1) Perception involves categorizing new experiences based on familiar past experiences. 2) Buyers' perceptions of price differences as insignificant, comparable, or significant can determine if they classify products as similar or different and make choices based on price or other factors. 3) Perceived value is determined by balancing perceived benefits against perceived monetary sacrifice, and influences willingness to buy.

1. Understanding Customer and Buyer Behavior Aug. 23, 2012
Behavioral Foundations for pricing management:
Perception
- basically involves categorization
 Placing new experiences into existing classifications of familiar experiences
 If buyers perceive the price difference as insignificant, they may classify the two
prices as similar and act as they have in the past.
 If buyers perceive the prices of two alternative products as comparable,
although not identical, they may choose on bases other than price.
 If buyers perceive the price differences as significant, they may classify the two
products as different and make their choices on the basis of price.
Perceived value = perceived benefits (gains)
perceived sacrifice (give)
Perception
Perceived
quality
Actual Willingness
Perceived
price to buy
value
Perceived
monetary
sacrifice
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