Consumers are grappling with sharply higher prices nearly everywhere, thanks to soaring inflation rates. The sticker shock at the grocery store can be particularly tough to swallow, says Maryland Smith’s P.K. Kannan, the Dean’s Chair in Marketing Science and associate dean for strategic initiatives.
Kannan recently spoke with the Baltimore Sun about how area consumers are handling the price hikes. They’ve come to expect to pay certain prices for certain products, he said, and when they see those numbers tick up, it can feel like a real blow to the wallet.
“That gets ‘encoded’ as a loss, and sometimes these losses that you feel can really play a big role in how you will react,” Kannan told the Sun.
Consumers feel the hit of a price increase a lot more than the “gain” when they get a discount. They’ll tend to respond by changing their habits, Kannan said. That means limiting impulse buying, comparing prices among stores, shopping around at multiple stores for different products, or buying in bulk.
“They are trying to reduce the total amount of spending on food and other things,” he said in the article. But “given that prices are rising all over, they may not be able to do that very well.”
Kannan said consumers just might get used to the higher prices, especially if their pay goes up too.
“If your increase in pay somehow cushions this, then you may not change as much and you may take that in stride,” he said.
Or they might permanently change their shopping habits.
Kannan said manufacturers would do well to explain why prices are going up – because of factors like higher shipping costs and more expensive raw materials – to keep customers and market share.
“Being transparent about the reasons for the price increase may get them some Brownie points from consumers,” he said. “They don’t want to be seen as a manufacturer who is price gouging.”
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