Imagine you are selling branded products in a price range of $49 to $2,999 – products like home electronics: TV sets, soundbars, speakers.
You start arranging the shelves for your TV sets in your brick-and-mortar outlet and plan to set up your online store later this week.
In either case, you wonder how this simple task of grouping and ordering your products becomes an actual decision.
Should you group them by brand and place Sony, Samsung, and Philips TV sets separately?
Or should you sort the TV sets by price and present them in order?
The answer is: it depends.
Researchers found that high-price brands received better ratings on perceived quality, price, and overall value if grouped by brands. However, consumers rated low-price alternative products higher when sorted by price.
Depending on your target products – high-price brand versus low-price alternative – sorting by brand or by price is more beneficial.
Target "high-priced branded products? Group products by brand.
Target "low-priced alternative products? Group products by price.
BONUS QUESTION: You decide to order by price because you either target a low-price (but high margin) alternative to a high-price brand or your products carry low prices; Let us say below $10, such as beer in a bar. Should you present prices in ascending or descending order? What do you think?
Research discovered that ordering items on a menu by price in descending order increases the likelihood that customers buy higher priced-products than vice versa.
References
Suk, Kwanho, Jiheon Lee, and Donald R. Lichtenstein (2012), “The influence of price presentation order on consumer choice,” Journal of Marketing Research, 49 (5), 708–717.
Suri, Rajneesh, Jane Z. Cai, Kent B. Monroe, and Mrugank V. Thakor (2012), “Retailers’ merchandise organization and price perceptions,” Consumer Behavior and Retailing, 88 (1), 168–179.