Shopping Wisdom – Perceived Value

Disclaimer: This post and its associated price comparisons were done in 2010.

Most of us are somewhat cost conscious when we go to the grocery store. Even thought there are specific items we might pick up no matter what the price, it still pays to check out the pricing in effect at your local grocery.

Recently I went into the local grocery for a flat of water. This was all I needed that day, so I was not looking for anything else. What greeted me at the door was a neatly stacked display of water in the bottle sizes of what I was specifically looking for. However, the astute shopper I thought I was bypassed that display, as it was for a name brand. I knew I could get the water cheaper as a store brand that had just as good of a taste.

I entered the store and not too far away was another neatly stacked display of bottled water in the bottle size I was after. Moreover, I am familiar with this store brand and it was within their normal pricing level. This display was an end cap, which is the display at the end of the aisle where all the enticingly good and tempting stuff sits. Priced at just slightly over 12 cents per bottle for 24 bottles, I quickly grabbed and headed for the check out thinking I had made a great buy. It was not until later when I had to go to the store for a gallon of milk that I discovered otherwise.

Where do the grocery marketers place the milk? At the back of the store where you have to go past all kinds of items you might just “happen” to need. What did I walk by to get to the milk but a display of a 35 bottle flat of store brand water for 10 cents a bottle? This was the same water, just in a different quantity. In addition, the price of this flat was similar to a flat sold in a warehouse store.

Take another example I encountered recently. In this case, I was looking for paper towels. I came across a very popular brand of Brawny towels that did not seem to be out of line price wise. There was a roll of eight paper towels for the price of $7.69. However, just a couple of displays down was a larger and supposedly more efficiently packaged display of Brawny paper towels. However, this one promoted eight giant rolls as being equivalent to twelve regular rolls for a price of $15.99. This did not sound like a bad deal until I looked deeper into the perceived value.

Let us take a look at this deal just a little closer to see what is the better deal.

Since the rolls for the super size are larger and each package contains eight rolls, the cost per roll for the super size is also greater. Looking closely at the packaging I discovered that the rolls are only 50% larger but the cost per roll is more than 100% greater. The actual price of this super sized roll should have been no more than one and one half times the price of the regular size or $11.54. To take advantage of this super offer, I would have spent $4.45 more than necessary. I could have purchased two packages of the regular size, received 800 sheets of towels equivalent to 5,132.8 square feet, and still saved myself $0.61 cents.

While the pricing and packaging were not erroneous and misleading as to the actual offer, obviously the technique used was to present a different perceived value to encourage the shopper to go for the larger package.

When grocery shopping, be aware of the price you are paying in exchange for the quantity and value of what you are purchasing.

Perceived value and actual value are often radically different.