Marketing Strategy: Why are buyer perceptions so important?

Understanding your customers is essential to both your marketing and sales strategies, because by listening to your customers you will know what they want or need, which ultimately helps you serve them better. In the long run, this leads to higher customer retention, improved sales and higher revenue. Buyer perceptions are important because they greatly influence how your customers make purchase decisions. Never compete on price alone, as it can eat away your profit margins pretty quickly. Instead, understand your customer’s perceptions and market your product/service based on that.

Disney’s wait-in-line perception: To make the perception of waiting in line more pleasant for customers, Disney provides entertainment, which makes the wait time seem shorter. Disney also makes people stand in multiple lines, as opposed to one long line, to help with the perception of a long wait. In 1999, Disney introduced the Fastpass, which lets customers come back to a ride at a specific time and wait in a special line. Customers were willing to pay a little extra in exchange for a shorter wait time. The strategy ended up being so successful that Disney now owns a patent on it.
The decoy effect: Let’s say your customers are trying to buy a product and choosing between two products. Then, a third, higher priced product is introduced. The decoy effect takes place when this third higher priced product increases the attractiveness and sales of the higher priced product from the original two. The decoy here is the third, higher priced product.

For instance, let’s say your customer is buying a software product from the following three:
Software X: $50Software Y: $80Software Z: $120
Software Z is too expensive and is likely to be unattractive. In most cases, your customer will likely purchase software Y, as it is reasonable and bears the perception of being better than the cheapest product.  
The story of the candy shop: This is how the story goes. There are two candy shops next to a school. One shop charges a slightly higher price than the other, but still gets most of the students (i.e., higher sales). When the children are asked why they purchase from the higher priced candy shop, they say, “The other store takes candy away from us.”

It turns out that the lower price shop owner piles candy on a scale and then removes from the pile to arrive at the desired weight. On the other hand, the higher price shop owner starts with little candy and adds to it to until the desired weight is reached. This shows that even though the same amount is sold in both shops, the buyer’s perception of value is very different. Even though the price is slightly higher at one shop, the children think they are getting a better value for their buck.
The bottom line is, do some market research to understand how your buyers perceive your product/service. How do they see it in comparison to a competitor’s products/services? Determining buyer perception is essential to increasing sales, and in turn, increasing profits.