Menu price endings that communicate value and quality

Cornell Hotel and Restaurant Administration Quarterly

Volumn 42, Issue 1, 2001, Pages 26-37

  Naipaul, Sandra ^a   Parsa, H G ^a  

^a OHIO STATE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0035255710     PISSN: 00108804     EISSN: None     Source Type: Journal    
DOI: 10.1177/0010880401421003     Document Type: Article

References (45)

1. 1 See T T Nagle and R K Holden, The Strategy and Tactics of Pricing A Guide to Profitable Decision Making, second edition (Englewood Cliffs, NJ Prentice Hall, 1995), pp 298-321, and K B Monroe, "Buyers' Subjective Perceptions of Price," Journal of Marketing Research, Vol X, February 1973, pp 70-80
2. 1 See T T Nagle and R K Holden, The Strategy and Tactics of Pricing A Guide to Profitable Decision Making, second edition (Englewood Cliffs, NJ Prentice Hall, 1995), pp 298-321, and K B Monroe, "Buyers' Subjective Perceptions of Price," Journal of Marketing Research, Vol X, February 1973, pp 70-80
3. 2 M A Stiving and R S Winer, "An Empirical Analysis of Price Endings with Scanner Data," Journal of Consumer Research, Vol 24, June 1997, pp 57-67
4. 3 See Ibid, and L M Kreul, "Magic Numbers Psychological Aspects of Menu Price," Cornell Hotel and Restaurant Administration Quarterly, Vol 23, No 2 (August 1982), pp 70-75
5. 3 See Ibid, and L M Kreul, "Magic Numbers Psychological Aspects of Menu Price," Cornell Hotel and Restaurant Administration Quarterly, Vol 23, No 2 (August 1982), pp 70-75
6. 4 For example, see M A Stiving, "Price Ending When Prices Signal Quality," Journal of Management Science, Vol 46, No 12 (December 2000), pp 1617-1629, D Lichtenstein and S Burton, "The Relationship Between Perceived and Objective Price-Quality," Journal of Marketing Research, Vol XXVI, November 1989, pp 429-443, VA Zeithaml, "Consumer Perceptions of Price, Quality, and Value A Means-End Model and Synthesis of Evidence," Journal of Marketing, Vol 52, July 1988, pp 2-22, and A Gabor and C WJ Granger, "Prices as an Indicator of Quality Report on an Enquiry," Economica, Vol 33, February 1966, p 45
7. 4 For example, see M A Stiving, "Price Ending When Prices Signal Quality," Journal of Management Science, Vol 46, No 12 (December 2000), pp 1617-1629, D Lichtenstein and S Burton, "The Relationship Between Perceived and Objective Price-Quality," Journal of Marketing Research, Vol XXVI, November 1989, pp 429-443, VA Zeithaml, "Consumer Perceptions of Price, Quality, and Value A Means-End Model and Synthesis of Evidence," Journal of Marketing, Vol 52, July 1988, pp 2-22, and A Gabor and C WJ Granger, "Prices as an Indicator of Quality Report on an Enquiry," Economica, Vol 33, February 1966, p 45
8. 4 For example, see M A Stiving, "Price Ending When Prices Signal Quality," Journal of Management Science, Vol 46, No 12 (December 2000), pp 1617-1629, D Lichtenstein and S Burton, "The Relationship Between Perceived and Objective Price-Quality," Journal of Marketing Research, Vol XXVI, November 1989, pp 429-443, VA Zeithaml, "Consumer Perceptions of Price, Quality, and Value A Means-End Model and Synthesis of Evidence," Journal of Marketing, Vol 52, July 1988, pp 2-22, and A Gabor and C WJ Granger, "Prices as an Indicator of Quality Report on an Enquiry," Economica, Vol 33, February 1966, p 45
9. 4 For example, see M A Stiving, "Price Ending When Prices Signal Quality," Journal of Management Science, Vol 46, No 12 (December 2000), pp 1617-1629, D Lichtenstein and S Burton, "The Relationship Between Perceived and Objective Price-Quality," Journal of Marketing Research, Vol XXVI, November 1989, pp 429-443, VA Zeithaml, "Consumer Perceptions of Price, Quality, and Value A Means-End Model and Synthesis of Evidence," Journal of Marketing, Vol 52, July 1988, pp 2-22, and A Gabor and C WJ Granger, "Prices as an Indicator of Quality Report on an Enquiry," Economica, Vol 33, February 1966, p 45
10. 5 J Gregan-Paxton and D R John, "Consumer Learning by Analogy A Model of Internal Knowledge Transfer," Journal of Consumer Research, Vol 24, December 1997, pp 266-284 See also W Boulding and A Kirmani, "A Consumerside Experimental Examination of Signaling Theory Do Consumers Perceive Warranties as Signals of Quality?," Journal of Marketing Research, Vol 20, June 1993, pp 111-123
11. 5 J Gregan-Paxton and D R John, "Consumer Learning by Analogy A Model of Internal Knowledge Transfer," Journal of Consumer Research, Vol 24, December 1997, pp 266-284 See also W Boulding and A Kirmani, "A Consumerside Experimental Examination of Signaling Theory Do Consumers Perceive Warranties as Signals of Quality?," Journal of Marketing Research, Vol 20, June 1993, pp 111-123
12. 6 See M Friestad and P Wright, "The Persuasion Knowledge Model How People Cope with Persuasion Attempts," Journal of Consumer Research, Vol 21, June 1994, pp 1-31, and P Wright, "Schemer Schema Consumers' Intuitive Theories about Marketers' Influence Tactics," in Advances in Consumer Research, Vol 13, ed Richard J Lutz (Provo, UT Association for Consumer Research, 1995), pp 1-13
13. 6 See M Friestad and P Wright, "The Persuasion Knowledge Model How People Cope with Persuasion Attempts," Journal of Consumer Research, Vol 21, June 1994, pp 1-31, and P Wright, "Schemer Schema Consumers' Intuitive Theories about Marketers' Influence Tactics," in Advances in Consumer Research, Vol 13, ed Richard J Lutz (Provo, UT Association for Consumer Research, 1995), pp 1-13
14. See also S B Castleberry and A VA Resurrection, "Communicating Quality to Consumers," Journal of Consumer Marketing, Vol 6, No 3 (Summer 1989), pp 21-28, and K B Monroe and R Krishnan, "The Effect of Price on Subjective Product Evaluation," in Perceived Quality How Consumers View Stores and Merchandise, ed J Jacoby and J C Olson (Lexington, MA Lexington Books, 1985), pp 209-262
15. See also S B Castleberry and A VA Resurrection, "Communicating Quality to Consumers," Journal of Consumer Marketing, Vol 6, No 3 (Summer 1989), pp 21-28, and K B Monroe and R Krishnan, "The Effect of Price on Subjective Product Evaluation," in Perceived Quality How Consumers View Stores and Merchandise, ed J Jacoby and J C Olson (Lexington, MA Lexington Books, 1985), pp 209-262
16. 8 See M Shaw, "Positioning and Price Merging Theory, Strategy, and Tactics," Hospitality Research Journal, Vol 15, No 2 (1992), pp 31-39, and Zeithaml, op cit
17. 9 See Monroe, Castleberry and Resurrection, Gabor and Granger, and T Scitovszky, "Some Consequences of the Habit of Judging Quality by Price," Review of Economic Studies, Vol 12, Winter 1944, pp 100-105
18. 10 See Nagel and Holden, and Monroe
19. 11 Lewis and Shoemaker showed that price-sensitivity measures could be used to determine the appropriate level of pricing in a given food-service segment, see R C Lewis and S Shoemaker, "Price-sensitivity Measurement," Cornell Hotel and Restaurant Administration Quarterly, Vol 38, No 2 (April 1997), pp 44-54 According to Chan and Au, some restaurants in Hong Kong intentionally use "loss leaders" on their menus to give an impression of high value, see W Chan and N Au, "Profit Measurement of Menu Items," Cornell Hotel and Restaurant Administration Quarterly, Vol 39, No 2 (April 1998), pp 70-75 See also J M Cotter and W W Snyder, "How Mobil Stars Affect Restaurant Pricing Behavior," Cornell Hotel and Restaurant Administration Quarterly, Vol 37, No, 2 (April 1996), pp 34-41, and Gabor and Granger
20. 11 Lewis and Shoemaker showed that price-sensitivity measures could be used to determine the appropriate level of pricing in a given food-service segment, see R C Lewis and S Shoemaker, "Price-sensitivity Measurement," Cornell Hotel and Restaurant Administration Quarterly, Vol 38, No 2 (April 1997), pp 44-54 According to Chan and Au, some restaurants in Hong Kong intentionally use "loss leaders" on their menus to give an impression of high value, see W Chan and N Au, "Profit Measurement of Menu Items," Cornell Hotel and Restaurant Administration Quarterly, Vol 39, No 2 (April 1998), pp 70-75 See also J M Cotter and W W Snyder, "How Mobil Stars Affect Restaurant Pricing Behavior," Cornell Hotel and Restaurant Administration Quarterly, Vol 37, No, 2 (April 1996), pp 34-41, and Gabor and Granger
21. 11 Lewis and Shoemaker showed that price-sensitivity measures could be used to determine the appropriate level of pricing in a given food-service segment, see R C Lewis and S Shoemaker, "Price-sensitivity Measurement," Cornell Hotel and Restaurant Administration Quarterly, Vol 38, No 2 (April 1997), pp 44-54 According to Chan and Au, some restaurants in Hong Kong intentionally use "loss leaders" on their menus to give an impression of high value, see W Chan and N Au, "Profit Measurement of Menu Items," Cornell Hotel and Restaurant Administration Quarterly, Vol 39, No 2 (April 1998), pp 70-75 See also J M Cotter and W W Snyder, "How Mobil Stars Affect Restaurant Pricing Behavior," Cornell Hotel and Restaurant Administration Quarterly, Vol 37, No, 2 (April 1996), pp 34-41, and Gabor and Granger
22. 12 R M Schindler, "Symbolic Meaning of a Price Ending," Advances in Consumer Research, Vol 18, 1991, pp 794-801
23. 13 Stiving, 2000
24. 14 See R M Schindler and T Kirby, "Patterns of Rightmost Digits Used in Retail Price Advertising Implications for Consumer Effects," Journal of Consumer Research, Vol 24 (September 1997), pp 192-201, Kreul, L Friedman, "Psychological Pricing in the Food Industry," in Prices Issues in Theory, Practice, and Public Policy, ed Almarin Phillips and Oliver E Williamson (Philadelphia University of Pennsylvania Press, 1967), pp 187-201, D W Twedt, "Does the 9 'Fixation' in Retail Pricing Really Promote Sales?," Journal of Marketing, Vol 29, October 1965, pp 54-55, and H J Rudolph, "Pricing for Today's Market," Printers' Ink, 247, May 28, 1954, pp 22-24
25. 14 See R M Schindler and T Kirby, "Patterns of Rightmost Digits Used in Retail Price Advertising Implications for Consumer Effects," Journal of Consumer Research, Vol 24 (September 1997), pp 192-201, Kreul, L Friedman, "Psychological Pricing in the Food Industry," in Prices Issues in Theory, Practice, and Public Policy, ed Almarin Phillips and Oliver E Williamson (Philadelphia University of Pennsylvania Press, 1967), pp 187-201, D W Twedt, "Does the 9 'Fixation' in Retail Pricing Really Promote Sales?," Journal of Marketing, Vol 29, October 1965, pp 54-55, and H J Rudolph, "Pricing for Today's Market," Printers' Ink, 247, May 28, 1954, pp 22-24
26. 14 See R M Schindler and T Kirby, "Patterns of Rightmost Digits Used in Retail Price Advertising Implications for Consumer Effects," Journal of Consumer Research, Vol 24 (September 1997), pp 192-201, Kreul, L Friedman, "Psychological Pricing in the Food Industry," in Prices Issues in Theory, Practice, and Public Policy, ed Almarin Phillips and Oliver E Williamson (Philadelphia University of Pennsylvania Press, 1967), pp 187-201, D W Twedt, "Does the 9 'Fixation' in Retail Pricing Really Promote Sales?," Journal of Marketing, Vol 29, October 1965, pp 54-55, and H J Rudolph, "Pricing for Today's Market," Printers' Ink, 247, May 28, 1954, pp 22-24
27. 14 See R M Schindler and T Kirby, "Patterns of Rightmost Digits Used in Retail Price Advertising Implications for Consumer Effects," Journal of Consumer Research, Vol 24 (September 1997), pp 192-201, Kreul, L Friedman, "Psychological Pricing in the Food Industry," in Prices Issues in Theory, Practice, and Public Policy, ed Almarin Phillips and Oliver E Williamson (Philadelphia University of Pennsylvania Press, 1967), pp 187-201, D W Twedt, "Does the 9 'Fixation' in Retail Pricing Really Promote Sales?," Journal of Marketing, Vol 29, October 1965, pp 54-55, and H J Rudolph, "Pricing for Today's Market," Printers' Ink, 247, May 28, 1954, pp 22-24
28. 15 M A Stiving, "An Economic Theory of Price Endings," Ph D dissertation, University of California, Berkeley, 1996
29. 16 See Nagle and Holden, F Jones, Principles of Retailing (New York Pitman Publishing Corporation, 1949) Also, years ago Duncan and Philip suggested that the digit 9 seemed to appeal to price-conscious consumers, suggesting its role as an indicator of great value, see D J Duncan and C F Phillip, Retailing Principles and Methods (Chicago Richard D Irwin, 1941)
30. 16 See Nagle and Holden, F Jones, Principles of Retailing (New York Pitman Publishing Corporation, 1949) Also, years ago Duncan and Philip suggested that the digit 9 seemed to appeal to price-conscious consumers, suggesting its role as an indicator of great value, see D J Duncan and C F Phillip, Retailing Principles and Methods (Chicago Richard D Irwin, 1941)
31. 17 R M Schindler and T M Kibarian, "Increased Consumer Sales Response through Use of 99-ending Prices," Journal of Retailing, Vol 72, No 2 (1996), pp 187-199
32. 18 D M Georgoff, Odd-Even Retail Price Endings (East Lansing, MI Bureau of Business and Economic Research, Graduate School of Business Administration Michigan State University, 1972)
33. 19 Schindler and Kibarian
34. 20 Stiving (1996)
35. 21 See Kreul, Twedt, and Rudolph
36. 22 Rudolph
37. 23 Most of the studies that investigated price-ending practices were conducted in the consumer-goods market Little information is available on price-ending strategies in the hospitality industry except for R M Schindler and L S Warren, "Effect of Odd Pricing on Choice of Items from a Menu," Advances in Consumer Research, Vol 15, 1988, pp 348-353, and Kreul (op cit), and we found Kreul's findings and conclusions limited due to the methodology that was used
38. 24 D Hayes and L Huffmann, "Value Pricing How Low Can You Go?," Cornell Hotel and Restaurant Administration Quarterly, Vol 36, No 1 (February 1995), pp 51-56
39. 25 L Too, Essential Feng Shut (New York Ballantine Wellspring, 1998), pp 66-68
40. 26 Qu Chunli, The Life of Confucius (Beijing Beijing Foreign Languages Printing Press, 1996)
41. 27 Although the students were not offered an inducement to participate in the experiments, at the end of the study we nevertheless gave the students gourmet cookies and a free one-day pass to a local health club
42. 28 M D Olsen and J L Zhou, "The Restaurant Revolution in Growth, Change, and Strategy in the International Food Service Industry," Journal of Restaurant Food Service Marketing (forthcoming)
43. 29 Those examples are unpublished case studies developed by students at Ohio State University in fulfillment of their hospitality-marketing course requirements In the first example, a family owned hamburger restaurant was repositioned to accommodate revised traffic patterns and consumer behavior after a new mall and highway were built nearby The biggest change was reprinting the menu with only "9" price endings instead of the "0" price ending that had been preferred by the owners Similarly, in the second example, the students recommended that a gourmet hotdog operation use only "9" as its price-ending digit
44. 30 We analyzed the prices from more than 800 restaurant menus that we collected from around the world
45. 31 The phenomenon of using prices to specify an industry segment is visible in the Chinese book-publishing industry, where most prices end in either the digit 6 or 8