Price Endings Research Articles

Guest Editorial: Will the Omicron Variant Lead to the Collapse of Oil Prices?

With the Omicron variant continuing to spread around the world, will a drop in oil prices follow? Maybe, but probably only in the short term. Equity markets tanked Friday, 26 November 2021, on fears that the Omicron variant, first identified in South Africa, would sharply impact worldwide economic output. The nearly 1,000-point loss in the Dow wiped nearly $90 billion of value in Dow equities. Oil prices were particularly hit hard, dropping nearly 10% from Thursday’s close. That drop, however, was minor compared to what happened to prices in early 2020, when at the end of April oil prices had dropped nearly 70% in value. This was frightening and was a combined pessimistic response to fears of demand destruction due to the coronavirus and the price war initiated by OPEC and Russia to counter rising production from US shale oil producers. As a world economy, we had not faced a major health crisis since 2014 when Ebola fears gripped the world and in 2009 when H1N1 flu sickened 60.8 million and killed 12,469 in the US, according to the US Centers for Disease Control and Prevention (CDC). If we go back to the 1918 Spanish flu, Fig. 1 shows the gross US demographic impact of these pandemics. The 1918 Spanish flu infected about 28% of the US population but did not impact oil prices to any great degree. COVID-19 has infected about 15% of our fellow citizens but has caused nearly 125,000 more deaths because our population is about three times larger than it was in 1918. In our current COVID-19 pandemic, images of first responders desperately improvising to save lives, stories of grief-stricken children, and partners forced to provide remote comfort to isolated and suffering elders tested our confidence that there would ever be a “normal” American life in the future. How Did Oil Markets React? The pre-COVID price of oil (CLF) in late 2019 dropped by 73% to its low in April 2020. Fears of demand destruction due to COVID dropped the price from $63/bbl to around $40/bbl—a 36% drop (Fig. 2). Price pressure was further exacerbated by OPEC’s price war with Russia, with OPEC increasing its output by a factor of four during a short window going into and lasting through April 2020. This dropped the price of oil another 40–50%. Once OPEC ended its price war, the baseline price of oil was around $40/bbl. When Moderna and Pfizer announced their vaccines, and the CDC authorized their emergency use, prices recovered until late July 2021 when the US entered its third wave of increasing case counts and rising death counts.

Are 1-endings the new 9-endings? An alternative for generating price discount perceptions

Although extant literature confirms the efficacy of 9-endings, how consumers perceive multi-digit prices with repeating identical ending digits such as $1999 is less clear. Research indicates that consumers tend to truncate 9-ending prices and associate them with discounts. Five experiments demonstrate, however, that consumers are likely to perceive multi-digit prices with 1-endings (e.g., $2111) as being more on a discount than prices with 9-endings (e.g., $1999). Moreover, a year-long field study shows that 1-ending (vs. 9-ending) prices receive more click-through rates when presented in online ads. These novel findings inform retailers on how they can generate higher discount perceptions by using 1-endings rather than 9-endings in multi-digit prices.

Uticaj psihološkog određivanja cena i aktivnosti unapređenja prodaje na impulsivne kupovine odeće u maloprodajnim objektima - istraživanje ponašanja potrošača u Srbiji i Bosni i Hercegovini

The impact of psychological pricing and sales promotion activities on impulse purchases of clothing in retail stores: research on consumer behavior in Serbia and Bosnia and Herzegovina The aim of this research was to determine the relationship between psychological pricing and impulsive buying, as well as the tendency towards impulsive buying and the demographic characteristics of the respondents. The two methods of psychological pricing used in this research are: odd prices and promotions and discounts. Impulsive buying is defined as a purchase in which the consumer gets a sudden, often very strong and lasting desire to buy something immediately. The sample consisted of 343 respondents, the battery of tests consisted of: Questionnaire for examining the influence of different methods of psychological pricing on consumer decision-making and behavior, Impulsive buying tendency scale and Questionnaire for examining data on demographic characteristics of respondents. The results showed that promotions and price discounts as a method of psychological pricing have a statistically significant effect on the tendency towards impulsive buying. Also, it was concluded that women are more inclined to impulsive buying of clothing items compared to men. The results showed that there are no statistically significant differences between respondents of different levels of personal income, satisfaction with personal income and level of education in the tendency towards impulsive buying.

Customer Manipulation in a Retail Outlet and the Customer’s Purchasing Decisions

The customer is one of the most significant participants of economic processes. However, not all purchasing decisions that consumers make can be deemed as rational ones. The irrationality that accompanies consumers when shopping arises from the human psyche and personality, where conscious acts of making choices merge with external stimuli (e.g. manipulations employed by retail outlets). The basic aim of this study has been to determine the awareness of manipulative techniques used in shops among consumers, and then to try and evaluate their effectiveness. The study is an example of survey research and it used an online survey as a research tool. The study was participated by 194 respondents. The research results show that according to the respondents the manipulations most often used are: psychological pricing (‘odd prices’), promoting a product by offering some tangible benefits (enhancing the appeal of a product) and placing products near checkouts in order to induce impulse buying. As for the effectiveness of the analysed techniques, it coincides with their intensity. Apart from the ones mentioned above (manipulating prices, promoting sales and checkout zone), a proper and interesting arrangement of the shop’s layout is worth attention. The respondents declared that fragrance marketing was demonstrably less effective. Most respondents do not consider manipulations targeting the behaviour of clients as unethical actions. There were no distinctly negative attitudes to the applied manipulative techniques. Based on the survey results, it can be concluded that manipulations of customer behaviour in retail outlets are very common, if not standard actions. Customers understand how such manipulations work, are at least to some extent vulnerable to them and, most importantly, are satisfied with them. The respondents see manipulations in the context of benefits that can be gained rather than the costs they can incur.

BAGAIMANA HARGA GANJIL MEMBANTU ANDA MEMANFAATKAN KEKUATAN PSIKOLOGI

Price is one of the important points in marketing as well as in creating customer value. Odd prices.are..one of the strategies made by companies to form the impression of low prices in the minds of consumers. The goal of this study is to understand the relationship between odd prices and consumer involvement in purchase intentions. Non-random sampling (convenience sampling) was used in this study for data collection. The respondents numbered 112 people who were in Kupang. Questionnaires were disseminated to customers who used shopee (Flash sale product) in Kupang. The research method is a survey and outcome were analyzed and interpreted using Structure Equation Modeling (SEM). The relationship between odd prices, customer involvement shows positive influence on each other. 
 Keywords: Odd price, consumer involvement, purchase intention

Using residual heat maps to visualise Benford’s multi-digit law

It has been known for more than a century that, counter to one’s intuition, the frequency of occurrence of the first significant digit in a very large number of numerical data sets is nonuniformly distributed. This result is encapsulated in Benford’s law, which states that the first (and higher) digits follow a logarithmic distribution. An interesting consequence of the counter intuitive nature of Benford’s law is that manipulation of data sets can lead to a change in compliance with the expected distribution—an insight that is exploited in forensic accountancy and financial fraud. In this investigation we have applied a Benford analysis to the distribution of price paid data for house prices in England and Wales pre and post-2014. A residual heat map analysis offers a visually attractive method for identifying interesting features, and two distinct patterns of human intervention are identified: (i) selling property at values just beneath a tax threshold, and (ii) psychological pricing, with a particular bias for the final digit to be 0 or 5. There was a change in legislation in 2014 to soften tax thresholds, and the influence of this change on house price paid data was clearly evident.

Emotion and pricing

Psychological pricing is a pricing strategy that utilizes specific techniques to form a psychological or subconscious impact on consumers. It integrates sale tactics with price. Most psychological pricing tactics simplify the decision-making process for consumers. Gauging a target market’s emotional responses to an item is known as psychological pricing. What is psychological pricing? Simply, it is a slick way to increase sales without significantly reducing prices.

Compromise pricing in luxury

PurposeGoing beyond odd and even prices, this paper aims to explore the rationale behind the widespread practice of setting prices ending in “50” or “80” in the luxury industry. The authors argue that when they set such prices, managers agree to reduce their profit margin to limit the anticipated guilt luxury consumers associate with luxury shopping while also protecting their brand luxury. The authors label these prices compromise prices and formally define compromise pricing as the practice of choosing a price’s ending so that the price falls below (but not just below) a round number to boost sales without damaging brand luxury.Design/methodology/approachFollowing the observation of the overrepresentation of prices ending in “50” and “80” in the luxury clothing category, an experiment explores the impact of compromise prices on anticipated guilt and brand luxury in the luxury watch category. Then, to identify when luxury pricing managers typically favor compromise prices, multinomial regressions investigate prices collected on two online luxury fashion retailers for the luxury clothing and handbag categories.FindingsCompromise prices reduce the anticipated guilt luxury consumers associate with luxury shopping compared with even prices while enhancing brand luxury compared with odd prices and interestingly, with even prices also. This finding gives rationale to luxury managers’ preference for compromise prices in the ninth hundred (i.e. €X950, €X980), especially for higher-priced products, i.e. when the potential for price underestimation and/or the risk of damaging brand luxury are more important.Originality/valueThis research contributes to the field of luxury pricing by providing evidence to an original price-ending practice, coined compromise pricing, which consists in agreeing to a slight reduction in prices and unit margin to protect brand luxury.

The not-so-odd couple: Odd pricing in a luxury context

Two large samples of prices indicate that odd prices (i.e., prices just below a round number, for example €1495 vs. €1500) are used in the pricing of luxury products. An analysis of price endings suggests that luxury brand managers rely less on the drop-off mechanism than on the meaning mechanism, both of which have been used to show that odd prices influence consumers in the Fast-Moving Consumer Goods (FMCG) industry. Building on the odd-ending price justification effect, a conjoint analysis, indicating that a large proportion of luxury consumers prefer odd prices, supports the likely role of a guilt-relief mechanism in the pricing of luxury products.

Magic Number 8: Hospitality Price Ending Strategies

ABSTRACT It is not uncommon to see prices that end with a 9 or 99, be it in a restaurant, grocery store, or clothes store. Yet, this convention in pricing is typically found in the US, and evidence of it in the Asian marketplace remains limited. Given this, the present study pioneers an empirical investigation on price ending strategies in Asian marketplaces, particularly in the hospitality industry. Using automated data extraction, a total of 63,075 room rates were sampled from 21 hotels operating in Macau that were advertised online. The digit 8 is the most frequently used price ending, especially by five-star hotels and upper-scale rooms. Conversely, 4 was not the least frequently used price ending. These findings provide guidance to hospitality pricing managers who are not aware of the local culture and the price-ending dynamics of the Asian marketplace.

Psychological prices at retail gasoline stations: the policies of 0-, 5-, and 9-ending prices

ABSTRACT Psychological prices are known to impact consumer behaviour and to depend on retailers’ characteristics. Less understood is last digit pricing, especially in the context of retail gasoline stations. We study price endings in the French gasoline market with 11,471 gas stations and 4,775,300 prices for oil companies, supermarkets, and independent retailers during five years. Raw data suggest that 0-ending prices are more expensive. Yet, these last digit effects do not survive careful scrutiny focusing on the individual behaviour/distribution of each gas station. Plus, 9-, 0-, and 5-ending prices are over-represented. Our evidence better informs administrative authorities investigating market irregularities and consumers interested in better deals.

Consistent price endings increase consumers perceptions of cheapness

Should marketers make the last digit of a sale price consistent with that of its original price? Across multiple studies, including field studies and studies using student and non-student samples and various product categories, this research shows that price perception and purchase intention are related to consistency between the sale price and original price. The price perception of the deduction is moderated by the consistency between the final digit in the prices. First, consumers perceive sale prices as cheaper and have a higher purchase intention when the rightmost digit in a sale price is the same as in the original price—a phenomenon this study refers to as the “consistent ending price effect.” Second, the consistent ending price effect occurs when prices are at least three digits long, but not for two-digit prices. Finally, the study demonstrates the mediating role of processing fluency in the link between consistent ending price and price perception.

Psychological pricing in online food retail

PurposeThis 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/approachThe 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.FindingsThe 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/valueThis 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.

OIL PRICE BEHAVIOUR, EXCHANGE RATE MOVEMENT AND THE COVID-19 PANDEMIC IN NIGERIA: ANALYSIS OF THE FIRST THREE QUARTERS OF 2020

This paper evaluates the response of oil price and exchange rate to the corona virus pandemic shock aside from the link between oil price and exchange rate for the first three quarters of 2020 in Nigeria. The theoretical framework emanates from the informal approach and the terms of trade channels. Using VAR cointegration approach, results show existence of long run relationship among the oil price, exchange rate movement and the corona virus indicators based on Max-Eigen and Trace test statistic. End of first quarter oil price, discharge rate and fatality rate negatively relate with current exchange rate. First quarter exchange rate and fatality rate positively relates to oil price behaviour in the third quarter while end of first quarter discharge rate increase fosters oil price decline. First quarter spread rate increase gradually reduces oil demand and the price in the third quarter. All corona virus indicators and exchange rate variable Granger Cause current oil price. Diversification is key to widen export base and increase foreign exchange and stability. Policy measures to sustain the economy in the post COVID-19 and beyond are necessary for long term development.

Maximizing revenue in airline industry through air cargo operations

This research aims 1) to identify the impact of pricing strategies on airlines’ revenues, 2) to identify the impact of non-pricing strategies on airlines’ revenues, 3) to explore the significance of revenue management to airlines competitive advantage. The behavioural-demand based pricing, psychological pricing, capacity management and over contract booking strategies are determined as independent variables. A dependent variable is the competitive advantage, and a mediator is revenue management. Primary data was collected from an online survey of 500 airline industry and revenue management strategies personnel; there were only 424 completed questionnaires in return. Results show that larger competitive advantage is associated with non- pricing strategy which is the over contract booking and there is a positive relationship between the psychological pricing and competitive advantage, as compared to the behavioural-demand based pricing and capacity management based strategic approaches.

A catering economic survey of steamed dishes in Wuhan based on big data of Meituan application

The origin, quantities distribution and different market positioning of steamed dishes stores in Wuhan were analyzed based on the big data of Meituan application. By April 2020, there were a total of 230 steamed dishes restaurants in Wuhan, mainly distributed in Hongshan district (63), Jianghan district (47) and Wuchang district (35). Now the largest steamed dishes restaurant chains was "Zhen Kungfu" originated from Cantonese cuisine while "Liuyang steamed dishes” and "Zhen Liuji" restaurants were in the second place which came from "Home of steamed dishes in China". All of them were rapidly expanding in the form of Chinese fast-food chains in recent years and located either near the business district or the airport/station. On the contrary, "Mianyang three streamed dishes" restaurants with regional characteristics was few and scattered. It had not yet formed a scale with its unclear product positioning. A survey of consumers' preference showed that about 22% of consumers chose steamed dishes when eating out. With the increase of age, more and more people would opt for steamed dishes. Half of consumers over 40 chose steamed dishes. On the other hand, there were double peaked at 20 Yuan and 45 Yuan per person in consumers’ psychological prices. These results would provide reference for the development of "Mianyang three streamed dishes" and Wuhan catering economy.

9-Ending Prices in Retail Advertisements: Indian Consumers’ Price Perception and Proneness to Buy

This study examines the effect of the ubiquitous use of 9-ending prices in newspaper retail advertisements by mall retail stores on Indian consumers' price perception and proneness to buy. In order to collect data, a mall-intercept technique was used. The data were analysed using multivariate statistical techniques. Findings reveal that the use of 9-ending prices in advertisements, convenience benefit, enhanced value, discount price, and misleading action positively impact Indian consumers' price perception. However, entertainment benefit, value expression benefit, savings benefit, and low-quality do not significantly impact the Indian consumers' price perception. The Indian consumers' price perception towards the advertisements of 9-ending prices in newspapers and free home-drop advertising materials has a positive impact on their proneness to buy.

9-ending prices in retail advertisements: Indian consumers' price perception and proneness to buy

9-ending prices in retail advertisements: Indian consumers' price perception and proneness to buy

Effect of Psychological Pricing of Goods on Consumers’ Perception: Shoprite as a Case Study

Effect of Psychological Pricing of Goods on Consumers’ Perception: Shoprite as a Case Study

DEMAND IMPACT FOR PRICES ENDING WITH “9” AND “0” IN ONLINE AND OFFLINE CONSUMER GOODS RETAIL TRADE CHANNELS

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