If you think 9-ending prices are low, think again

Avichai Snir, Daniel Levy

Research output: Contribution to journalArticlepeer-review

6 Scopus citations

Abstract

The 9-ending prices, which comprise between 40% and 95% of retail prices, are popular because shoppers perceive them as being low. We study whether this belief is justified using scanner price-data with more than 98-million observations from a large US grocery chain. We find that 9-ending prices are higher than non-9-ending prices, by as much as 18%. Two factors explain why shoppers believe, mistakenly, that 9-ending prices are low. First, we find that among sale prices, 9-ending prices are indeed lower than non-9-ending prices, giving 9-ending prices an aura of being low. Second, 9-ending prices were indeed lower than other prices. Shoppers therefore learned to associate 9-endings with low prices. Over time, however, 9-ending prices rose substantially, which shoppers failed to notice, because the continuous use of 9-ending prices for promoting deep price cuts draws shoppers’ attention to them and helps to maintain and preserve the image of 9-ending prices as bargain prices.

Original languageEnglish
Pages (from-to)33-47
Number of pages15
JournalJournal of the Association for Consumer Research
Volume6
Issue number1
DOIs
StatePublished - Jan 2021

Bibliographical note

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© 2020 the Association for Consumer Research. All rights reserved.

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