October 13, 2016 by Martha’s Dad
I came across an interesting piece in yesterday’s Daily Mail that may be of interest to the owners of discount retailer Poundland. The piece in question is a fairly light-hearted review of some of the research on the psychology or pricing, drawing on some actually quite good sources.
The bit that leapt out related to a particular research interest of mine, sex differences in decision-making. It seems that some prices are considered by consumers to be more masculine or feminine than others, holding correspondingly different levels of appeal for men and women respectively.
We’ve long known that many consumers prefer a price of 99p to £1, an effect normally attributed to the tendency for us to group prices into categories. 99p is typically seen as in the consumer’s “under £1” category, so it emotionally (if not mathematically) feels closer to, say, 75p than it does to a straight quid. According to experiments conducted by Dr Amna Khan at MMU, however, round numbers (such as £1) are seen as more feminine, holding greater appeal to women, whereas precise numbers (99p) are considered more masculine and appeal to men. If these data from Amna are replicable, it suggests we should revisit some of the 99p studies in consumer psychology to see if this sex difference is evident in their data also.
Some of the other effects mentioned in the paper are rather interesting too. It seems when dining out, for instance, we are inclined to spend more when the restaurant quotes the price without a currency symbol (e.g. “7” rather than “£7”), an effect attributable to the fact that removing said symbol broadens the psychological gap between the pleasure of eating our dessert and the pain of having to pay for it. Similarly, and also related to the category explanation, luxury brands have long exploited the so-called “£300 Club”, offering entry-level products close to that price bracket to tempt consumers into the brand cult, despite most of their other goods costing thousands. It appears that even within the £300 Club, price sensitivity must be carefully managed – a handbag up to about £350 will be seen as an attractive treat, for example, but any higher (say £370) and it becomes seen more as a £400 bag.
Fascinating stuff all round and well worth a read. It does pose an interesting marketing question for Poundland, however, as I noted earlier. According to Amna’s research, their recently acquired 99p Store chain is probably appealing more to male consumers than to female ones. So, depending on which demographic profile it is seeking to target, should the company retain the 99p Store brand, the Poundland brand, or both? If you’re out there and listening and would like to find out, Mr Poundland, I have some very capable Marketing students looking for projects who’d happily help decide!