Monday, March 9, 2015

Round Out Prices for Feel-Good Buys

When does a price of $10.00 look more appealing to a shopper than a price of $9.99? According to studies at INSEAD-Singapore and Nanyang Technological University, that happens when the purchase will make the shopper feel good. HDTVs, vacation packages, clothing, handbags, and other hedonic items feel more right when the price is rounded.
     The findings are consistent with past research showing how indulgences should be priced at whole-dollar amounts. Consider these as exceptions to the well-documented traditional rule that $3.99 looks significantly better than $4.00 to the shopper, and $499 looks much better than $500.
     Does the traditional rule always hold for mundane products like toothpaste and washing machines? No, not always, say the INSEAD/Nanyang researchers. If the salesperson successfully positions the item as giving pleasure rather than as only utilitarian, a rounded price will project attractiveness.
     The researchers presented consumers with a description of a camera and a sample of photos taken with the camera. For one group, the price of the camera was stated as $101.53, and for the others as $100.00. Then half of the number of participants in each group were asked to consider purchasing the camera for a class project—a mundane use. The other half were asked to consider purchasing the camera for a family vacation—a hedonic use.
     Sure enough, those considering the class project use rated the quality of the sample pictures higher when the camera price was $101.53, while those considering the family vacation use rated the picture quality higher if the price was $100.
     The preference for round prices was also produced when shoppers felt under stress when making selections. Here, the feeling good was the relief which came from completing the task.
     Feeling right from the round and regular applies to package shapes, too. Researchers at University of Georgia and University of Pennsylvania asked consumers to evaluate packages designed to look incomplete. The result of this was a belief among the consumers that the package held a lower quantity compared to packages of equivalent size and weight, but without blanks in the design. It’s as if the missing portion generated feelings in the consumer that part of the contents had leaked out, leaving less behind.
     A byproduct of this perception was how people in the study desired a larger quantity of the contents from an incomplete package than from a complete package. The gap stimulated demand.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Expect Exceptions to 99-Ending Pricing 
Attend to Negatives When High Time Pressure 
Blank Out to Increase Consumption

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