"The difference between a good product and a poor product in the consumers' eyes could come down to that penny," says Robert Schindler, a professor of marketing at the Rutgers School of Business–Camden. "When consumers care more about product quality than price, just-below pricing has been found to actually hurt retail sales."
Schindler, one of the world's leading pricing scholars, is conducting a meta-analysis of the effect 99-cent price endings have on consumers. For years, he has studied the marketing strategy behind pricing an item at, say, $29.99 instead of $30. The penny may not seem like much, but people actually perceive a big difference in price and think they're getting a bargain.
The illusion, Schindler says, isn't the last number on the price tag. It's the first number.
"People focus more on the left-most digit," says Schindler, who reviewed about 100 different studies in performing his meta-analysis. "Just-below pricing certainly makes it seem like the price is less than it actually is. It gives an image of being a bargain or a discount."
Schindler says most people won't perceive a big difference in price between a $20 item and a $25 item. But by dropping the price of each item by one cent, "something that costs $19.99 is considered much less expensive when compared to something priced $24.99."
But while just-below pricing has been effective in increasing sales, Schindler has found that it can also work against retailers.
"On the other side, it can give the image that an item is of low or questionable quality," he says.
Schindler says most people are more concerned about quality over price when buying luxury products, services, or making risky purchases.
"Retailers don't want those items to come across as cheap," Schindler says. "For example, if you're going to do some work on a person's house, you wouldn't want your price to reflect that you might do a poor job. In that case, the customer is concerned about quality and I would suggest not using 99-cent endings. It's better to be straightforward when selling that kind of product."
Schindler has been recognized as one of the top pricing researchers in the world by an article published in the Journal of Business Research, which surveyed the articles, authors, and institutions that have contributed most to the topic of pricing over the past 30 years.
The publication recently ranked Schindler as the fourth-most productive pricing researcher in number of articles adjusted for multiple authorship and the 13th-most productive researcher in absolute number of articles.
Schindler's research has had a profound impact on how marketers, retailers, and scholars study consumer behavior. In 2007, Fordham University held a scholarly conference focusing on Schindler's definitive research. Schindler was awarded the Lifetime Achievement Award in Pricing Research at the conference, which was held in New York.
He recently completed the forthcoming textbook Pricing Strategies: A Marketing Approach (Sage Publications), a book written to make basic pricing concepts more accessible to business students.
"We want students to be able to have the fundamentals so that pricing can be part of their business education, whether they want to be an entrepreneur, part of a big company, part of a small company, or something else," Schindler says.
"Very often, there are far more courses in production, distribution, and promotion than there are in pricing," he says. "That pricing isn't taught that much represents a gap in business education and this book is designed to fill that gap."
Schindler, a Cherry Hill resident, received his bachelor's degree from the University of Pennsylvania and his master's degree and doctorate from the University of Massachusetts.
He teaches "Principles of Marketing," "Pricing Strategies," and "Consumer Analysis" at the Rutgers School of Business–Camden.
Ed Moorhouse | EurekAlert!
Amputees can learn to control a robotic arm with their minds
28.11.2017 | University of Chicago Medical Center
The importance of biodiversity in forests could increase due to climate change
17.11.2017 | Deutsches Zentrum für integrative Biodiversitätsforschung (iDiv) Halle-Jena-Leipzig
MPQ scientists achieve long storage times for photonic quantum bits which break the lower bound for direct teleportation in a global quantum network.
Concerning the development of quantum memories for the realization of global quantum networks, scientists of the Quantum Dynamics Division led by Professor...
Researchers have developed a water cloaking concept based on electromagnetic forces that could eliminate an object's wake, greatly reducing its drag while...
Tiny pores at a cell's entryway act as miniature bouncers, letting in some electrically charged atoms--ions--but blocking others. Operating as exquisitely sensitive filters, these "ion channels" play a critical role in biological functions such as muscle contraction and the firing of brain cells.
To rapidly transport the right ions through the cell membrane, the tiny channels rely on a complex interplay between the ions and surrounding molecules,...
The miniaturization of the current technology of storage media is hindered by fundamental limits of quantum mechanics. A new approach consists in using so-called spin-crossover molecules as the smallest possible storage unit. Similar to normal hard drives, these special molecules can save information via their magnetic state. A research team from Kiel University has now managed to successfully place a new class of spin-crossover molecules onto a surface and to improve the molecule’s storage capacity. The storage density of conventional hard drives could therefore theoretically be increased by more than one hundred fold. The study has been published in the scientific journal Nano Letters.
Over the past few years, the building blocks of storage media have gotten ever smaller. But further miniaturization of the current technology is hindered by...
With innovative experiments, researchers at the Helmholtz-Zentrums Geesthacht and the Technical University Hamburg unravel why tiny metallic structures are extremely strong
Light-weight and simultaneously strong – porous metallic nanomaterials promise interesting applications as, for instance, for future aeroplanes with enhanced...
11.12.2017 | Event News
08.12.2017 | Event News
07.12.2017 | Event News
12.12.2017 | Physics and Astronomy
12.12.2017 | Earth Sciences
12.12.2017 | Power and Electrical Engineering