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Sales Prices: Pay Attention Or Else You Pay Money

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Despite appearances, every pricedriven buying decisions are fare less guided by arithmetics than most of us would want to believe. The amount of the discount may be less important than the numerical value of the farthest right digit, explains a new study from the Journal of Consumer Research. Keith S. Coulter (Clark University) and Robin A. Coulter (University of Connecticut) are the first to identify a visual distortion effect that may influence how consumers look at sale prices.

The researchers show that “right-digit effect” influences consumer perception of sale prices. When the right digits are small, people perceive the discount to be larger than when the right digits are large. In other words, an item on sale for $211 from the original price of $222 is thought to be a better deal than an item on sale for $188 from an original price of $199, even though both discounts are $11.

In addition, the researchers find that when consumers view regular and sale prices with identical left digits, they perceive larger price discounts when the right digits are “small” — less than 5 — than when they are “large,” or, greater than 5.

“When consumers examine multi-digit regular and sale prices in an advertisement, they read those prices from left-to-right. If the left (hundreds) digits are identical, consumers will pay less attention to those digits, and instead will focus primarily upon the disparate right-most (tens and units) digits in the price comparison process.,” the authors explain.

“Our findings indicate that comparative price advertising can distort consumers’ perceptions in ways unintended by the seller.”
 
JOURNAL OF CONSUMER RESEARCH, Inc. · Vol. 34 · August 2007Distortion of Price Discount Perceptions: The Right Digit Effect
KEITH S. COULTER;ROBIN A. COULTER*

We use four experiments to examine consumers’ processing of comparative regular and sale price information in advertisements. Consistent with our hypothesized right digit effect, we find that, when consumers view regular and sale prices with identical left digits, they perceive larger price discounts when the right digits are “small” (i.e., less than 5) than when they are “large” (i.e., greater than 5). As a result, they may attribute greater value and increased purchase likelihood to higher-priced, lower-discounted items. We examine alternate processing explanations for this right digit effect, as well as the moderating impact of price presentation format.

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* Keith S. Coulter is associate professor of marketing, Graduate School of Management, Clark University, Worcester, MA 01610-1477 (kcoulter@clarku.edu). Robin A. Coulter is professor of marketing and Ackerman Scholar at the School of Business, University of Connecticut, 2100 Hillside Road, Storrs, CT 06269-1041 (robin.coulter@business.uconn.edu). Correspondence: Keith Coulter. The authors would like to thank the associate editor and reviewer A in particular, along with the other reviewers, for their insightful comments and guidance related to this article.

Written by huehueteotl

September 3, 2007 at 9:02 am

Posted in Psychology

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