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

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.

This is a preview of subscription content, log in to check access.

Fig. 1
Fig. 2
Fig. 3

References

  1. Ambady, A., & Bharucha, J. (2009). Culture and the brain. Current Directions in Psychological Science, 18, 342–345.

    Article  Google Scholar 

  2. Buchtel, E., & Norenzayan, A. (2009). Thinking across cultures: implications for dual processes. In J. Evans & K. Frankish (Eds.), In two minds: dual processes and beyond (pp. 33–54). New York: Oxford University Press.

    Google Scholar 

  3. Choi, I., Dalal, R., Chu, K., & Park, H. (2003). Culture and judgment of causal relevance. Journal of Personality and Social Psychology, 84(1), 46–59.

    Article  Google Scholar 

  4. Chua, H. F., Boland, J. E. & Nisbett, R. E. (2005). Cultural variation in eye movements during scene perception. Proceedings of the National Academy of Sciences, USA, 102, pp. 12629–33.

  5. Coutler, K. S., & Coulter, R. A. (2007). Distortion of price discount perceptions: the right digit effect. Journal of Consumer Research, 34, 162–173.

    Article  Google Scholar 

  6. Dehaene, S., Dupoux, E., & Mehler, J. (1990). Is numerical comparison digital? Analog and symbolic effects in two-digit number comparison. Journal of Experimental Psychology: Human Perception and Performance, 16(3), 626–641.

    Google Scholar 

  7. Demangeot, C., Broderick, A., & Craig, C. (2015). Multicultural marketplaces: new territory for international marketing and consumer research. International Marketing Review, 32(2), 118–140.

    Article  Google Scholar 

  8. Dhar, R., & Nowlis, S. (1999). The effect of time pressure on consumer choice deferral. Journal of Consumer Research, 25(4), 369–384.

    Article  Google Scholar 

  9. Drolet, A., & Luce, M. F. (2004). The rationalizing effects of cognitive load on emotion-based trade-off avoidance. Journal of Consumer Research, 31(June), 63–77.

    Article  Google Scholar 

  10. Heeler, R., & Nguyen, A. (2001). Price endings in Asia (64-71). In B. Murphy & L. Engle (Eds.), Proceedings of Australia-New Zealand and Marketing Association. Auckland: Massey University Press.

    Google Scholar 

  11. Ji, L., Peng, K., & Nisbett, R. E. (2000). Culture, control and perception of relationships in the environment. Journal of Personality and Social Psychology, 78(5), 943–955.

    Article  Google Scholar 

  12. Kahneman, D. (2003). A perspective on judgment and choice: mapping bounded rationality. American Psychologist, 58(9), 697–720.

    Article  Google Scholar 

  13. Kim, H. S. (2002). We talk, therefore we think? A cultural analysis of the effect of talking on thinking. Journal of Personality and Social Psychology, 83(4), 828–842.

    Article  Google Scholar 

  14. Kitayama, S., & Uskul, A. K. (2011). Culture, mind, and the brain: current evidence and future directions. Annual Review of Psychology, 62, 419–449.

    Article  Google Scholar 

  15. Knowles, E. D., Morris, M. W., Chiu, C., & Hong, Y. (2001). Culture and the process of person perception: evidence for automaticity among East Asians in correcting for situational influences on behavior. Personality and Social Psychology Bulletin, 27(10), 1344–1356.

    Article  Google Scholar 

  16. Konieczny, J. & Skrzypacz, A. (2004). Search, costly price adjustment and the frequency of price changes: theory and evidence, Stanford University manuscript.

  17. Lalwani, A., & Shavitt, S. (2013). You get what you pay for? Self-construal influences price-quality judgments. Journal of Consumer Research, 40(August), 255–267.

    Article  Google Scholar 

  18. Lichtenstein, D., Bloch, P., & Black, W. (1988). Correlates of price acceptability. Journal of Consumer Research, 15(2), 243–252.

    Article  Google Scholar 

  19. Manning, K. C., & Sprott, D. E. (2009). Price endings, left-digit effects, and choice. Journal of Consumer Research, 36(January), 328–335.

    Article  Google Scholar 

  20. Masuda, T., & Nisbett, R. E. (2001). Attending holistically versus analytically: comparing the context sensitivity of Japanese and Americans. Journal of Personality and Social Psychology, 81, 922–934.

    Article  Google Scholar 

  21. Masuda, T., Akase, M., Radford, M. H. B., & Wang, H. (2008). Cross-cultural research on the pattern of eye-movement: comparing the level of concentration between Japanese and Western participants. Japanese Psychological Research, 79, 35–43.

    Google Scholar 

  22. Monga, A. B., & John, D. R. (2008). When does negative brand publicity hurt? The moderating influence of analytic versus holistic thinking. Journal of Consumer Psychology, 18(4), 320–332.

    Article  Google Scholar 

  23. Monroe, K. B., & Lee, A. Y. (1999). Remembering versus knowing: issues in buyers’ processing of price information. Journal of the Academy of Marketing Science, 27(2), 207–225.

    Article  Google Scholar 

  24. Moyer, R. S., & Landauer, T. K. (1967). Time required for judgments of numerical inequity. Nature, 215, 1519–1520.

    Article  Google Scholar 

  25. Nisbett, R. E., Peng, K., Choi, I., & Norenzayan, A. (2001). Culture and systems of thought: holistic versus analytic cognition. Psychological Review, 108, 291–310.

    Article  Google Scholar 

  26. Schindler, R. (2009). Patterns of price endings used in US and Japanese price advertising. International Marketing Review, 26(1), 17–29.

    Article  Google Scholar 

  27. Schindler, R., & Kirby, P. N. (1997). Patterns of rightmost digits used in advertised prices: implications for nine ending effects. Journal of Consumer Research, 24(September), 192–201.

    Article  Google Scholar 

  28. Shepard, R. N., & Podgorny, P. (1978). Cognitive processes that resemble perceptual processes. In W. Estes (Ed.), Handbook of Learning and Cognitive Processes (Vol. 5, pp. 189–237). Hillsdale: Erlbaum.

    Google Scholar 

  29. Stiving, M., & Winer, R. S. (1997). An empirical analysis of price endings with scanner data. Journal of Consumer Research, 24(June), 57–67.

    Article  Google Scholar 

  30. Tang, Y., Zhang, W., Chen, K., Feng, S., Ji, Y., Shen, J., & Reiman, E. M. (2006). Arithmetic processing in the brain shaped by cultures. Proceedings of the National Academy of Sciences, 103, 10775–10780.

    Article  Google Scholar 

  31. Thomas, M., & Morwitz, V. (2005). Penny wise and pound foolish: the left-digit effect in price cognition. Journal of Consumer Research, 32(June), 54–64.

    Article  Google Scholar 

  32. Thomas, M., & Morwitz, V. (2009). Heuristics in numerical cognition: implications for pricing. In R. Vithala (Ed.), Handbook of Pricing (pp. 132–149). Northampton: Elgar.

    Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Lingjiang Lora Tu.

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Tu, L.L., Pullig, C. Penny wise and pound foolish? How thinking style affects price cognition. Mark Lett 29, 261–273 (2018). https://doi.org/10.1007/s11002-018-9460-y

Download citation

Keywords

  • Nine-ending prices
  • Thinking style
  • Analytic thinking
  • Holistic thinking
  • Price cognition