Price Ending in High-Low Context Countries

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This edition of Pricing for Researchers is a review of a research study that uses Hall’s high-low context construct to explain the variance of odd versus even ending practices observed in western and non-western countries. The paper, entitled “High-Low Context Cultures and Price-Ending Practices”, is written by Roger M. Heeler of York University and researchers Adam Nguyen and Zinaida Taran of Siena College.

Background

• The high-low context concept refers to how communication is conveyed: expressed verbally and explicitly or is embedded in the context of the communication message.
• Low context cultures can be simply understood as “what is said is what is meant”, attaching meanings explicitly to the message itself without requiring many verbal cues.
• High context cultures in contrast, require attention to understanding the implicit and non-verbal cues from the routine communication since “many things are left unsaid’.

Purpose

• To examine how odd price endings and even price endings are perceived differently in countries with high vs. low context cultures.
• Provide evidence regarding the popularity of odd and even price ending practices in different high vs. low context countries.

Research Methods

Sampling of prices

• Prices were collected on the web mainly from MSN, Yahoo and AOL shopping portals. Product categories included grocery, gift, handcraft, clothing, cosmetics and other general merchandise
• An average of 350-650 price samples were selected in each country for analysis.

Country Selection

• 10 countries/regions from both developed and developing countries, spanning Asia, North America, South America and Europe, were selected.
• 6 high context countries/regions: China, Hong Kong, Japan, India, Brazil and Argentina.
• 3 western countries and low context countries used: USA, Australia and Norway.
• Italy was also selected as a western but high context country to provide stronger evidence that it’s the high-low context difference that leads to different price ending practice, instead of western vs. non-western categorization.

Findings

• 9-ending occurs more frequently in low context countries (44% compared to 23% in high context countries).
• 0-ending has predominance in high context countries (50% compared to 30% in low context countries).
• The predominance of 0-ending is even supported in China, Hong Kong and Japan where 8-ending has symbolic significance.
• 5-ending occurs more frequently in low context countries (14% compared to 11% in high context countries) except for India (26%).

Practical Implications

• Consumers from high-context countries are less attracted to the illusion of cheapness or small gain created by “just below the round” odd endings.Instead they are more likely to perceive such a pricing format as a manipulative marketing tool to “fool” them, and therefore might link negative feelings or distrust to the retailer/manufacturer.
• Even endings are a “safer” pricing practice in high context, non-western countries such as Asia.
• Accordingly, odd endings should be operated in a ‘realistic’ way that communicate more real savings and value that is of significance to consumers.