Pricing is an important aspect of the business, as it determines the level of sales and the number of customers visiting an organization. A business should select a pricing strategy that will create a psychological situation for the customer. Most of the pricing strategies used in the business do not have major differences but the level of psychological satiation created among the customer matters (Levitt et al., 2016). Charm is one of the pricing situations that create psychological situations for the consumers. Charm is pricing strategy that the prices attached to the products end with the figures 9 or 99. The last left digit is one cent reduces this strategy from the round number.
Most of the consumers come across such prices but do not pay attention as it creates a psychological situation in their minds. For example, $2.99 and $3.00 are considered different prices with different values. In the psychological situation, the customer concludes that $2.99 is the same as $2.00, which will be cheaper as compared with $3.00 when buying products and services in the market (Chung & Petrick, 2015).
Delegate your assignment to our experts and they will do the rest.
As seen from the text provided, prices ending with number 9 have a powerful influence on the customers in the market (Kotler, & Armstrong, 2017). The products or services offered in the market with $99 and $100 as the prices will have major differences regarding the number of sales made in a given period (Hallberg, 2017). Many customers will buy the products and services sold at $99 as compared with those sold at $100 yet the difference is small.
From the psychological situation, customers are made to believe product sold at $99 are cheap. The last left digit has a major influence on the creation of psychological situation among the customers (Hinterhuber & Liozu, 2015). For example, comparing changes in prices from $3.50 to $3.49 with $4.00 to $3.99, the customer will consider the first one has no change while the second has major change due to the last left digit. It is important for the people in business to consider the pricing strategy that will have a major influence on the creation of psychological situation among the customers (Golan & Ert, 2015).
References
Chung, J. Y., & Petrick, J. F. (2015). Measuring price fairness: Development of a multidimensional scale. Journal of Travel & Tourism Marketing , 32 (7), 907-922.
Golan, H., & Ert, E. (2015). Pricing decisions from experience: The roles of information-acquisition and response modes. Cognition , 136 , 9-13.
Hallberg, N. L. (2017). The micro-foundations of pricing strategy in industrial markets: A case study in the European packaging industry. Journal of Business Research , 76 , 179-188.
Hinterhuber, A., & Liozu, S. M. (2015). Behavioral and psychological aspects of b2b pricing. Industrial Marketing Management , 47 , 4-5.
Kotler, P. T. & Armstrong G. (2017). Principles of Marketing, Student Value Edition. New York, NY: Pearson Education
Levitt, S. D., List, J. A., Neckermann, S., & Nelson, D. (2016). Quantity discounts on a virtual good: The results of a massive pricing experiment at King Digital Entertainment. Proceedings of the National Academy of Sciences , 113 (27), 7323-7328.
