Consumer perceptions of fi nancial services prices
In this chapter we will discuss how consumers form their perceptions of fi nancial services prices. We will fi rst highlight the role that customer perceptions of fi nancial services prices play in customer engagement with fi nancial services organizations. We will then discuss the unique characteristics of fi nancial services prices, which can make them diffi cult for consumers to evaluate. A discussion of cognitive processes through which fi nancial services price perceptions are formed will be then presented. In this discussion we will draw from research fi ndings in psychology, marketing and behavioral economics, focusing on what is known about how consumers evaluate fi nancial services prices and the heuristics that they often use to conduct such evaluations. The chapter will conclude with a discussion of public policy measures and improved marketing practices that may aid consumers in making informed decisions related to fi nancial services prices.
For most fi nancial services organizations, the pricing decision is one of the main issues that management need to address. This is because price has a series of effects that go beyond its direct fi nancial impact on the company (Farquhar and Meidan 2010 , Harrison 2006 ). Price serves as the sole source of revenue for fi nancial services organizations. In other words, unlike other marketing mix elements such as advertising and distribution, which represent costs to the fi nancial services provider, revenue recuperation to cover these costs is only possible through price (Oyelere and Turner 2000 ). Price can also represent the positioning of the company with respect to its competitors and serve as a signal to the industry as to where a fi nancial services organization is positioned. In addition, in fi nancial services markets where product and service quality may be diffi cult to measure, price can often serve as an indicator of quality and has a signifi cant impact on customer perceptions of the fi nancial services provider (Estelami 2008 , Rao 2005 ). For these reasons it is critical to ensure that the prices being charged provide for profi table operations are consistent with company goals, while projecting the correct marketing signals to potential and existing customers.