A new pricing policy View as slide show Adapted from AdPrin.com

A new pricing policy You are a retailer. You learn about a new pricing policy “P-plan” that you could implement at virtually no cost and the effects on long-term sales would be negligible. 1. Customers say they believe the P-plan is more honest. 2. It would save time and reduce confusion for customers and retail clerks. 3. It would improve your image as a quality retailer. Should you adopt this new pricing policy? ___ YES____ NO___NOT SURE Adapted from AdPrin.com2

The Plan: Use round prices (1.4.2) Of customers, 66% prefer even prices, and 13% prefer odd. Odd prices take 1/3 time longer to think about and even university students are led to substantial errors. Round prices imply higher quality: Kmart used odd prices on 99% of its items while Nieman Marcus used it on 16%. For experimental evidence, see: (Schindler and Wiman 1989Schindler and Wiman

Evidence on round prices Evidence on the round vs. odd prices was obtained from a number of laboratory and field experiments. A summary is provided on pages of Persuasive Advertising.

Should the Bose Wave Radio have a round price? Adapted from AdPrin.com Click this slide for the evidence-based answer. Yes, Bose is a high-quality product. 6

Based on this exercise, write a small application step for yourself, and set a deadline, preferably within one week. If you are working with someone else, share your application plan and the results of your application. For example, think about your objectives. If you only need to success in the short term, odd pricing has been found to increase sales in the short term (Persuasive Advertising p 44). If you would like to emphasize quality, use round prices. Adapted from AdPrin.com