Publication Date:
2019-10-22
Description:
9-ending prices, which comprise between 40%–95% of retail prices, are popular because shoppers perceive them as being low. We study whether this belief is justified using scanner price-data with over 98-million observations from a large US grocery-chain. We find that 9-ending prices are higher than non 9-ending prices, by as much as 18%. Two factors explain why shoppers believe, mistakenly, that 9-ending prices are low. First, we find that among sale-prices, 9-ending prices are indeed lower than non 9-ending prices, giving 9-ending prices an aura of being low. Second, at first, 9-ending prices were indeed lower than other prices. Shoppers, therefore, learned to associate 9-endings with low prices. Over time, however, 9-ending prices rose substantially, which shoppers failed to notice, because the continuous use of 9-ending prices for promoting deep price cuts draws shoppers’ attention to them, and helps to maintain-and-preserve the image of 9-ending prices as bargain prices.
Description:
Special Issue on Behavioral Pricing
Keywords:
M30
;
M31
;
L11
;
L16
;
L81
;
D12
;
D22
;
D40
;
D90
;
D91
;
E31
;
ddc:330
;
Behavioral Pricing
;
Psychological Prices
;
Price Perception
;
Image Effect
;
9-Ending Prices
;
Price Points
;
Regular Prices
;
Sale Prices
Repository Name:
EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
Language:
English
Type:
doc-type:article