IDEAS home Printed from https://ideas.repec.org/a/spr/sjobre/v51y1999i1d10.1007_bf03371558.html
   My bibliography  Save this article

Preisschwellen und Deckungsbeitrag — Verschenkt der Handel gro Potentiale?

Author

Listed:
  • Karen Gedenk

    (Christian-Albrechts-Universität zu Kiel)

  • Henrik Sattler

    (Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät)

Abstract

Summary Retailers have been criticized for heavily relying on odd prices although their advantage over even prices has not been convincingly proven. In this paper we argue that such behavior does not have to stern solely from tradition, but may be seen as a rational way of dealing with uncertainty. We review 22 empirical studies on the effects of odd versus even prices and find that the results are inconclusive as to whether threshold effects exist. In an analysis of profit contributions we then show that in the light of such uncertainty it is rational to set odd prices. The reason is that only small losses in profit contribution are incurred when odd prices are set although no thresholds exist. In the opposite case, however, losses can be quite substantial. Results of a response surface analysis show the size of the two errors for a wide range of response parameters.

Suggested Citation

  • Karen Gedenk & Henrik Sattler, 1999. "Preisschwellen und Deckungsbeitrag — Verschenkt der Handel gro Potentiale?," Schmalenbach Journal of Business Research, Springer, vol. 51(1), pages 33-59, January.
    • Handle: RePEc:spr:sjobre:v:51:y:1999:i:1:d:10.1007_bf03371558
    DOI: 10.1007/BF03371558
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/BF03371558
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1007/BF03371558?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Pradeep K. Chintagunta, 1993. "Investigating the Sensitivity of Equilibrium Profits to Advertising Dynamics and Competitive Effects," Management Science, INFORMS, vol. 39(9), pages 1146-1162, September.
    2. Schindler, Robert M. & Wiman, Alan R., 1989. "Effects of odd pricing on price recall," Journal of Business Research, Elsevier, vol. 19(3), pages 165-177, November.
    3. Wesley A. Magat & John M. McCann & Richard C. Morey, 1986. "When Does Lag Structure Really Matter in Optimizing Advertising Expenditures?," Management Science, INFORMS, vol. 32(2), pages 182-193, February.
    4. Alain Bultez & Philippe Naert, 1988. "Note---When Does Lag Structure Really Matter ... Indeed?," Management Science, INFORMS, vol. 34(7), pages 909-916, July.
    5. Schindler, Robert M & Kirby, Patrick N, 1997. "Patterns of Rightmost Digits Used in Advertised Prices: Implications for Nine-Ending Effects," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 24(2), pages 192-201, September.
    6. Alain V. Bultez & Philippe A. Naert, 1979. "Does Lag Structure Really Matter in Optimizing Advertising Expenditures?," Management Science, INFORMS, vol. 25(5), pages 454-465, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karen Gedenk & Henrik Sattler, 1997. "Preisschwellen und Deckungsbeitrag - Verschenkt der Handel große Potentiale?," Working Paper Series A 1997-04, Friedrich Schiller University of Jena, School of of Economics and Business Administration.
    2. Santana, Shelle & Thomas, Manoj & Morwitz, Vicki G., 2020. "The Role of Numbers in the Customer Journey," Journal of Retailing, Elsevier, vol. 96(1), pages 138-154.
    3. Mohamed Didi Alaoui, 2020. "L’effet d’adéquation entre la forme de présentation du prix et de la distance temporelle sur les réponses du consommateur : une approche par la théorie des niveaux de représentation," Post-Print hal-02870097, HAL.
    4. Levon Barseghyan & Maura Coughlin & Francesca Molinari & Joshua C. Teitelbaum, 2021. "Heterogeneous Choice Sets and Preferences," Econometrica, Econometric Society, vol. 89(5), pages 2015-2048, September.
    5. Cardella, Eric & Seiler, Michael J., 2016. "The effect of listing price strategy on real estate negotiations: An experimental study," Journal of Economic Psychology, Elsevier, vol. 52(C), pages 71-90.
    6. Asmus Olsen, 2013. "The politics of digits: evidence of odd taxation," Public Choice, Springer, vol. 154(1), pages 59-73, January.
    7. Carver, James R. & Padgett, Daniel T., 2012. "Product Category Pricing and Future Price Attractiveness: 99-Ending Pricing in a Memory-Based Context," Journal of Retailing, Elsevier, vol. 88(4), pages 497-511.
    8. Eli Beracha & Michael Seiler, 2014. "The Effect of Listing Price Strategy on Transaction Selling Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 49(2), pages 237-255, August.
    9. Eric Anderson & Duncan Simester, 2003. "Effects of $9 Price Endings on Retail Sales: Evidence from Field Experiments," Quantitative Marketing and Economics (QME), Springer, vol. 1(1), pages 93-110, March.
    10. Robert M. Schindler & Mathew S. Isaac & Rebecca Jen-Hui Wang, 2023. "Strategic use of just-below numbers in packaged-foods calorie information," Marketing Letters, Springer, vol. 34(2), pages 237-250, June.
    11. Marcial López-Pastor & Jesús García-Madariaga & Joaquín Sánchez & Jose Figueiredo, 2020. "Demand Impact for Prices Ending with “9” and “0” in Online and Offline Consumer Goods Retail Trade Channels," International Review of Management and Marketing, Econjournals, vol. 10(6), pages 58-78.
    12. Fraccaro, Annalisa & Macé, Sandrine & Parguel, Béatrice, 2021. "The not-so-odd couple: Odd pricing in a luxury context," Journal of Business Research, Elsevier, vol. 136(C), pages 356-365.
    13. Annalisa Fraccaro & Sandrine Macé & Béatrice Parguel, 2021. "The not-so-odd couple: Odd pricing in a luxury context," Post-Print halshs-03503449, HAL.
    14. Macé, Sandrine, 2012. "The Impact and Determinants of Nine-Ending Pricing in Grocery Retailing," Journal of Retailing, Elsevier, vol. 88(1), pages 115-130.
    15. Banerjee, Prantosh J. & Tripathi, Sanjeev & Sahay, Arvind, 2016. "When less is better than more: Just-below discount in tensile price promotions," Journal of Retailing and Consumer Services, Elsevier, vol. 31(C), pages 93-102.
    16. Jeong, Ji Youn & Crompton, John L., 2017. "The use of odd-ending numbers in the pricing of five tourism services in three different cultures," Tourism Management, Elsevier, vol. 62(C), pages 135-146.
    17. Jeong, Ji Youn & Crompton, John L., 2018. "Do subjects from high and low context cultures attribute different meanings to tourism services with 9-ending prices?," Tourism Management, Elsevier, vol. 64(C), pages 110-118.
    18. Hung, Hui-Hsi & Cheng, Yin-Hui & Chuang, Shih-Chieh & Yu, Annie Pei-I & Lin, Yu-Ting, 2021. "Consistent price endings increase consumers perceptions of cheapness," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    19. Chien-Huang Lin & Jyh-Wen Wang, 2017. "Distortion of price discount perceptions through the left-digit effect," Marketing Letters, Springer, vol. 28(1), pages 99-112, March.
    20. Béatrice Parguel & Annalisa Fraccaro & Sandrine Macé, 2021. "Compromise pricing in luxury," Post-Print halshs-03503443, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sjobre:v:51:y:1999:i:1:d:10.1007_bf03371558. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.