Pricing Strategies of iHerb and Their Impact on Consumer Behavior

iHerb employs several pricing strategies that significantly influence consumer behavior, primarily by offering competitive prices, transparent pricing, and promotional discounts such as coupons and voucher codes. These strategies encourage consumers to purchase directly from iHerb rather than local retailers, as iHerb’s prices are often lower due to the absence of import taxes and additional local markups when products are tagged for personal use.

Key pricing strategies and their impacts include:

• Competitive Pricing: iHerb offers products at prices generally lower than local stores because it bypasses import taxes and reseller markups. This pricing strategy appeals to cost-conscious consumers who seek authentic supplements at affordable prices, leading to increased purchase frequency and loyalty.

• Free Shipping Thresholds and Discounts: iHerb provides free shipping for orders above a certain amount (e.g., ₱3,200), which incentivizes consumers to increase their order size to qualify for free delivery. This strategy positively affects consumer spending behavior by encouraging larger purchases.

• Promotional Discounts and Coupons: Regular availability of promo codes and voucher discounts enhances perceived value and motivates consumers to buy more or try new products. Transparent pricing combined with these promotions helps consumers make informed decisions, increasing trust and purchase likelihood.

• Personal Use Tagging to Avoid Customs Taxes: By positioning purchases as personal use, iHerb helps consumers avoid customs taxes on orders below a certain value, effectively lowering the total cost and reducing purchase barriers. This strategy impacts consumer behavior by making international purchases more attractive and less risky.

Research on pricing strategies broadly shows that approaches like penetration pricing, price skimming, and competitive pricing have significant positive effects on consumer behavior by influencing purchase decisions and perceived value. iHerb’s pricing model aligns with these findings by focusing on affordability and transparency, which fosters consumer trust and repeat buying.

In summary, iHerb’s pricing strategies—competitive pricing, free shipping incentives, promotional discounts, and customs tax avoidance—work together to lower purchase costs and enhance perceived value, thereby positively impacting consumer purchasing behavior and loyalty.