The 99 Price Ending As a Signal of a Low-Price Appeal

EXTENDED ABSTRACT - There is evidence that the use of 99 in the rightmost two digits of a retail price may create a low-price image in the minds of consumers (Quigley and Notarantonio 1992; Schindler 1984; Schindler and Kibarian 2001). This result contrasts with the surprising finding, replicated in two separate studies, that prices with 99 endings are both less likely to be the lowest prices for the item and are, on the average, further above the item’s lowest competitive price than are prices that do not end in 99 (Schindler 1997; 2001). One possible explanation for this discrepancy is that 99 endings are used when retailers are making a low-price appeal, such as claiming that the item is being sold at a discounted or otherwise low price. Such a claim does not necessarily mean that the item’s price is low with respect to what other retailers are charging for the item. However, consumers may make that generalization. The goal of this paper is to test whether this possibility is viable by examining if the presence of a 99 ending in an advertised price is related to the presence of a low-price appeal.

Citation:

Robert M. Schindler (2003) ,"The 99 Price Ending As a Signal of a Low-Price Appeal", in NA - Advances in Consumer Research Volume 30, eds. Punam Anand Keller and Dennis W. Rook, Valdosta, GA : Association for Consumer Research, Pages: 270.

Advances in Consumer Research Volume 30, 2003     Page 270

THE 99 PRICE ENDING AS A SIGNAL OF A LOW-PRICE APPEAL

Robert M. Schindler, Rutgers UniversityBCamden

EXTENDED ABSTRACT -

There is evidence that the use of 99 in the rightmost two digits of a retail price may create a low-price image in the minds of consumers (Quigley and Notarantonio 1992; Schindler 1984; Schindler and Kibarian 2001). This result contrasts with the surprising finding, replicated in two separate studies, that prices with 99 endings are both less likely to be the lowest prices for the item and are, on the average, further above the item’s lowest competitive price than are prices that do not end in 99 (Schindler 1997; 2001). One possible explanation for this discrepancy is that 99 endings are used when retailers are making a low-price appeal, such as claiming that the item is being sold at a discounted or otherwise low price. Such a claim does not necessarily mean that the item’s price is low with respect to what other retailers are charging for the item. However, consumers may make that generalization. The goal of this paper is to test whether this possibility is viable by examining if the presence of a 99 ending in an advertised price is related to the presence of a low-price appeal.

Data from two large systematic samples of price advertising, together comprising over 2400 price ads, are used to test for the occurrence of this relationship. Each price’s two-digit ending was based on the rightmost two digits that actually appeared in the ad. The ad was considered to be a low-price appeal if it had one or more of the following: an external reference price, a number indicating the size of the savings claimed, or any words suggesting the lowness of the selling price or describing the savings that the selling price was claimed to represent.

In both price samples, the most commonly occurring two-digit ending was 99, followed in order by 00 and 95. In the first sample, the incidence of the 99 ending was 70 percent greater in ads with low-price cues than in those ads without low-price cues. This 99-ending/low-price-appeal relation was statistically significant and did not interact with the level of the price. In the second sample, relation between the 99 ending and low-price appeals was even more pronounced than in the first sampleB99 endings occurred more than twice as often in the ads that made low-price appeals than in the ads that did not. Although this 99-ending/low-price-appeal relationship was stronger in lower prices than in higher prices, the relationship was still large and statistically significant among the higher half of the prices in the sample.

These data from two separate studies of price advertising converge to indicate that there is a strong relationship between the use of the 99 price ending and the presence of cues for a low-price appeal. Further, this relationship appears to be robust over price level. These results indicate that the 99 price ending is indeed a valid signal of a low-price appeal. Particularly considering the salience of advertising that makes a low-price appeal, this relationship seems sufficient to account for a low-price image of the 99 ending despite the evidence that the 99 ending is not a valid signal of a competitively low price.

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