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1 – 10 of over 37000This 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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Three scenario-based experiments were conducted to explore the influence of the base option’s price format (just-at vs just-below) on tourists’ upgrade intention. The findings of…
Abstract
Three scenario-based experiments were conducted to explore the influence of the base option’s price format (just-at vs just-below) on tourists’ upgrade intention. The findings of this research indicated that tourists are more inclined to upgrade the option when the base option’s price is presented in a just-at condition due to the mediating role of tourists’ price perceptions of the upgrade option. This study discovered that the just-at (vs just-below) pricing strategy can lower tourists’ price perceptions of the upgrade choice. This research further explored the moderating of tourists’ mindsets. It was found the threshold-crossing effect will disappear for tourists with fixed mindsets. This study also provides practical implications for travel service providers to set up appropriate pricing strategies to attract tourists to make upgrade decisions.
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Milos Bujisic, Vanja Bujisic, Haragopal Parsa, Anil Bilgihan and Keyin Li
Hospitality firms aim to increase their profits by implementing a variety of marketing activities, including using decoy pricing to provide alternative choices for consumers…
Abstract
Purpose
Hospitality firms aim to increase their profits by implementing a variety of marketing activities, including using decoy pricing to provide alternative choices for consumers. Decoys are relatively higher-priced offerings that signal lower value than the other offerings in the consideration set. The purpose of this research is to investigate the influence of decoy pricing on consumer choices across various contexts in the foodservice and hotel industries.
Design/methodology/approach
Across the pilot and four main studies, the current research employs a sequential exploratory mixed-method design to investigate the influence of decoy pricing in the foodservice and lodging industries. The qualitative part of this research was based on two focus groups, followed by a pilot study and four main study experiments.
Findings
The results show that decoy pricing escalates consumers’ choices of more expensive product bundles in both restaurant and hotel cancellation policy contexts. However, decoy pricing does not increase the selection of more expensive hotel product bundles.
Originality/value
While decoy pricing has been utilized as an effective revenue maximization strategy for product placement in retail stores, less is known about how promotional advertisements with decoy offers influence hotel and restaurant customers to choose more costly options. Specifically, this is the first study that explores whether decoy pricing and product/service bundling can encourage customers to select more expensive offers in hotel and restaurant contexts, considering the types of hospitality bundles that may limit this effect.
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The purpose of this study is to investigate the presence of psychological barriers both in the main stock market indices of the Baltic states and the most actively traded…
Abstract
Purpose
The purpose of this study is to investigate the presence of psychological barriers both in the main stock market indices of the Baltic states and the most actively traded individual stocks. A psychological barrier refers to a specific price point, often at round numbers (i.e. powers of 10), that investors believe is challenging to breach, influencing their behavior and trading decisions.
Design/methodology/approach
We conduct uniformity tests and barrier tests, such as barrier proximity tests and barrier hump tests, to evaluate the presence of psychological barriers. Additionally, we explore variations in means and variances near these potential barriers using regression and GARCH analysis.
Findings
The findings reveal that psychological barriers do exist in the Baltic stock markets, particularly within market indices. The Estonian market index stands out with the most pronounced indications of psychological barriers. Individual stocks also display significant changes in means and variances related to potential barriers, albeit with less uniformity.
Practical implications
Collectively, our findings challenge the traditional assumption of random returns within the Baltic stock markets. For practitioners, the finding that psychological barriers exist opens up opportunities for investment strategies that can capitalize on them.
Originality/value
This study is the first to comprehensively investigate psychological barriers in the Baltic stock markets. Our results provide a valuable contribution to understanding the impact of that phenomenon on pricing dynamics, which is particularly pertinent in less-researched frontier markets like the Baltic states.
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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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Considers a number of aspects of pricing, including the classical relationship between price and supply and demand, pricing objectives, factors affecting pricing decisions and…
Abstract
Considers a number of aspects of pricing, including the classical relationship between price and supply and demand, pricing objectives, factors affecting pricing decisions and aspects of pricing policy and pricing methods. Explores the relevance of these concepts in the information marketplace. The central role that price plays in regulating a marketplace makes an understanding of pricing essential.
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Jungsil Choi, Dorcia E. Bolton and Marija Grishin
This paper aims to explore how temporal distance influences the evaluation of partitioned pricing.
Abstract
Purpose
This paper aims to explore how temporal distance influences the evaluation of partitioned pricing.
Design/methodology/approach
The effect of temporal distance on the effectiveness of partitioned pricing is tested using data collected through experiments in the USA.
Findings
Study 1 reveals that people perceive partitioned pricing as more attractive than combined pricing, but only for a distant event. Study 2 reveals that individuals predisposed to global information processing perceive partitioned pricing as more attractive than combined pricing. However, for individuals who commonly engage in local processing, combined pricing was equally attractive as partitioned pricing. In Study 3, the authors examine a boundary condition and find that the joint effect of temporal distance and partitioned pricing is attenuated when the purchase is made for a gift in which consumers are assumed to pay less attention to a surcharge. In Study 4, the authors examine how partitioned pricing influences a consumer’s choice in terms of temporal distance.
Practical implications
The findings provide practical guidelines to business leaders looking for practical guidelines for pricing policy decisions.
Originality/value
Previous research shows that partitioned pricing is more effective in increasing consumers’ purchase intention and demand than combined pricing. In the present research, the authors introduce temporal distance as an important moderator that affects the effectiveness of partitioned pricing.
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Suggests that rapid rise of energy costs and worldwide inflation have altered pricing decisions importance. Provides an overview of the marketing literature on pricing — intending…
Abstract
Suggests that rapid rise of energy costs and worldwide inflation have altered pricing decisions importance. Provides an overview of the marketing literature on pricing — intending developing a conceptual framework and classification system for different types of pricing strategies in industrial markets. Strives to provide a more comprehensive basis for developing industrial pricing strategies in addition to earmarking the most relevant marketers' needs. Sectionalises the article and, in the first part, explores existing literature; the second part develops a taxonomy of purchasing situations. Closes by linking the pricing topics, identified previously, to the different purchasing situations. Lists, by topic, the articles used and these are in the Appendix to enable quick reference to potential users. Employs tables for extra emphasis to aid in explanation along with 2 Appendixes.
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Ying Huang, Xiankui Hu, Kenneth Hunsader and Steven Xiaofan Zheng
The authors of this study aim to investigate possible explanations of the prevalence of price clustering in the final offer prices of mergers and acquisitions (M&A).
Abstract
Purpose
The authors of this study aim to investigate possible explanations of the prevalence of price clustering in the final offer prices of mergers and acquisitions (M&A).
Design/methodology/approach
The authors use final offer price in M&A deals to investigate the price clustering phenomena. The authors used regressions and logistic regressions to examine potential factors that might affect pricing strategy by looking into one-time acquirers and experienced serial acquirers.
Findings
Price clustering increases with negotiation uncertainties characterized as competitive bidding, number of bidders, challenged deals and duration. Moreover, the authors find persistent price clustering in experienced serial acquirers that are more experienced and better equipped with handling uncertainties, suggesting a preference of using round numbers regardless of levels of uncertainties. The authors' evidence shows that price clustering results from a combination of Harris' (1991) costly negotiation hypothesis where round prices may be used to lower search costs and psychological bias and preference.
Originality/value
The authors appear to be the first to investigate alternative theories that support M&A offer price clustering behavior, finding that both the costly negotiation and psychological bias and preference theories apply to M&A final price formation. Thus, the authors' major contribution, specific to the M&A process, is a clarification of physical and psychological factors associated with bidding and negotiation behavior. The authors are confident that the authors' study impacts conventional knowledge regarding M&A deal negotiation strategies, including bidding behavior, contract negotiation, financial analysis, management practices and risk management.
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The purpose of this paper is to provide insight into the way industrial service firms price the services they render in the market, with particular emphasis on the pricing…
Abstract
Purpose
The purpose of this paper is to provide insight into the way industrial service firms price the services they render in the market, with particular emphasis on the pricing practices of pricing‐competent firms.
Design/methodology/approach
In order to achieve the study's research objectives, data were collected through a mail survey from 129 transportation and 48 information technology companies. Moreover, 20 in‐depth personal interviews were conducted in the initial phase of the research.
Findings
The study found that pricing‐competent firms have developed a “holistic” and multi‐faceted pricing approach, paying attention to both company‐ and market‐related pricing objectives, methods, policies, and information.
Research limitations/implications
These findings underline the multidimensionality that characterizes pricing decisions, necessitating a systematic approach triggered by the thorough examination of both company‐ and market‐related characteristics. The significance of these findings notwithstanding, the narrow context of the study does limit generalization of its findings to other service sectors and national contexts.
Originality/value
The paper constitutes the first attempt to examine empirically the concept of pricing performance in an industrial service context.
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