Are perceptions of value important to consumers?
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Perceptions of value are absolutely important to customers. They go a very long way towards determining what consumers will be willing to pay for a particular good or service.
In general, consumers do not have much of an idea about how much it costs to actually produce a given good or service. They do not base their buying decisions on the price of the good relative to what it cost to produce. Instead, they tend to have some idea in their minds as to what a good is worth. They will buy the good or service if it is around that price or lower, but they will not buy it if it costs much more.
Sellers, then, want to raise the consumers’ perceptions of the value of their product. They want consumers to believe that there is something extremely valuable about that product. This is, for example, much of why they produce lavish advertising campaigns for certain products. They hope that the ads will make consumers perceive that the product is very valuable. If they are successful, they will be able to charge higher prices and they will have more loyal customers.
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