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Article
Publication date: 31 January 2020

Mazen Jaber and Kylie Jaber

Cause-related marketing (CRM) campaigns have become common features of the marketplace. CRM often involves a for-profit business agreeing to contribute a specified amount…

Abstract

Purpose

Cause-related marketing (CRM) campaigns have become common features of the marketplace. CRM often involves a for-profit business agreeing to contribute a specified amount to a cause when the business’s customers engage in revenue-generating exchanges. Despite the central role that price is likely to play in a consumer’s decision to purchase or not to purchase an offer associated with a CRM campaign, to the best of the authors’ knowledge, very few have examined price framing effects in a CRM context. This paper aims to explore the effect of rightmost digits manipulation in prices on participation intentions for CRM campaigns.

Design/methodology/approach

In Study 1, 241 college students participated in an online experiment for class credit. The experiment used a 3 (price level: low, medium and high) × 2 (price ending: 99 ending and no ending) between-subjects design. The dependent variable was participation intention, and several moderators and mediators were considered. PROCESS was used to test the moderated mediation. In Study 2, 351 subjects participated in an online experiment with a design similar to the earlier study. In Study 2, however, new mediators were added and the moderated mediation was tested using SPSS PROCESS macro.

Findings

This research shows that price ending impacts the effectiveness of CRM as a tactic on consumers’ purchase intentions. Consistent with the authors’ prediction, this study shows that consumers exposed to a 99-ending CRM offer are more likely to participate in the offer compared to consumers exposed to a no-ending priced offer. Offer attractiveness, elaboration and corporate social responsibility were also shown to have a strong effect on participation intentions.

Practical implications

This research indicates that for moderately priced products, 99-ending prices led to an increased influence on consumer purchase intentions; on the other hand, no-ending/even-ending prices were more effective for high-priced products. Thus, the use of the right digit effect by managers in a CRM context as way of increasing consumers’ participation likelihood is likely to be more successful for moderately priced offers.

Originality/value

This research extends previous work on CRM and right digit effect in pricing. This study’s findings, in both Studies 1 and 2, demonstrate that the effectiveness of CRM campaigns on consumer choice is dependent on the offer price ending. Consumers exposed to the no-ending priced CRM offers tend to be affected less by CRM campaigns compared to consumers exposed to 99-ending offers, who perceive the offer as more attractive.

Details

Journal of Consumer Marketing, vol. 37 no. 3
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 9 February 2015

Charlotte Gaston-Breton and Lola C. Duque

This paper aims to explore not only the utilitarian but also the hedonic persuasive effects of promotional techniques like 99-ending prices and the influence of consumers…

Abstract

Purpose

This paper aims to explore not only the utilitarian but also the hedonic persuasive effects of promotional techniques like 99-ending prices and the influence of consumers’ decision style when evaluating these appeals. Evidence suggests that retailers use 99-ending prices as a promotional technique, based mostly on its savings appeal.

Design/methodology/approach

Three complementary studies were performed. A first field study among 317 shoppers allows to test the hypotheses for two groups of decision-makers (intuitive and analytical) using structural equation modeling based on the partial least squares algorithm. Then, a laboratory experiment assigned to 123 respondents manipulates the decision-making style and, in turn, tests more precisely the proposed hypotheses. Finally, the third study replicates the laboratory experiment with 104 respondents without manipulating decision-making; rather it is measured, which allows to test the effect of internal-based versus contextual-based decision style.

Findings

First, the 99-ends are not strictly associated to utilitarian benefits (savings, quality or convenience) but also to hedonic benefits fulfilling consumer’s needs for exploration, value expression and entertainment. Second, a better understanding of the moderating role of the decision-making style is obtained: consumers in an intuitive decision mode give importance only to hedonic benefits; and there are differences in the analytical decision mode: when the decision-making style is internal (measured as a personal trait), consumers give importance to both utilitarian and hedonic benefits; however, when the decision-making style is contextual (manipulated), consumers focus only on utilitarian benefits.

Research limitations/implications

It is necessary to check the robustness of the results depending on other marketing variables (e.g. product category knowledge, purchase frequency) and individual consumers’ differences in price-sensitivity (e.g. price consciousness).

Practical implications

The findings help to better understand the image effect of 99-ends underlying both consumers’ individual differences and contextual effects. Findings also help retailers and pricing managers in their use of 99-ends as a promotional technique.

Originality/value

This research contributes to a better understanding of the persuasive promotional effect associated to 99-ends. The study demonstrates that utilitarian benefits cannot fully explain consumers’ responses to 99-ends, as 99-end prices can also provide stimulation, entertainment and help fulfill consumers’ needs for information, exploration and self-esteem. The authors further examine the moderating role of the decision-making style between promotional benefits and proneness to buy 99-ends products. The intuitive mode, either internal or contextual, activates hedonic benefits, whereas the analytical mode activates both utilitarian and hedonic benefits when the mode of processing is internal and only utilitarian benefits when the mode of processing is contextual.

Details

European Journal of Marketing, vol. 49 no. 1/2
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 1 October 1998

Philip Gendall

This study used choice modelling to estimate the effect of odd pricing on the demand for three products: a $4 can of fly spray, a $7 block of cheese, and a $50 electric…

Abstract

This study used choice modelling to estimate the effect of odd pricing on the demand for three products: a $4 can of fly spray, a $7 block of cheese, and a $50 electric kettle, with each product represented by three different brands. For cheese and fly spray a significant odd‐price effect was observed at 99 cents but not at 95 cents, whereas for the electric kettles a significant odd‐price effect occurred at 95 cents but not at 99 cents. The estimated value of the odd‐pricing effect ranged from 4 cents for fly spray, to 6 cents for cheese, to $3.18 for the kettles. The results of the study provide empirical support for the assumption that odd pricing generates greater‐than‐expected demand, at least at the individual brand level, and for the common practice of setting retail prices that end in 95 cents or 99 cents.

Details

Journal of Product & Brand Management, vol. 7 no. 5
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 1 October 2006

Jianping Liang and Vinay Kanetkar

This paper aims to improve understanding of the effects of price endings on consumers' choice behavior. The research study described here was driven by three central…

Abstract

Purpose

This paper aims to improve understanding of the effects of price endings on consumers' choice behavior. The research study described here was driven by three central questions. First, do consumers process a price holistically or process each digit as a stimulus? Second, do consumers “round” prices? Third, do price endings such as 9 or 0 have specific effects on purchase intentions?

Design/methodology/approach

The study is based on a discrete choice experiment where consumers responded to two‐digit prices. Tomato soup and backpacks were the two product categories selected for the study. A total of 188 university students who had purchased these products completed an online survey indicating their choices for one of the four alternative products, with an option of not purchasing anything. Tomato soup prices were varied from 40 cents to 99 cents (every potential price ending was included) and backpack prices varied from $30 to $59 (no pennies). Each respondent made 20 choices for each product and the resulting database was used to construct the nested logit models.

Findings

Estimated models suggest that consumers do not process price holistically. In other words, respondents processed prices by splitting numbers into two parts. Furthermore, the use of truncation and the effects of “odd/even” and “0” appeared to be statistically significant for both canned soup and backpack products. Although there was rounding of prices for the soup category, there was no statistically significant support for that in the backpack category. Finally, the effect of a 9‐ending was statistically significant for the backpack category but not for the soup category.

Practical implications

The findings suggest that consumers may not process prices holistically. This, in turn, means that price endings are likely to influence consumer price sensitivity and both retailer and manufacturer profits.

Originality/value

This is the first paper that examines price endings for all numbers from 0 to 9. In addition, the use of a discrete choice modeling method to infer individual choice behaviour in this context is new and innovative.

Details

Journal of Product & Brand Management, vol. 15 no. 6
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 19 March 2021

Judith Hillen

This study aims to analyse the use of psychological pricing in online food retailing. In stationary grocery shops, psychological prices with nine-endings have been a…

Abstract

Purpose

This study aims to analyse the use of psychological pricing in online food retailing. In stationary grocery shops, psychological prices with nine-endings have been a well-documented phenomenon for many decades. However, little is known about the relevance of this pricing practice in the growing grocery e-commerce sector.

Design/methodology/approach

The authors investigate the frequency of nine-ending prices at Amazon Fresh for more than 10,000 products from May 2019 until March 2020 for the customer location Berlin, Germany. Applying a within–between logit model, the authors identify the determinants for the use of nine-ending prices.

Findings

The authors find that more than 70% of all prices end in the digit 9. This indicates that Amazon Fresh applies psychological pricing to a similar degree as traditional offline grocers. Nine-ending prices are more likely for so-called “want” products such as snacks and sweets than for “should” products such as fruits and vegetables. Also, psychological price endings are used less for products with a higher price level and for products with temporary sales promotions.

Originality/value

This study is the first to analyse psychological pricing practices for the world's largest online food retailer Amazon Fresh. The study results contrast with most previous empirical and theoretical studies, which suggest that the use of psychological prices would decline in an online context.

Details

British Food Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0007-070X

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Article
Publication date: 1 August 2006

Ralf Wagner and Kai‐Stefan Beinke

The purpose of this paper is to introduce a new approach for the identification of price thresholds, which enables learning true thresholds from previous buying decisions…

Abstract

Purpose

The purpose of this paper is to introduce a new approach for the identification of price thresholds, which enables learning true thresholds from previous buying decisions recorded in POS scanner data.

Design/methodology/approach

The methodology presented herein combines spline regression with generalized cross‐validation. Classical Chi‐square testing confirms the separation of regimes of the price response function by this methodology. Five propositions concerning the consumers' response to odd pricing in a Western‐type market are evaluated.

Findings

Despite the widespread retail practice odd prices are unlikely to flag the actual threshold in consumer response. The term odd price refers to prices with a non‐zero ending in the cent digit, e.g. .95, .98 or .99, which are commonly used in Western‐type markets. Moreover, the simple odd price effects are distinguished from odd‐ending prices with the first number left of the decimal point set to an odd number. The results show that even these prices not always flag a threshold in consumer response.

Research limitations/implications

The discussion of the odd‐price effect is confused by conflicting empirical results and related interpretations of the underlying mechanisms. In contrast to many previous investigations – which are restricted to the consideration of very few price endings – this study covers all reasonable prices. Statistically significant odd‐price effects are found for some brands, but not for all within the same category.

Practical implications

One must argue for checking the thresholds for each brand individually rather than generalizing by applying misleading rules of thumb.

Originality/value

The paper provides researchers as well as practitioners with a methodology to evaluate price thresholds and outlines the shortcoming of contemporary retailers pricing practices in a detailed manner.

Details

Journal of Product & Brand Management, vol. 15 no. 5
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 14 April 2014

Alexander C. Larson, Rita L. Reicher and David William Johnsen

– The purpose of this research is to test for price threshold effects in the demand for high-involvement services for small businesses.

Abstract

Purpose

The purpose of this research is to test for price threshold effects in the demand for high-involvement services for small businesses.

Design/methodology/approach

The authors use a stated preference choice-based conjoint study of small business telecommunications demand. Using survey data, individual-level parameter estimates for a demand model are achieved via the Hierarchical Bayes method of estimation.

Findings

For demand for small business telecommunications services, the authors find very strong positive impacts of nine-ending and zero-ending prices on the demand for a common bundle of telecommunications services (wired telephone service, broadband internet, and cellular telephone service), even at prices so high a shift in the left-most digit does not occur.

Practical implications

The advertising, brand, or product manager or statistician who assumes threshold effects are not extant in high-involvement service demand may find conventional demand estimation methods lead to erroneous conclusions and less effective pricing strategies.

Originality/value

In the statistical literature on price-ending effects on product demand, most products for which demand is modelled are low-involvement consumer products priced at less than ten monetary units per unit of product. There is a lacuna in this price-ending effects literature regarding small businesses and high-involvement services offered at three-digit prices via monthly subscription. This research indicates that testing for threshold effects should be de rigeur in the methodology of demand estimation for telecommunications or other high-involvement services.

Details

Journal of Product & Brand Management, vol. 23 no. 2
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 19 March 2018

Avinash Tripathi and Neeraj Pandey

The discount image associated with odd-ending prices has led to its extensive use by retailers. The purpose of this study is to assess the impacts and applications of…

Abstract

Purpose

The discount image associated with odd-ending prices has led to its extensive use by retailers. The purpose of this study is to assess the impacts and applications of nine-ending vs round-ending prices on the purchase of green and non-green products at different price levels and under different purchase motivations.

Design/methodology/approach

Three experiments are conducted. The first experiment is a 2 (price ending: nine-ending vs round-ending) × 2 (product appeal: green vs non-green) between-subjects study; the second experiment is a 2 (price ending: nine-ending vs round-ending) × 2 (price level: low price vs high price) × 2 (product appeal: green vs non-green) between-subjects study; and the third experiment examined buyers’ preferences of price endings regarding the purchase of green products having either utility (utilitarian) or pleasure (hedonic) motivation.

Findings

This research highlights that consumers prefer zero-ending prices for green products and pleasure motivation products, but they prefer odd endings for low-priced and utilitarian products. These results support the increased reception of round-ending prices. Accordingly, this study contributes to the literature by providing a boundary condition for odd-ending prices. Specifically, the study finds that the effect of nine-ending prices becomes weaker as the price of the product increases.

Practical implications

The findings of this study have practical implications for managers, as the results indicate that pricing green products and high-quality perception products using round digits and pricing low-priced and utility perception products using odd digits will increase consumers’ purchase intentions. Moreover, pricing the products using round-ending prices will reduce the perception of low quality and deter brand loyalty emanating from a low-priced/discount image of a product.

Originality/value

This research contributes to theoretical and practical aspects of behavioural pricing literature. This research uncovers the buyers’ distinct preferences for zero-ending prices and odd-ending prices when purchasing different products based on different motivations and varied price levels. This is the first research of its kind to explore and compare the impact of psychological pricing on green products. The study also resolves a contradiction in past literature regarding the use of nine-ending prices by providing boundary conditions.

Details

Journal of Consumer Marketing, vol. 35 no. 2
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 1 January 2004

Nicolas Guéguen and Patrick Legoherel

The practice of pricing with numbers ending in nine (“nine‐ending”) has been little studied. It now seems well established that, under certain conditions, the practice of…

Abstract

The practice of pricing with numbers ending in nine (“nine‐ending”) has been little studied. It now seems well established that, under certain conditions, the practice of such pricing strategies has a particular effect on sales, especially inciting the customer to buy products that are more expensive. The research design for explaining such an effect would depend on the price encoding mechanisms, namely, the emphasis of focusing attention, which decreases when reading from left to right, leading to only partial memorization of the price. This would favour the leftmost digits, thus leading to errors of evaluation or estimation of the starting price. A new experiment was carried out to test this possibility. Subjects had to estimate the discount rate of products in a sale, according to whether the starting price was a “rounded” figure or “odd‐ending”. Assuming the first digit of the price is memorized, we might expect that a round starting price leads to an overestimation of the amount of the offered discount. The results provide evidence in support of this hypothesis, enabling us to gain a more accurate knowledge of the processes used for estimating the starting price.

Details

European Journal of Marketing, vol. 38 no. 1/2
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 5 June 2007

Christine Harris and Jeffery Bray

To investigate the area of price endings to determine which groups of consumers are more likely to use odd‐endings as opposed to round‐endings.

Abstract

Purpose

To investigate the area of price endings to determine which groups of consumers are more likely to use odd‐endings as opposed to round‐endings.

Design/methodology/approach

A questionnaire was developed that tested respondents' use of odd‐endings as opposed to round‐endings dependent on classification by gender and age. Respondents were required to estimate the price they would be expected to pay in stores for six products. This methodology enabled the researchers to generate a large sample size and to encourage accuracy of response.

Findings

The main finding was that there was a difference between gender groups; women were more likely to respond with odd‐endings than men and hence segmenting the market is the way forward when investigating price endings.

Research limitations/implications

The research only considers segmentation by gender and age. Further research needs to be undertaken to fully understand the consumer responses.

Practical implications

Although the difference between 99 cents and a $1.00 is small, for high volume items this can have a significant impact on gross profit and margins, particularly for low value items. If retailers understand which groups of consumers were more likely to be attracted to the round‐endings they could use this knowledge to determine the most effective prices.

Originality/value

This research follows on from a price trial conducted into price endings and is the second phase of an investigation into whether odd‐endings are effective. It proposes a theory that has been empirically tested and points the way forward for future research in this area.

Details

Journal of Product & Brand Management, vol. 16 no. 3
Type: Research Article
ISSN: 1061-0421

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