Right Digit Effect and Subjective Relative Income: An Abstract

The manipulation of the rightmost digits in prices has been an effective tactic utilized by retailers for decades. A long stream of research studies how the manipulation of price endings plays a role in influencing consumer behavior intentions and perceived value of a certain item. While a lot of research focuses on the effectiveness of those tactics or the different form of them, very little research is available on what might moderate those effects, specifically, whether factors like subjective relative income will moderate the effect of this price frame on offer attractiveness or even behavioral intentions. This paper explores that very question. We begin by reviewing literature on the effectiveness of 99 ending pricing strategies and then explore the variances in those tactics’ effectiveness in low vs. high subjective relative income conditions. Next, we conduct an experiment to test our propositions.

To explore our effects an online experiment was conducted. Respondents were presented with one of the four offers that are manipulated in a 2 × 2 between-subjects design. The first factor is the price ending where a Blu-ray disc player was presented with either a 99-ending price or no right digit ending ($49.99 vs. $50). The second factor is the income manipulation (Haisley et al. 2008) (high relative income vs. low relative income). To manipulate relative income we followed the procedure utilized by Haisley et al. (2008), where respondents were told they just won some money (money to burn) and were later asked about their income level; however half of the respondents were induced to feel that their income was low and the other half were induced to feel their income was in the middle income range. After seeing one of the offers, respondents were asked, “How attractive (or an attractive) was the offer?” and responded on a 9-point scale with “Very Unattractive” at one and “Very Attractive” at nine as anchors. A three-item scale was also utilized to measure the respondents purchase likelihood/purchase intentions.

Our results extend previous research by exploring the moderating effect of subjective relative income on the effectiveness of 99-ending pricing tactic. Additional process measures are being explored, by the authors, with the hope of building a better understanding of how subjective relative income will impact pricing tactics. Once completed, the authors believe that the paper will have a great impact on the right digit effect research in pricing.