, it has also brought an added level of competition. Since, the availability of uncountable products and services, consumers have a large number of options available in the market. Day-by-day the behavior and ability of consumers are changing in this dynamic environment. Thus, it has significantly increased the level of competition between business organizations, both nationally and internationally. All these elements in a business environment are directly or indirectly affect the purchasing ability or power of the consumer.

Consequently, the purchasing ability of the consumer has a direct relation with the price of the product or service of the organization. Price plays an important role in the decision-making process of the consumer for a particular product or service (Safitri, 2018). There are other factors also that influence the decisions of the employees, however, the price remains one of the central factors that affect the decision of a consumer to buy or purchase the product.  Moreover, setting the price of a particular product is largely depends on the purchasing ability of the consumer. It is often been noticed that consumers show a high-resistance towards any change in the pricing strategy of the particular firm. There are a lot of customers or consumers who are extremely sensitive to the price of products.  These types of consumers tend to buy products only at the time of sales. It directly impacts the pricing of the products by lowering the rate of the products. Thus, many retailers apply the strategies of high-low and everyday low price in order to take advantage of the consumers who are extremely conscious about the price of the products (Perner, 2008).

Internal And External Factors That Influences Purchasing Abilities Of Consumer

Additionally, in this ever-changing environment, consumer purchasing ability is constantly governed by several factors. These factors are further divided into internal factors and external factors. As per the analysis of Bojkovska et al (2014), internal factors greatly impact the customers as compared to external factors. Internal factors can be defined as the internal state of the personality of the consumer. It is linked to the mental state of the consumer. On the other hand, external factors are related to the environmental influences of the consumers. According to the analysis of the research of Kotler and Keller (2012), internal and external factors are further divided into smaller elements that persuade the purchasing ability of the consumer. According to these authors, the external factors include geographical regions, demography, and economy or financial position of the consumers. On the other hand, the internal factor includes only psychological factors.

In the geographical factors, climate, climate patterns, land relief, transport facilities, etc are some of the geographical factors that significantly influence the purchasing ability or behavior of the consumer. Furthermore, Assignment writing in Liverpool experts identified demographic factors such as rate of the population, gender, age, culture, etc are some of the external factors that help the customers to make decisions regarding the purchase of any products or items. In addition to this, the economic factor is also one of the most crucial factors that help the business analyst to decide market segmentation of the particular product. The current economic condition of the country, the financial strengths of the consumers together act as a driving force for the consumer to make an appropriate decision about buying the products. Apart from this, one more external factor which persuades the purchasing ability of the consumer is a sociological factor. Family status and the social role of the consumer help to decide the purchase of products. On the other hand, the buying ability or behavior of the consumer is influenced by psychological factors such as motivation and perception (Ramya and Ali 2016). Motivation is usually defined as a force or urge of an individual to achieve a targeted outcome in order to get ultimate satisfaction. In the context of the psychological factor and buying ability of the consumer, motivation can be referred to as the purchase of products that provides immense satisfaction to the consumers. Here, the satisfaction of the consumer becomes the core motive that influences the decision to purchase. On the other hand, perception is the process in which an individual or a consumer receives, organizes, and interprets the information in order to develop a meaningful conclusion. In this context, a consumer generally receives, organizes, and interprets the information related to a particular product that will further help them to draw a meaningful conclusion regarding purchase decisions. MBA assignment service Sydney experts defined, With the blend of imagination and experience, a consumer generally makes the perceptions of a particular product.

Figure 1: Classifications Of Factors Affecting Consumer Purchasing Ability

(Source: Ramyaand Ali, 2016)

Other psychological factors are the learning and attitude of the consumer. Consumer purchasing ability or behavior is also influenced by learning. A consumer’s learning is related to his skills, knowledge, and intentions. Moreover, past experiences also play a major role in the purchasing factor of a consumer. Furthermore, attitudes and beliefs are additional psychological factors on which the decisions of a consumer rely. A particular consumer has a particular attitude and beliefs towards a particular product. For example, the brand name of a particular product tremendously develops a special kind of attitude towards the product of that brand only. Thus, the external and internal factors are the key forces that build the purchasing ability of the consumer. These are the factors that influence a consumer to purchase the products. Ultimately, these factors also impact the price of the product in several ways. In case you have doubt, you can also ask for Dissertation writing work delivered by SourceEssay experts.

Relation Between Brand Image And Consumer

Brand image can be defined as the current perception of the consumer about a particular brand. In other words, it can be said that brand image is the unique bundle of memories associated with the brand of the product in the minds of consumers. These memories can be positive or negative. Furthermore, these memories about a brand can be consist of product attributes or perceived benefits of products to the consumer. Hence, it constructs a positive image of the brand inside the consciousness of a consumer. Along with this, brand image not only imposes a mental association of the product but also reflects the emotional connection of the particular product of the brand with the consumer. Thus, brand image is one of the strongest elements that affect a consumer’s decision to purchase the product of a particular brand.

Brand image is regarded as one of the most significant marketing strategies of the organization. It defines the character, values, mission, and objectives of the organization. The modern business environment is characterized or associated with the image of the brand. Moreover many make my assignment Bristol experts said, it helps the consumer to develop trust with the brand. In the busy life schedule of consumers, they do not have much time to seek knowledge about the product in order to make a purchasing decision (Safitri, 2018). Thus, they rely on the image of the brand to make a purchasing decision based on the previous experiences and social perception of the brand.

Figure 2: Relationship Between Brand Image, Price, And Purchase Decision Of The Consumer

(Source:Safitri, 2018)

Price And Consumer Behavior 

There is no doubt that the price of the product directly influences the decision of a consumer to purchase the product. Pricing plays a central role for the consumer to associate a brand image, internal factors, and external factors on which a consumer relies to make a purchasing decision. Moreover, the psychological factors of the consumer greatly impact the pricing strategy of the product. In other words, the psychology of a consumer deeply impacts the price of the product of a particular brand. Nowadays marketing experts are playing with the psychology of the consumer by using the strategy of psychology pricing. The researcher and market analyzers viewed that the psychic purchasing ability of consumer directly impacts the price of the products. Thus, according to the analysis of Asamoah and Chovancová (2011), psychological pricing is a strategy developed by marketers to influence the purchasing decision of the consumer. To a great extent, it is the belief and perception of the consumer to buy the product and not the actual price of the product. Thus, the behavior or ability of consumers to purchase a product can largely impact the pricing decision of the marketers. Assignment writing in Toowoomba experts defined, The organization or retailers who understand the role of psychology of the consumer can effectively apply pricing strategy in order to achieve success in the market competition. The psychological behavior of the consumer has influenced the marketers to develop an odd-even psychological pricing strategy. In this pricing strategy, certain odd and even digits are used as price endings. It is a potent strategy that can directly influence the purchasing ability of the consumer (Kumar and Pandey, 2017). It is an exponential way to attract consumers to purchase the product. However, it is only successful when the organization has acutely analyzed the purchasing ability and behaviors of the consumer in order to determine the price of the product. 

Perceived Quality, Consumer Behavior, And Pricing 

The perceived quality of a product or service can be defined as an attribute or characteristic that conveys functional and psychological benefits to the consumer. In other words, perceived quality can also be defined as the perception of the customer regarding the superiority or overall quality of a product or a service. Therefore, in the current business environment, many business organizations are adopting the consumer-focused quality of the product or service as a powerful strategic tool to achieve maximum output and profits. Perceived quality helps the consumers to distinguish a particular brand from the rest of the competitive brands. This eventually persuades the consumer to make a decision regarding the purchase of the product or service. This is one of the most crucial aspects of the purchasing ability of consumers. Based on this ability or behavior of the consumer, most of the well-recognized brand companies determine the pricing strategy of the product. This purchasing behavior of the consumer directly impacts the price of the product. It acts like a helping tool for the brand companies to utilize a pricing strategy with a premium price of the product. A premium pricing strategy is a tactical strategy applied by the companies to convey the value, superiority, and quality of the product. In this strategy, the company decides to determine the price of the product relatively higher than the immediate competitive company (Campbell, 2020. This can be regarded as one of the appropriate justifications of the statement that consumer purchasing ability directly impacts the price of the product. Thus, the premium pricing strategy ultimately improves the brand value and perception of the products. Moreover, it helps the organization to achieve immense recognition and profits. Furthermore, it also helps the companies to expand their market share and market position (Akkucuk and Esmaeili, 2016). Paradoxically, the bad image or negative perceived quality of a particular brand will affect the organization in several ways such as loss of customer loyalty, trust, etc. Thus, the quality of the product influences the purchasing ability of the consumer, and the behavior of the consumer is directly utilized by the brand company to apply various pricing strategies to the product.  If you want to know more about consumer behavior, ask for Online assignment help Darwin available at SourceEssay.

The Theoretical Ground On Consumer Purchasing Ability 

The two most popular and groundbreaking theories that are mostly applied to study the ability and behavior of consumers for purchasing the products are the Theory of Reasoned Action and the Theory of Planned Action. 

The theory of reasoned action is based on the fact that humans are rational beings and utilize a systematic way of information available to them. This theory was pioneered by Fishbein and Ajzen in the year 1975. This theory is used by marketers to predict consumer behavior and their ability to purchase the product. According to this theory, two components, attitude and subjective norms of the consumers influence the purchase behavior of the product (Sulehri and Ahmed, 2017). 

Figure 3: Model of the theory of reasoned action

(Source: Sulehriand Ahmed, 2017)

These two components of this theory influence the behavior intention of the consumer. Moreover, attitude and subjective norms are measured by the expectancy-value model. In addition to this, the attitude toward the behavior can be defined as a function and evaluation of beliefs. Moreover, the social norm is a function of the belief of the consumer towards social perception. Based on the perception, an individual decides whether to perform the behavior or not. The study of Sulehri and Ahmed (2017indicates that consumer develops their perception for purchasing the products according to their location, environment, etc. 

The theory of planned action is an extension of the theory of reasoned action. This theory has been developed to predict the intention of an individual based on time and place. The theory of planned action is comprised of six components. These are attitudes, behavior intention, subjective norms, social norms, perceived power, and perceived behavior control. Based on these two theories, most of the market analyzers predict the reactions or behavior of consumer regarding the price of products. 

Moreover, another theory that explains how the consumer will perceive different pricing strategies is known as adaptation-level theory. This theory is the function of price, brand, place, and promotion. This theory is one of the most influential theories that explain how consumers perceive different prices. Moreover, it also influences the purchase decision of the consumer. 

Another theory is the signaling theory in which three components, signaler, receiver, and signal together play an important role to influence the purchasing decision of the consumer. Academic writing services in Albany experts identified, In the present context, signaler is brand companies or retailers, the receiver is consumer, and the signal is the price of the product or service. Based on the analysis of consumer behavior, retailers, or brand companies determines the price and analyze which pricing strategies appeal most to the consumers. 

Purchasing Ability Of Consumer And Pricing Of The Product 

There are many pricing strategies applied by marketers that significantly affect the decision–making procedure of the consumer. Paradoxically, it can be said that the purchasing ability of consumers directly affects the price and pricing strategies of the marketers for the particular products or services. 

The study of Njeru (2017) indicates that external factors such as the financial factor of the consumer directly impact the pricing strategy of the retailers or companies. As per the arguments of Ellickson and Misra (2008), the Hi-Lo pricing strategy is effective when it is applied to a high-income group of customers. High-Low (Hi-Lo) is a pricing strategy that is utilized by retailers. In this pricing strategy, the retailing organization or supermarkets charges a high price for the product ad when the demand and popularity of the product decreases, they put discounts on that product in order to increase the sales rate. The theory of reasoned action and signaling theory tremendously plays an important role in determining the behavior and reaction of the consumer after applying a Hi-Lo pricing strategy to a certain product. 

On the other hand, the everyday low price strategy is applied by the retailers in which they charge a constant lowers the price from the consumer. They do not offer temporary discount offers to the consumers (Njeru, 2017). This is one of the most influential strategies to achieve the loyalty and trust of the customers. Along with the internal factor, external factors such as time and price of the products or services have an important role in applying everyday low pricing strategy. Marketers analyze the customer segments that are influenced by the factors of time and price and decide to put this pricing strategy for a particular product or service. Thus, it can be seen how these factors, perceptions, and purchasing behavior of the consumer impact the pricing of the product. Along with this, the knowledge, awareness, and perception of consumers regarding the price and quality of the products ultimately impact price management. essay writer Parkes said, It helps the marketers or retailers to determine the price and how it will be perceived, valued, and influence the consumers to make effective decisions to purchase the product. Moreover, this pricing strategy attracts high sale-prone customers rather than low-sale prone customers. Hence, the purchasing behavior of the consumer is being analyzed and according to the analysis, different pricing strategies are applied by the retailers or companies. 

Concluding Remarks

The modern world is governed by several strategies, tools, and techniques. Especially, in the context of the business environment, analysis, and interpretation of information has become an inevitable part. As compared to traditional marketing, modern marketing is characterized by data analysis, interpretation, evaluation, application, and again analysis. It is a continuous cycle that will never be going to end. However, all these activities are performed only to please the consumer and to influence their purchasing decision. Various theories have been developed to analyze and predict the purchasing behavior and choice of the consumer. With the advent of modern technologies and the advancement of the internet and communication, analysis and prediction have become easier. However, making a decision is still a risky and complicated process.

The analysis of consumer purchasing ability and its impact on a price reflects how all the relevant factors in the contemporary business environment interplay dynamically. The perception of the consumer for brand image, perceived quality, pricing, internal factors, and external factors determines the ability to purchase the product. Moreover, the development of various theories by well-known philosophers is still relevant in the current business environment. Thus, in order to conclude, it can be stated that the purchasing ability of the consumer is governed by several factors and it directly impacts the price of the products.


Akkucuk, U. and Esmaeili, J., 2016. The Impact of Brands on Consumer Buying Behavior. International Journal of Research in Business and Social Science (2147-4478)5(4), pp.1-16.

Asamoah, E.S. and Chovancová, M., 2011. The influence of price endings on consumer behavior: An application of the psychology of perception. Acta Universitatis agriculturae et silviculturae mendelianae Brunensis.

Bojkovska, K., Joshevska, E., Jankulovski, N. and Mihajlovski, G., 2014. THE IMPORTANCE OF FACTORS THAT INFLUENCE ON CONSUMER PURCHASING DECISIONS OF FOOD PRODUCTS. Journal of Hygienic Engineering and Design9, pp.73-79.

Campbell, P., 2020. Complete Guide to Premium Pricing.

Kotler P., and Keller K. L. 2012. Marketing Management (14th Edition). Prentice Hall, New Jersey, USA, pp. 122-182.

Kumar, S. and Pandey, M., 2017. The impact of psychological pricing strategy on consumers’ buying behaviour: a qualitative study. International Journal of Business and Systems Research11(1-2), pp.101-117.

Njeru, I.M., 2017. Influence of pricing strategies on consumer purchase decision: a case of supermarkets in Nairobi County (Doctoral dissertation, Strathmore University).

Perner, L., 2008. Introduction to marketing. Marshall School of Business University of Southern California.

Ramya, N. and Ali, S.M., 2016. Factors affecting consumer buying behavior. International journal of applied research2(10), pp.76-80.

Safitri, I., 2018. The Influence of Product Price on Consumers’ Purchasing Decisions. Review of Integrative Business and Economics Research7, pp.328-337.

Sulehri, N.A. and Ahmed, M., 2017. Theory of reasoned action and retail agglomerations buying behavior for urban consumers. The Business & Management Review9(2), pp.263-266. Protection Status
Open chat
Need Help?
Hello! Welcome to Sourceessay.
How can I help you?