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Penny wise and pound foolish? How thinking style affects price cognition

Author

Listed:
  • Lingjiang Lora Tu

    (Baylor University)

  • Chris Pullig

    (Baylor University)

Abstract

Nine-ending pricing is a common marketing technique because of the traditional belief that consumers pay more attention to the dollar digits and less attention to the penny digits. This research challenges the universal effectiveness of nine-ending pricing and identifies thinking style as a moderator for the nine-ending price effect with analytic (holistic) thinkers more (less) prone to the effect of nine-ending prices. Further, we examine cognitive resource as a boundary condition for the moderating effect. Our results demonstrate that holistic thinkers are not responsive to nine-ending prices when they have unlimited cognitive resources. With limited cognitive resources (e.g., under time pressure or cognitive load), both holistic and analytic thinkers are subject to the nine-ending price effect. We identify the lack of holistic thinking as a mechanism underlying the nine-ending effect.

Suggested Citation

  • Lingjiang Lora Tu & Chris Pullig, 2018. "Penny wise and pound foolish? How thinking style affects price cognition," Marketing Letters, Springer, vol. 29(2), pages 261-273, June.
    • Handle: RePEc:kap:mktlet:v:29:y:2018:i:2:d:10.1007_s11002-018-9460-y
    DOI: 10.1007/s11002-018-9460-y
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    References listed on IDEAS

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    Cited by:

    1. Sarah Mittal & Katherine Rice Warnell & David H. Silvera, 2021. "In the world of plastics: how thinking style influences preference for cosmetic surgery," Marketing Letters, Springer, vol. 32(4), pages 425-439, December.

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