nep-mkt New Economics Papers
on Marketing
Issue of 2019‒08‒26
three papers chosen by
Marco Novarese
Università del Piemonte Orientale

  1. If You Think 9-Ending Prices Are Low,Think Again By Daniel Levy; Avichai Snir
  2. Literature Overview in the Field of Consumer Adoption of Sustainable Solutions By Malchenko, Yu.
  3. Pricing Better By Sourav Ray; Li Wang; Daniel Levy; Mark Bergen

  1. By: Daniel Levy (International School of Economics at Tbilisi State University, Georgia; Department of Economics, Bar-Ilan University, Israel; Department of Economics, Emory University, USA; The Rimini Centre for Economic Analysis, Italy); Avichai Snir (Department of Banking and Finance Netanya Academic College, Netanya, ISRAEL)
    Abstract: 9-ending prices are a dominant feature of many retail settings, which according to the existing literature, is because consumers perceive them as being relatively low. Are 9-ending prices really lower than comparable non 9-ending prices? Surprisingly, the empirical evidence on this question is scarce. We use 8 years of weekly scanner price data with over 98 million price observations to document four findings. First, at the category level, 9-ending prices are usually higher, on average, than non 9-ending prices. Second, at the product level, in most cases, 9-ending prices are, on average, higher than prices with other endings. Third, sale prices are more likely to be non-9 ending than the corresponding regular prices. Fourth, among sale prices, 9-ending prices are often lower, on average, than comparable non 9-ending prices. The first three findings imply that although consumers may associate 9-ending prices with low prices, the data indicates otherwise. The fourth finding offers a possible explanation for this misperception. Retailers may be using 9-ending prices to draw consumers’ attention to particularly large price cuts during sales, which perhaps conditions the shoppers to associate 9-ending prices with low prices.
    Keywords: Behavioral Pricing, Psychological Prices, Price Perception, Image Effect, 9-Ending Prices, Price Points, Regular Prices, Sale Prices
    Date: 2019
  2. By: Malchenko, Yu.
    Abstract: The present literature overview stipulates the challenge of the adoption of sustainable solutions by their prospective consumers. The research outlines the most common theories investigating the issues and reflects the ones which are the most applicable for the specificity of sustainable solutions: planned behaviour and consumer choice. These theories are offered for further research on the consumer adoption of sustainable solutions.
    Keywords: consumer adoption, sustainable solutions, public goods, club goods, diffusion of innovations, social contagion, planned behaviour, consumer choice, Hofstede's cultural dimensions, knowledge transfer,
    Date: 2019
  3. By: Sourav Ray (Department of Marketing, McMaster University, Canada); Li Wang (CHEPA, McMaster University, Canada); Daniel Levy (Department of Economics, Bar-Ilan University, Israel; Department of Economics, Emory University, USA; Rimini Centre for Economic Analysis); Mark Bergen (Department of Marketing, University of Minnesota, USA)
    Abstract: Electronic shelf label (ESL) is an emerging price display technology around the world. While these new technologies require non-trivial investments by the retailer, they also promise significant operational efficiencies in the form of savings in material, labor and managerial costs. The presumed benefits of ESL, for example, tend to be focused around lower price adjustment costs (PAC), also known as menu costs. However, ESL not only can save PAC but may also enable the retailer to price “better,” generating greater value for the transacting parties. Thus, ESL’s strategic impact for retailers occurs between claiming these presumed efficiencies and realizing the value generating potential. Using transactions data from a longitudinal field experiment, we assess such impact of ESL by studying how it shapes retail pricing practices and outcomes. Our general finding is that ESL plays an enabling role to the retailer’s strategy – thereby enhancing the retailer’s sales and revenues. The price adjustment efficiencies of ESL allows retailers to do better waste management, price discovery, as well as leveraging value in information for consumers. However, ESL’s impact on prices is nuanced, based on the retail strategy (EDLP, HI-LO) being used. Papers quantifying emerging technologies' impact on retail outcomes are sparse, even fewer investigating their role in pricing. To the best of our knowledge, ours is the first study to explore and quantify how ESL interacts with retail strategy to affect retail pricing practices and retail outcomes.
    Keywords: Retailing, Pricing, EDLP, HI-LO, Dynamic Capability, Menu Costs, Price Adjustment, Price Elasticity, Price Discovery
    JEL: M31 E31 D22 D40 C93 L10 O33 L81
    Date: 2019–08

This nep-mkt issue is ©2019 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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