Dynamic Pricing Risks Eroding Consumer Trust: Gartner
Brands employing dynamic pricing run the risk of losing consumer trust according to a Gartner report.
A survey of 303 U.S. consumers conducted in October found that 68% reported that dynamic pricing made them feel like they were taken advantage of. Eighty percent felt that brands with consistent pricing were more trustworthy, with 42% being willing to spend more on a product if they were certain the price wouldn’t change.
Consumers are on the lookout for these shifts, with 79% of respondents to a cultural attitudes and behavior survey from October saying they experienced surge pricing, hidden fees, unforeseen rate hikes, or other unexpected price changes within the last year.
“While inflation may have eased, suspicion and frustration have not — and these negative sentiments are fueling distrust and price paranoia,” Gartner Marketing VP analyst Kate Muhl said in a statement. “As a result, consumer loyalty is diminished and the brand relationship hardens into something more adversarial.”
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Meeting Consumers Where They Are
Consumers who reduced spending when inflation was high have come to view that behavior as not just necessary but virtuous, with 68% of those surveyed saying they’ve cut back on spending as a form of self-improvement and 33% enjoying telling others about how thrifty they are — a growing trend dubbed conspicuous underconsumption. Marketers can appeal to these consumers by giving loyalty program members perks and demonstrating that their prices are stable.
“These consumers are embracing frugality to regain control after years of inflation-driven thrift,” Muhl said. “They are intentionally reducing consumption and curbing wasteful habits, with the added benefit of saving money. Leaders should lean into playful austerity and support consumers’ efforts to go bare bones.”
That thrift is seen less in baby boomers, who have greater confidence than younger consumers who tend to have less financial security. That makes efforts to market across generations especially challenging.
“Marketing leaders should use optimistic themes and traditional media strategies to engage baby boomers while deploying smart social media strategies and more culturally sensitive themes to reach younger consumers,” Muhl said.
Consumers have also grown fatigued by personalized marketing, seeking to crowdsource opinions and details on consumption and finances to better place themselves in a larger context. They are increasingly skeptical of the suggestions marketers make based on quizzes or other interactive tools, seeking to understand why they are being guided to a particular product.
