The .99 Effect

We live in an era of manipulation. – by companies, by marketers, by advertisers and finally retailers and supermarkets. Stores’ often provide consumers with informational clues about the uniqueness/ benefit of their products and service quality and assist in shaping consumer attitudes and perceptions.

I often find myself walking in a supermarket with a pre decided list but the scène at the billing counter seems to be a little different. My cart is filled with ambiguous things. Some of which I need but most of them- results of clever and astute marketing.

The buy one get one free offer (boosts me up and I end up spending more than I usually would), the smell of the freshly baked croissants (the atmospherics undeniably work wonders on me), the mints and chocolates places strategically near the billing counter (how thoughtful of them to remind us to pick up our mints evrytime we visit them!)-  . Should I say we are being victimized?

 

 

 

Well, in that case knowing about these marketing biases should help me act more rationally? Maybe, or maybe not. After all, look at the and-ninety-nine-pence effect. You already know about this one, right?

 

Walk into a store, see how many products are priced with the decimals running into .99? Who do these retailers think they re kidding with a price like 9.99 or 199.99?

 

But if everyone gets it, why do retailers keep doing it? The answer is clear enough – Because it still works.

 

A recent study in the Journal of Consumer Research found that when pens were priced at $1.99 and $4.00, only 18% of the participants chose the higher-priced pen; but when the pens were priced at $2.00 and $3.99, 44% of the participants selected the higher-priced pen. That one-cent price drop makes the $4 pen seem a lot cheaper.

 

Now looks like for some reason, we can’t take our eye off that leftmost digit. But we can at least try.

 

 

 

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5 Comments

  1. I read an article about this effect and why it works. Psychologists said that we know that we don’t save much money and 1 pence will not make our pocket look better, however this is an emotional trick that we just feel better because we were “able to save some money”. When people see $30 and $29.99, 3 is always bigger than 2 therefore we believe we are getting a good deal. Is seems unbelieveable but we all know that this really works.

  2. Hmmmmm…. this is nothing more than an emotional trick use to attract a customer when we see £4.00 we feel its costing more and on the same hand when we see £3.99 we feel its only £3.00…..But its only in buying but if in Bank or some legal issues if we find this it also save us with the interest as well…………

  3. Yes, you are perfectly right, we all know the .99 effect and it makes us believe not to pass a certain price level. Another effect I find very interesting is the .49 effect (I call it the .49 effect). If a price is for example 8 .99£, normally everybody rounds up. If someone asks you later how much the item was, we would say 9£. However if the Item costs 8.49£, most of us would round down the price and tell the others it cost 8£.

    However, imagine if every company uses nothing but “plain” amounts, what would happen to our pennies and to our economy;o)??

    Another thing which came to my mind while I am writing this comment, is the idea of the donation boxes at McDonald´s. Although a pence or some pennies seem to be a little, I read an article which sates, that if every McDonald’s customer donated a penny in the donation box, it could raise over $210 million to support children in need and their families worldwide. In my opinion, more supermarkets should do something like this, so their “manipulative strategies” to make us buy more could at least support poor families.

    • Although I am not the most social person in the world 😉 I also think the donation box is very useful. Sometime I have to empty my pocket or my purse because of all the coins (1,2 or 5 pence or cent). I could go to McDonalds and donate it, but I have to admit that sometimes I am just throwing it away. Maybe you think that I am stupid, but when you really start to think about it, we are throwing so many things away there are much more worth than 5p. I don’t know how it is in UK, but in Germany you get money for an empty PET-bottle (plastic bottle), sometimes it is 25 cent worth, and there are still people, who throws it away. So please don’t shout at me throwing 5 cent away, when you are putting your bottle in the litterbox! But maybe I am gonna to collect it and then going to McDonalds 😉

  4. Sorry to say it, but I think you are wrong with the .99p effect! As many people have mentioned, consumers have grown wary about the .99 effect, which is why supermarkets have now changed tack. Iceland were the first supermarket to change to round pound prices http://www.director.co.uk/magazine/2010/6_June/malcolm_walker_iceland_63_10.html and as their profits show it was a tactic that worked. Many other supermarkets soon followed http://news.bbc.co.uk/1/hi/8159072.stm and many of you may recall ASDA’s campaign about their round prices. Now why does it work? Suggestions include the prices being more transparent. A pound is a pound, right? Also, its suggested that the time it takes to wait for the penny change to be handed over costs more than the penny itself! Finally, having round prices makes it easier for budgeting – I mean when you make an estimate before you get to the till, you will estimate using pounds not .99p’s!


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