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1 – 10 of over 10000The current study investigates odd-even psychological pricing with the aid of a Price endings and Consumer Behavior (PCBM) Model for the hospitality industry. The PCBM proposes…
Abstract
The current study investigates odd-even psychological pricing with the aid of a Price endings and Consumer Behavior (PCBM) Model for the hospitality industry. The PCBM proposes that a reciprocal relationship exists between hospitality marketers and consumers with reference to 00 and 99 price ending practices. Theoretical support for the posited model is provided by signaling theory, a persuasion knowledge model (PKM), and learning by analogy from marketing and psychology literatures. Results indicate that consumers use intuition and knowledge gained from interacting in the retail marketplace to respond to the intentions of hospitality marketers’ odd-even psychological pricing strategy. After repeated exposures to odd-even pricing, consumers learn to accept the 00 and 99 pricing endings as extrinsic cues for quality and value and as pricing norms of the hospitality industry.
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 such…
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.
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Rajneesh Suri, Rolph E. Anderson and Vassili Kotlov
American multinationals, when deciding pricing strategies for their culturally diverse foreign markets, usually have to debate whether to change or to keep the pricing strategy…
Abstract
American multinationals, when deciding pricing strategies for their culturally diverse foreign markets, usually have to debate whether to change or to keep the pricing strategy that they have been using at home. The recent move towards standardization in global markets has only raised the importance of this issue. This research addresses this issue by comparing the effectiveness of 9‐ending prices or just below prices in the USA and in a Central European country, Poland. A conceptual framework was developed to predict why there might be differences in preference for such 9‐ending prices in Poland and the USA. Results from the first study show that 9‐ending prices, which are popular in the US market, are not well received in the Polish market. The second study provided further insights by determining reasons for differences in perception and preference for such prices in the two countries.
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Hsin‐Hui “Sunny” Hu, H.G. Parsa and Jin Lin Zhao
The aim of this paper is to understand the price‐ending strategies in European restaurants and make practical suggestions to the managers.
Abstract
Purpose
The aim of this paper is to understand the price‐ending strategies in European restaurants and make practical suggestions to the managers.
Design/methodology/approach
Data were collected from restaurant menus in three European countries. Results were compared with those of USA and Taiwan.
Findings
The price‐ending strategies of European restaurants are distinctly different from those of the USA and, interestingly, have more in common with those of Taiwan.
Research limitations/implications
The small sample size is a concern. Data were limited to three countries. Inclusion of more European restaurants is highly desired, especially with the Euro as a common currency.
Practical implications
Restaurant companies could have better understanding of the impact of cultural differences, while implementing price‐ending strategies.
Originality/value
This paper presents a case where cultural differences are of significant economic value in setting restaurant menu prices. In Europe, dining out is considered more a cultural activity than a utilitarian participation. The historical roots of the usage of digit zero in a European context are presented here.
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Research in marketing indicates that consumers may be sensitive to the final digits of prices. For example, despite being substantively equivalent, a price such as $199 may create…
Abstract
Research in marketing indicates that consumers may be sensitive to the final digits of prices. For example, despite being substantively equivalent, a price such as $199 may create more favorable price perceptions than $200. However, existing research has primarily focused on the effects of price endings in the context of uni‐dimensional prices – prices consisting of a single number. Advertised prices in the marketplace are often multi‐dimensional, consisting of numerous price dimensions. In such pricing contexts, price endings may influence consumers’ ability to conduct the arithmetic required to compute the total advertised price. Examines the effect of various price ending strategies on consumers’ computational efforts. The findings indicate that the more commonly exercised price ending strategies tend to result in prices that are the most difficult for consumers to evaluate.
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Robert M. Schindler and Rajesh Chandrashekaran
Although it has been proposed that recall processes play a role in the retail sales effects of 9‐ending pricing, substantial effects of price endings on the level of recalled…
Abstract
Although it has been proposed that recall processes play a role in the retail sales effects of 9‐ending pricing, substantial effects of price endings on the level of recalled prices has not been demonstrated. With an improved testing procedure, it is found that the level of a set of prices with low ending digits (such as 1 or 2 in the dollars place) is more likely to be overestimated in recall than the level of equivalent sets of prices with high ending digits (such as 6, 7, or 9 in the dollars place). The results of the study support the role of left‐to‐right processing of price information and point out some consequences for retailers of the use of low numbers in price‐ending digits.
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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.
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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.
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The purpose of this paper is to guide managers' choices of rightmost digits in retail prices by acquiring a better understanding of the psychological mechanisms by which price…
Abstract
Purpose
The purpose of this paper is to guide managers' choices of rightmost digits in retail prices by acquiring a better understanding of the psychological mechanisms by which price endings can influence sales.
Design/methodology/approach
The paper observes and compares the price endings used in large matched samples of advertised prices in two countries with considerable cultural differences, the USA and Japan.
Findings
Although the digit 9 predominates among the rightmost digits of advertised prices in the USA the digit 8 predominates in Japan. In contrast to this difference, the US and Japanese prices are similar in that both show greater use of 9 or 8 endings when this choice lowers the price's leftmost digit and when the advertised price is claimed to be a discount price.
Research limitations/implications
Future research should include a wider range of price advertising media and should examine usage patterns of less frequently occurring digits.
Practical implications
Setting a price that falls just below a round number can be helpful in creating a low‐price image. Setting this just‐below price with a 9‐ending would be appropriate in the USA and European countries, but in Japan and other Asian countries, it would be more appropriate to set this just‐below price with an 8‐ending.
Originality/value
These results provide guidance to the retail price setter and illustrate to the basic researcher how universal psychological processes and specific cultural meanings can interact to determine consumer perceptions of marketing stimuli.
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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 nine-ending…
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.
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