The effect of price-ending on luxury and necessity
Degree GrantorUniversity of Canterbury
Degree NameMaster of Science
The purpose of this study is to see whether price endings affect people's perceptions of luxury and necessity goods. There is evidence that the rightmost digits, or endings, of retail prices can communicate meanings to consumers. Some researchers (Schindler and Kirby, 1997; Stiving and Winer, 1997; Thomas and Morwitz, 2005) argued that there are two price ending effects level effects (those effects in which consumers may underestimate the price); and image effects (those effects in which consumers may infer meaning from the right-hand digits). In the study, ninety-three participants were recruited from the University of Canterbury, Christchurch, New Zealand. All participants were given questionnaires to rate the quality and necessity-luxury of the good first; then a distraction session which used for distracting participants' attention from memorizing the prices of the goods; then a recall-test was given. Participants gave significantly different ratings for luxuries and necessities according to the different price-endings. In addition, the idea that the prices ending in 9 tend to be underestimated was also found.