Odd Pricing Research Articles

Penetapan Harga Produk Industri Kerajinan Kayu UD. Akar Dewa Jati di Desa Karanganyar Kecamatan Kendit Kabupaten Situbondo dalam perspektif Etika Bisnis Islam

Odd pricing applied by UD. Akar Dewa Jati are only partly in wooden craft products. With the reason of attracting consumer interest and it is felt to be quite effective. The aim is to gain profits, gain market share and maintain the survival of industrial or business premises. Determining an odd price strategy is in accordance with Islamic business ethics by always prioritizing the principle of balance or fairness and responsibility in the form of honesty in conveying product prices, carrying out fair transactions and not committing fraud that could cause harm to other people. Meanwhile, for the remaining change from price rounding, if there is no change, it will be replaced with candy or transferred to social funds.

MEKANISME PENETAPAN HARGA JUAL PRODUK DAN LABA DALAM PANDANGAN EKONOMI ISLAM (Studi Kasus di Minimarket Family Bekasi)

Pricing errors can have various consequences; unethical pricing can make entrepreneurs dislike buyers, and even buyers can give reactions that can damage the company's reputation. Unsolicited quotations from buyers may result in rejection by some or all purchasers. This study uses qualitative methods in observation, interviews, literature, and documentation. Based on the results of this study, it can be concluded that in setting the product selling price, the Family minimarket uses the Cost Plus Pricing method, the Family minimarket offers a set low price to achieve the target sales volume, sales value, and market share by minimizing profits. Therefore the Family minimarket implements the use of the odd pricing mechanism. And in determining the profit, the Family minimarket does not determine the upper and lower limits of the profit earned but only takes a margin of 10-15%.

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.

Never too rich to care about prices: Effects of price endings on customer perceptions of luxury

In this article, we build on the existing literature on price endings in the fast-moving consumer goods and luxury pricing to highlight the potential paradox of adopting odd pricing (i.e. setting prices just below the round number) for luxury goods, which should mostly use even pricing (i.e. round numbers). In a first experiment concerning luxury handbags, we test the impact of three types of price endings (–90, –00, and “other”) on luxury image and its sub-facets. We propose four mediators of the relationship between price endings and overall luxury image, that is, quality, prestige, uniqueness, and expensiveness. In a second experiment, we find that price endings have connotations specific to the luxury sector and to different segments of consumers. We conclude with recommendations to help pricing managers strategically adjust their price-ending practice to target different consumer segments.

The Effects of Odd Pricing in the Price Discount

The Effects of Odd Pricing in the Price Discount

VIABILITY OF USING CARBON CREDIT FUTURES IN INVESTMENT PORTFOLIOS

With an odd pricing in the market, the Future Carbon Credit can act as mitigating risk when added to investment portfolios, ceasing to be simple positive socio-environmental assets to bring real benefits to the strategy of the Portfolio. It can be noticed that, in fact, to introduce Carbon Credit Futures can reduce the value at risk of investment portfolios however it should be a concern to balance what is the optimal amount of futures contracts inserted in the portfolio in order to not take positions that would make the portfolio less efficient. It was used a theoretical portfolio of USD 1000.00, so that the participation of Carbon Credit Futures positions varied between 100% short position and 100% long position in the portfolio and, for each 1% change in participation of EUA futures, it was created a hypothetical portfolio, with its expected return, market risk and modified Sharpe ratio. This study found that there are financial advantages by introducing Future Carbon Credit in investment portfolios when it analyzes risk versus return of portfolios composed of these assets.

Marketing Strategy Based on Marketing Mix Influence on Purchasing Decisions of Malang Apples Consumers at Giant Olympic Garden Mall (MOG), Malang City, East Java Province, Indonesia

Abstract The aim of this research was to know the influences of 7P marketing mix variables, which consists of product, price, promotion, place, people, physical evidence and process on purchasing decision of consumers in determining appropriate marketing strategy of Malang apples at Giant MOG. The result analysis showed that the most influential marketing mix variable was price with the odd pricing as the best strategy to increase the purchasing decision of Malang apples consumers at Giant MOG.

Odd pricing effects: an examination using adaptation‐level theory

PurposeUsing adaptation‐level theory as a conceptual framework, the purpose of this research is to determine what effect, if any, marketplace conditioning has on consumer price estimates and product evaluations.Design/methodology/approachA total of 475 subjects participated in two experiments that required them to read a scenario, evaluate a series of advertised products, and perform an aided price recall task.FindingsThe results suggest consumers are more likely to recall the correct price when more of the rightmost digits end in 0 or 9. Moreover, when prices are incorrectly recalled, consumers are likely to inadvertently assume prices end in commonly used rightmost digits (i.e. 5 and 9). Combined, the results demonstrate odd pricing effects are likely a result of marketplace price conditioning rather than truncation of rightmost digits as suggested by the analog model of numerical cognition.Practical implicationsFindings suggest that use of atypical rightmost digits in odd prices fails as a method to differentiate products in the mind of the consumer. This would explain the use of larger right ending digits by retailers in an effort to maximize profit without impacting consumer perceptions of quality, value, and purchase likelihood. In the absence of strong quality image effects, retailers are encouraged to continue the practice of setting prices with digits ending in 9.Originality/valueA key theoretical implication of this study is that the underestimation heuristic based on leftmost digit processing fails to explain the results of the incorrectly recalled price estimates. As a result, adaptation‐level theory may provide a more robust explanation for odd pricing effects.

The politics of digits: evidence of odd taxation

From the concept of odd pricing, i.e., setting rightmost price digits below a whole number, this paper advances the political counterpart of odd taxation using a panel of Danish municipal taxes. First, the distribution of tax decimals is non-uniform and resembles the distribution of price-endings data. Second, nine-ending and other higher-end decimals are found to be over-represented which echoes odd pricing research. It suggests that incumbents take voters’ biases into account and apply odd taxes to minimize the political costs of taxation while maximizing revenue. Attention should be given to how policy digits are arranged to exploit voters’ cognitive biases.

Are consumers heterogeneous in their preferences for odd and even prices? Findings from a choice-based conjoint study

While marketing theories provide some justification for the common practice of setting 9-ending prices, the results of empirical studies are not conclusive on the effects of odd pricing. Nearly all empirical studies have been conducted at the aggregate consumer level, thereby implicitly assuming that consumers respond to odd prices homogeneously. In this research, we analyze consumers' preferences for 9-ending versus 0-ending prices at the individual level. Our findings suggest that some consumers strongly prefer 9-ending prices, whereas other consumers favor 0-ending prices. We further address the existence of level effects and investigate the influence of consumer characteristics on preferences for odd prices.

Why Odd Pricing?1

The practice of setting prices a few pennies or a few dollars below an even (whole) number is referred to as odd pricing. Most attempts to explain odd pricing use an argument that, in part, draws on varying degrees of consumer irrationality. In this note, a justification for odd pricing is provided that assumes rational and informed consumers and businesses. Empirical evidence is offered in support of this view.

Identifying patterns of customer response to price endings

PurposeThe purpose of this paper is to introduce a new approach for the identification of price thresholds, which enables learning true thresholds from previous buying decisions recorded in POS scanner data.Design/methodology/approachThe methodology presented herein combines spline regression with generalized cross‐validation. Classical Chi‐square testing confirms the separation of regimes of the price response function by this methodology. Five propositions concerning the consumers' response to odd pricing in a Western‐type market are evaluated.FindingsDespite the widespread retail practice odd prices are unlikely to flag the actual threshold in consumer response. The term odd price refers to prices with a non‐zero ending in the cent digit, e.g. .95, .98 or .99, which are commonly used in Western‐type markets. Moreover, the simple odd price effects are distinguished from odd‐ending prices with the first number left of the decimal point set to an odd number. The results show that even these prices not always flag a threshold in consumer response.Research limitations/implicationsThe discussion of the odd‐price effect is confused by conflicting empirical results and related interpretations of the underlying mechanisms. In contrast to many previous investigations – which are restricted to the consideration of very few price endings – this study covers all reasonable prices. Statistically significant odd‐price effects are found for some brands, but not for all within the same category.Practical implicationsOne must argue for checking the thresholds for each brand individually rather than generalizing by applying misleading rules of thumb.Originality/valueThe paper provides researchers as well as practitioners with a methodology to evaluate price thresholds and outlines the shortcoming of contemporary retailers pricing practices in a detailed manner.

The Presence of Odd Pricing in the Texas State Lottery1

We examined 443 drawings from the Texas state lottery from 1992 to 1997 to determine whether odd pricing effects would be found in multimillion‐dollar lotteries. Specifically, we predicted that many more lottery tickets than expected would be purchased when the jackpot amount was $10 million than when it was $9 million. Three findings emerged. First, the higher the jackpot, the more tickets were purchased. Second, odd pricing effects were found at $10 million such that approximately 670,000 more tickets were purchased than expected. Third, controlling for the jackpot amount, there were approximately 620,000 fewer tickets purchased for each drawing per year. This final finding provides evidence that people are becoming less interested in multimillion‐dollar lotteries.

Estimating the effect of odd pricing

This study used choice modelling to estimate the effect of odd pricing on the demand for three products: a $4 can of fly spray, a $7 block of cheese, and a $50 electric kettle, with each product represented by three different brands. For cheese and fly spray a significant odd‐price effect was observed at 99 cents but not at 95 cents, whereas for the electric kettles a significant odd‐price effect occurred at 95 cents but not at 99 cents. The estimated value of the odd‐pricing effect ranged from 4 cents for fly spray, to 6 cents for cheese, to $3.18 for the kettles. The results of the study provide empirical support for the assumption that odd pricing generates greater‐than‐expected demand, at least at the individual brand level, and for the common practice of setting retail prices that end in 95 cents or 99 cents.

Estimating Irregular Pricing Effects: A Stochastic Spline Regression Approach

Markets respond to prices in complex ways. Multiple factors such as price points, odd pricing, and just-noticeable differences often cause steps and spikes in response. The result is market response functions that are frequently nonmonotonic. However, existing regression-based approaches employ functions that are inherently monotonic, which thereby limits representation of important irregularities. In this article, the authors use a stochastic spline regression approach in the framework of a hierarchical Bayes model that permits the estimation of irregular pricing effects and apply the approach to data sets from several product categories. A simulation study indicates that the stochastic spline approach is flexible enough to accommodate irregular response functions. The empirical results show that there are irregularities in own-price response for most of the brands examined and that there are important profit implications of these irregular response functions in pricing decisions. The authors find that the irregularities in the response functions include sales increases associated with odd prices in the range of 12% to 76%, flatness at the extremes of the range of observed prices, and kinks in the response function that are consistent with segmentation effects.

Estimating Irregular Pricing Effects: A Stochastic Spline Regression Approach

Markets respond to prices in complex ways. Multiple factors such as price points, odd pricing, and just-noticeable differences often cause steps and spikes in response. The result is market respons...

The effect of odd pricing on demand

Presents the findings of a study designed to investigate the effect of odd pricing on respondents’ purchase probabilities for six products ranging in price from $5 to $100. The products tested were a block of cheese, a frozen chicken, a box of chocolates, a hair dryer, an electric kettle and a food blender, and the data were collected in a mall intercept of 300 household shoppers. For each product a demand curve was estimated and the differences between expected and actual purchase probabilities at each odd price level examined. For all six products, demand was higher than expected at one or both of the odd price points tested. This effect was particularly marked for the lower‐priced food items (cheese, chicken and chocolates) and for prices ending in the digit 9. Provides support for the assumption that odd pricing generates greater than expected demand and for the common practice of setting retail prices which end in 99 cents or $99.

Effects of odd pricing on price recall

Odd pricing is the ubiquitous practice of expressing a price so that it falls just below a round number. In this study, subjects were presented with a set of prices and were asked to recall those prices 2 days later. It was found that odd-ending prices are less likely than even-ending prices to be recalled accurately and that expressing a price as an odd-ending price increases the likelihood that it will be underestimated when it is recalled.