Psychophysical Methods in Study of Consumers' Perceived Price Change for Food Products

When adjusting product prices, marketers wish information concerning consumers' price perceptions. The present study aimed to develop an optimal pricing framework for food products by applying Weber's Law and Stevens' Power Law in psychophysics. The first phase attempted to measure the differential thresholds when magnitudes of prices were raised and lowered. The second phase was conducted to establish the psychophysical function representing perceived changes. Analysis showed consumers' differential thresholds were positively correlated with the initial price, consistent with Weber's Law. Further, participants' perceived change differed for increased and decreased prices. Products were perceived as cheaper only when medium-and low-priced products dropped dramatically in price. However, small reductions for the high-priced products were perceived as cheaper. Regardless of price changes, participants perceived products were more expensive when prices dropped by a small amount.