Cultural impact on pricing strategies: how national values ​​are rounded, just bellows, and accurate price tags are formed.

It is well known that culture influences consumer behavior, but the effects of culture on pricing have not been studied much. One culture may be reflected in price tags. Price ends in a round (e.g. $10.00), just below (e.g. £9.99), or exact (e.g. 9.87 euros). The end of these prices is all common, but little is known as to why sellers in certain markets prefer one over the other.

Currently, German researchers have influenced the cultural aspects (individualism, avoidance of uncertainty, and long-term orientation) that influence how often consumers see certain types of price termination.

“Why isn’t the prevalence of price given that culture has a major impact on behavior, cognition and emotions?” said Dr. Meikel Soliman, researcher at Lüneburg and co-author of Frontier Behavioral Economics Studies. “Our findings reveal a link between price ends and cultural aspects.”

Is the price correct?

There are six cultural aspects that explain how society’s culture influences members’ values ​​and how these values ​​affect behavior.

In the current study, the researchers focused on three people. Individualism explains the extent to which people feel independent of others. Avoidance of uncertainty is defined as the extent to which a member feels threatened by unknown circumstances. Long-term orientation describes a culture that tends to focus on the future in a way that supports long-term success and slows short-term success.

The researchers included prices of 9,200 from 23 countries in the study. “Contrary to our expectations, higher individualism was positively associated with the prevalence of round prices, just negatively associated with the price of bellows,” Soliman said.

“This is because in individualistic cultures, retailers may recognize small quality prices as signaling lower quality, maintaining a high-quality brand image and avoiding them in order to appeal to consumers who are looking for personality.” In this study, individualistic culture was represented in countries such as Australia, Canada, and the Netherlands.

On the other hand, cultures that aim to reduce uncertainty may just prefer the price of bellows. “Just Bellow’s prices are related to cost reductions and ‘deals’,” Soliman explained.

“This may explain why retailers in cultures with high uncertainty support low-price signals. Similarly, round prices can be hard-knowingly aware of good quality and may reduce their ability to mitigate uncertainty.” These cultures were expressed in countries such as Greece, Portugal, and Belgium.

The authors also found that the long-term orientation is associated with a higher prevalence of round prices. “Round prices convey quality and trust and help retailers develop long-term relationships,” Soliman noted. Cultures that favor long-term relationships were represented by countries including Estonia, Germany and Spain.

Meet pricing expectations

In a globalized world where vendors often compete for national and cultural customers, these insights can be used to provide a cultural perspective when setting pricing. They also highlight cultural differences that can affect pricing strategies and help to match prices to customer culturally shaped expectations.

Researchers did not directly consider whether they are familiar with the price format, but said that whether consumers are more likely to choose a particular product could potentially choose a product that is more familiar than the others.

The team also noted that their research is limited in several respects. They looked at only one e-commerce platform and focused on the selected country, which could limit generalization. Furthermore, the researchers did not observe the causal relationship between cultural aspects and price termination and did not examine the underlying mechanism.

Nevertheless, these insights into the cultural price relationship are important for retailers and those operating in globalized markets. “Benders face diverse price expectations,” Soliman concluded. “Our research helps to clarify these expectations and provides insight into how retailers adapt price ends across cultures.”