What Do You Know About The Psychological Pricing Theory?

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What Do You Know About The Psychological Pricing Theory?

3 Answers

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Answer 1

Psychological pricing is also called price ending. It is a marketing strategy and practice that is based on the theory that certain prices have a psychological affect on the sale and shelf life of a product or service. In the current market scenario, the retail prices are often referred to as odd prices; slightly less than a round figure, like the popular $19.99 and £6.95. However, it is not necessary that the figure be mathematically odd. It could also be 2.98. The theory involved is that this particular line of figures demand greater customer attention than would be expected if consumers were rational in thought.

Psychological pricing theory is based certain hypotheses. Consumers tend to ignore the least significant digits, rather than concentrate on the rounding. Even though the cents are 'seen' in a subtle way, they are not totally ignored and may subconsciously be partially ignored. The effect may be enhanced further when the cents are printed smaller, like in the case of $1999. The fractional prices in a way suggest to the consumer that the goods are available at the lowest possible market price. When items are listed by way of segregation into price bands, the price ending is used to keep an item within a lower band, so that it is viewed by the potential purchasers.

Answer 2

Psychological Pricing Theory
There is no doubt in this fact if we say that Psychological Pricing is a marketing theory which demonstrates that prices contains a deep force, effect which takes demand huge than it should be anticipated when consumers were fully balanced.

Basically there are some hypotheses which is describes here one by one.

1. Clients pay no attention to the slightest important number rather than do the appropriate rounding and cents are not disregard completley.

2. It is true that fractional prices recommended to regulars and customers that supplies are marked at the lowest achievable price.

3. The position is that customers are very eager to used psychological prices.

Psychological Pricing Theory is completely a contoversial theory and various readings show that purchaser including children have an extremely good realizing of real price and comparative value and it is for this reason that they act sensibly.

Some investigator believe that this behavior takes no notice of the non-rational temperament of the experience and that approval of the theory need faith in a subliminal level of thinking procedures, a faith which economic form tend to refuse.

Answer 3

Psychological pricing is a theory in marketing that these prices have a psychological impact that drives demand greater than would be expected if consumers were perfectly rational. Psychological pricing is one cause of price points. The theory of psychological pricing is controversial. Some studies show that buyers, even young children, have a very sophisticated understanding of true cost and relative value and that, to the limits of the accuracy of the test, they behave rationally.
Other researchers claim that this ignores the non-rational nature of the phenomenon and that acceptance of the theory requires belief in a subconscious level of thought processes, a belief that economic models tend to deny or ignore. Research using results from modern scanner data is mixed. Creating change requires the employee to open the cash register, recording the sale. This reduces the risk of the cashier stealing from the store owner.