ONE LE$$ CENT & ONE MORE GIMMICK!

The penny is continually taken for granted, walked over, pitched aside, flipped for sport, etc. Having said that, it actually costs more to make a penny than its cash register value. According to the 2014 US Mint Annual Report it costs 1.43¢ to produce each penny.  To marketers however, a penny is worth much more as it actually becomes part of our strategy/tactic bag.

The common theme among price cuts and sales is marking the price down to 99¢, $99, etc. It is something that is so simple that it often overlooked. Experts say however, that this tactic draws more attention than just the consumer’s eye. In 2009 researchers at Colorado State Univ. and Washington State Univ., (Journal of Consumer Research, Vol 36, #2, 2009) found that this 1¢ difference can “turn a window shopper into an actual shopper”. WOW! In a test, researchers priced 2 identical pens at $2.00 & at $3.99. Surprisingly, 44% of the participants in the study chose the $3.99 pen. Talk about penny power, WOW!!

The question that has been on researcher’s minds since the 1930s is what happens when consumers see different prices b/t 2 multi-digit numbers? How do they internalize the message & respond? In short, what does a price change from $4.00 to $3.99 do? Our native left-to-right reading of numbers is heightened b/c our attention on a 4 dropping to a 3. This 1¢ has a large effect on our internal processing of numbers. In a case where the price drop is NOT on a whole dollar, the change does NOT wield the same magnitude, as from $4.70 to $4.69 (Journal of Consumer Research, Penny Wise and Pound Foolish: The Left-Digit Effect in Price Cognition, V32#1).

The “one cent” method is NOT the only tactic that is up retailers’ sleeves this season. Black Friday (11/27/15) & Cyber Monday (11/30/15) entice shoppers to logon or to run though brick and mortar scouring for best deals. These deals come and go quickly. The frantic pressure can persuade shoppers to buy “on impulse” rather than by necessity or desire. “Doorbusters” are typically low-end electronics that are budget priced & of budget quality (cnet.com). Most shoppers don’t “do their homework” b-4 rushing into the madness. CAVEAT EMPTOR.

Blk Fri & Cyber Mon are great opportunities for shoppers to grab deals but shoppers however must be aware of retailers’ tactics. “Layered discounts”, (such as using a 25% off coupon on top of a 10% sale is generally processed 35% “off”. But guess what, that really amounts to 32½% off?) Some retailers give shoppers the choice b/t a “percentage off” and a “dollar amount off” (i.e. 30% or $15). The % is usually the better deal, as retailers bet against consumer intelligence (Today.com). American adults’ scores were among the lowest of developed countries in related tests. (We ranked 8th of 13 in prob solving, 9th in literacy, and 10th in numeracy. [CNN].)

Amazon’s Blk Fri’s sales rose 20.7%, this yr, thx to its aggressive pricing strategy. The avg $$ order by mobile and computer shoppers (collectively) was $134.45. Mobile devices have been boosting online sales for the past few yrs and this year mobile sales amounted to 35.3% of ALL online purchases (IBM). WOW! Mobile device shoppers are avging purchases of $117.87 per order. WOW!!

Holiday deals are great for consumers to save some $$ but they should be aware of retailer tactics. Do your homework before you shop! CAVEAT EMPTOR! CAVEAT EMPTOR!! CAVEAT EMPTOR!!!

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About bernacmd

For over 24 years, University of Detroit Mercy Marketing Professor Michael Bernacchi, Ph.D., J.D, has produced "uNDER tHE mIKE-rOSCOPE", a newsletter discussing current "marketing and advertising¹s bends, trends & ends." A well-know fixture in Detroit and national media, UDM's marketing guru has made several appearances on CNN's "Talk Back Live," the Voice of America worldwide radio network (VOA), ABC, CBS, NBC, MSNBC and on the pages of Sports Illustrated, Time, TV Guide, the New York Times, USA Today, the Wall Street Journal and the Washington Post, to name a few. At University of Detroit Mercy, he has taught courses in Marketing Management, Consumer Behavior, Marketing Communications, Research and Corporate Social Responsibility and Sports and Entertainment Marketing. Michael Bernacchi can be reached at 313-993-1116 or bernacmd@udmercy.edu. Please appropriately attribute the following for their work on uNDER tHE mIKE-rOSCOPE: Yen Ju Lee Robert Rouse Vidhyasagar Natarajan Eric Baumgardner & Ian Young
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