Abstract
Studies on demand impact for 9-ending and rounded prices have so far offered controversial results, with hardly any research focusing on their effect on online commerce or in a multichannel sales context. Our study aims to fill this gap by analyzing the conditions that influence the strategy behind setting such type of pricing in the multichannel retail business of fast-moving consumer goods (FMCG). To test the formulated hypotheses, scanner data from FMCG retailers are used. In addition to “demand” and “price”, “promotion communication”, “retailer type” and “price level” are included as moderators between 9-ending, rounded prices and demand. The results aim to provide, both in the academic and business fields, systematic findings of pricing relationships between online and offline channels which contribute to a better management strategy for “9-ending” and “rounded” prices.Keywords: Prices; 9-ending Prices; Rounded Prices; E-Commerce.JEL Classifications: M31, L81, C32DOI: https://doi.org/10.32479/irmm.10683
Highlights
In today’s business environment with retail undergoing extraordinary changes offering consumers with new options in terms of what and where to buy (Gogoi, 2017), many researchers consider multichannel retailing to be highly profitable for businesses (Herhausen et al, 2015; Oppewal et al, 2013 Rangaswamy and van Bruggen, 2005; Wallace et al, 2004; Wind and Mahajan, 2002)
It was observed that demand elasticity was greater when scanned with a 9-ending price compared to any other one (Blattberg and Wisnieswski, 1983)
It was concluded that the effect was positive for thirteen out of the twenty-one brands suggesting that the impact of a final price ending in 9 differed between brands
Summary
In today’s business environment with retail undergoing extraordinary changes offering consumers with new options in terms of what and where to buy (Gogoi, 2017), many researchers consider multichannel retailing to be highly profitable for businesses (Herhausen et al, 2015; Oppewal et al, 2013 Rangaswamy and van Bruggen, 2005; Wallace et al, 2004; Wind and Mahajan, 2002). Retailers are increasingly focusing on pricing strategies. It has been observed that demand elasticity was higher when shifting to a price ending with the number 9 than with any other digit (Blattberg and Wisniewski, 1983). 2003; Ngobo et al, 2010), factors such as promotion communication, product category, brand and even the country were analyzed, possibly explaining the variability in the impacts of 9-ending prices. Regarding the effects of price endings on online channels, previous research yielded similar controversial conclusion (Melis et al, 2015) with few studies having explored these pricing strategies in an e-commerce context. The lack of research in such emerging markets was surprising given the changes to our understanding of business pricing and promotional processes due to the digital revolution (Chen et al, 2020; Misra et al, 2019)
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