Is it always in Company's best interest to feature the lowest price?

Answer 1

No, it's rarely in the interest of the company to feature the lowest price. Certainly the "loss leader" item to draw customers into the store is a good time to use the "lowest price" strategy but it ends there.

There is a buying psychology that needs to be understood. It has been tested and proven you will sell more if you first offer the highest price item in the category to the customer than if you started with the lowest priced item.

It's called the law of contrast. It's been tested on everything from pool tables to menswear.

If you are selling pool tables and want a higher average sales price you show the most expensive unit first and then work your way down. You will end up getting the customer to spend more this way then starting with the lowest and working your way up.

If you sell menswear and someone is making a wardrobe purchase you start with the most expensive suit in the store and work your way down.

Once the decision to buy the suit has been made you bring out the most expensive sweater...by contrast the most expensive sweater seems inexpensive compared to the suit. Then you bring on the shirts, ties, slacks, shoes, etc.--all in descending order based on most expensive item first.

The law of contrast makes the lower item seem like a good deal. If you reversed the process and started with the least expensive item and tried to move the buyer up the ladder the law of contrast is still in play but it has the opposite affect... by comparison the more expensive item doesn't look like such a good deal.

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