Odd pricing effects: an examination using adaptation‐level theory

Abstract

Purpose

Using adaptation‐level theory as a conceptual framework, the purpose of this research is to determine what effect, if any, marketplace conditioning has on consumer price estimates and product evaluations.

Design/methodology/approach

A total of 475 subjects participated in two experiments that required them to read a scenario, evaluate a series of advertised products, and perform an aided price recall task.

Findings

The results suggest consumers are more likely to recall the correct price when more of the rightmost digits end in 0 or 9. Moreover, when prices are incorrectly recalled, consumers are likely to inadvertently assume prices end in commonly used rightmost digits (i.e. 5 and 9). Combined, the results demonstrate odd pricing effects are likely a result of marketplace price conditioning rather than truncation of rightmost digits as suggested by the analog model of numerical cognition.

Practical implications

Findings suggest that use of atypical rightmost digits in odd prices fails as a method to differentiate products in the mind of the consumer. This would explain the use of larger right ending digits by retailers in an effort to maximize profit without impacting consumer perceptions of quality, value, and purchase likelihood. In the absence of strong quality image effects, retailers are encouraged to continue the practice of setting prices with digits ending in 9.

Originality/value

A key theoretical implication of this study is that the underestimation heuristic based on leftmost digit processing fails to explain the results of the incorrectly recalled price estimates. As a result, adaptation‐level theory may provide a more robust explanation for odd pricing effects.

Citation

Kinard, B.R., Capella, M.L. and Bonner, G. (2013), "Odd pricing effects: an examination using adaptation‐level theory", Journal of Product & Brand Management, Vol. 22 No. 1, pp. 87-94. https://doi.org/10.1108/10610421311298740