Discount for Shoppers’ Eyes & Ears

As Christmas Eve approached, Marketing Daily published a piece titled “Penney, Target Double Down For Boxing Day.” My guess is that most Americans aren’t thinking Boxing Day is, of all things, today, the day after Christmas. You have to be smart enough to live in Canada, Australia, the U.K., or certain other parts of the world to know that.
     Still the news to all those reading the Marketing Daily article is clear: Retailers are keeping up discounting, even though the 2010 holiday shopping season has formally ended. If you’re participating, you’ll get the best profitability by discounting for shoppers’ eyes and ears.

• Perhaps following the lead of Walmart and Dollar Tree, a number of retailers used whole-dollar parity pricing this holiday season. A group of products were priced at $5.00 and another group at $10.00, for instance. The objective of parity pricing is to ease indecision. Now that it’s time to discount, use any whole dollar pricing to your advantage by realizing how shoppers’ eye tend to look to the left of the decimal point. Researchers at Colorado State University and Washington State University suggest just-below pricing, using $.99 for items priced below about $100.00. A discount from $10.00 to $7.99 looks to be a better deal than a discount from $10.00 to $8.00.
• For higher-priced items, avoid discounting to price points ending in an 8 or 9. Researchers at Clark University and University of Connecticut discovered that customers are likely to feel that a discount from $222.99 to $211.99 is better than a discount from $199.99 to $188.99, even though the first discount is about 4.9%, while the second discount is the better one mathematically, at about 5.5%.
• When saying a discounted price to a shopper, the sweet spot is with the digit 6. The Clark/Connecticut researchers find that a discount from $10.00 to $7.66 sounds better to participants than a discount from $10.00 to $7.22. The reason has to do with the subconscious influence of consonants. The smooth pronunciation of “six” triggers associations of “small.” The pronunciation of “two,” which is sharper, does not trigger these associations as well. In a similar appeal for the ears, researchers at HEC School of Management in Paris and at University of Pennsylvania conclude that, regardless of the discounted price, if the salesperson says it slowly to the shopper, the price is likely to be perceived as lower.

Click below for more:
Reassess Your Pricing Assumptions
Use Parity Pricing to Help Customers Decide
Earn Good Will in Giving Discounts