Life’s little luxuries may sell better if they’re priced with a rounded number – e.g. $20.00, rather than $19.99. That’s the finding of a new set of five studies in the Journal of Consumer Research that looked at the impact of rounded and non-rounded pricing on product appeal.
So whilst the ‘left-hand digit’ effect (we’re too lazy to read the whole price, so $99.99 is experienced as significantly less than $100.00) may work for rational work- or task-related purchases, if your customers are buying for pleasure, you’ll probably shift more stock with ‘double 0′ style pricing.
Interpreting the results the researchers suggest that non-rounded prices can encourage reliance on rational, practical thinking because they are more complex to mentally process. The practical upshot is that a .99 suffix ‘feels’ right for a product bought on reason rather than emotion. The opposite is true of products purchased for pleasure on emotional feel. Emotional purchases feel right with rounded prices.
Conducted in the lab rather than in the field, the findings need to be tested, but a quick real-world test would be easy for online retailers for whom cashier theft would not be a worry. Historically, a key rationale for .99 style non-rounded pricing had little to do with pricing psychology, and much to do with forcing cashiers to ring up a record of the sale because they would need to hand back change.
Wadhwa, M., & Zhang, K. (2014). This number just feels right: The impact of roundedness of price numbers on product evaluations. Journal of Consumer Research. DOI: http://www.jstor.org/stable/10.1086/678484
Facebook released more statistics on Super Bowl XLIX, this time from its Facebook IQ unit, which named its infographic (below) “The Big Gathering XLIX,” based on its finding that 85 percent of U.S. users planned to watch the game with other people.
Facebook IQ also found that:
Facebook IQ also offered the following takeaways for marketers on Facebook looking to score on Super Bowl Sunday:
Article courtesy of SocialTimes Feed
The Jam Study is one of the most famous experiments in consumer psychology, and new research to be published in the Journal of Consumer Psychology supports the Jam Study’s controversial conclusion; offering consumers less choice can be good for sales. Critically, the study reveals when precisely offering less choice may enhance your sales.
If you’re not familiar with the Jam Study, it’s here. Basically, the study, which was conducted at upscale Bay-area supermarket Draeger’s Market by psychologists Sheena Iyengar and Mark Lepper, found that consumers were 10 times more likely to purchase jam on display when the number of jams available was reduced from 24 to 6. Less choice, more sales. More choice, fewer sales. Weird, huh?
This phenomenon, replicated in a variety of product categories from chocolate to financial services to speed dating, has come to be known as ‘Choice Overload’ or the ‘Paradox of Choice‘. It’s a paradox because rationally speaking the more choice you offer your customers, the more sales you should make simply because you’ll be satisfying more needs better. But research showed that choice actually can be demotivating, and get in the way of sales. Why?
Psychologically, the Paradox of Choice is not so much of a paradox because the more options you give people, the more time and effort they have to invest in making a choice – something they may not be prepared to do. Moreover, giving your clients, customers or consumers a smorgasbord of options puts a psychological burden on them because what you are actually doing is giving them more opportunity to make the wrong choice, regret it and blame themselves.
Nevertheless, the Jam Study and follow-up studies (with other product types) has remained controversial – surely giving your customers more choice is a good thing? Indeed, a meta-analysis of studies in 2010 found that the inverse link between choice and purchase likelihood is from consistent.
But now a new study, ‘Choice overload: A conceptual review and meta-analysis‘ by Kellogg researchers at Northwestern University Alexander Chernev and Ulf Böckenholt (and Joseph Goodman) has re-analaysed the data from 99 Paradox of Choice studies and has isolated when reducing choices for your customers can boost sales
So the Jam Study strikes back; more choice can harm sales – but probably only when one or more of these four criteria are met.