左数效果及消费者人格特质对於消费品价格认知的影响.docx

左數效果及消費者人格特質對於消費品價格認知的影響
The effects of left-digit phenomenon and consumer characteristics on the perception of prices for consumption goods

龔昶元
朝陽科技大學 企業管理系 副教授
李延熹
朝陽科技大學 應用外語系 助理教授
游曙吏
朝陽科技大學 應用外語系 研究生

Abstract

In order to increase their sales, companies endeavor to lure and stimulate consumers to purchase products through promotional activities, particularly monetary promotions. However, not all monetary promotions influence consumers to purchase products because differences in consumer characteristics, such as need for cognition (NFC), create different attitudes toward promotions. The question of whether consumers treat a nine-ending price to be cheaper than a zero-ending price has been discussed for long. Recent researches indicate that the left-digit effect has a significant impact on the revenue of firms. A number of researchers suggest that prices with leftdigit effects increase the revenues of companies. Although monetary promotions such as left-digit effect and nine-ending prices influence consumers to purchase more, NFC may be one of the important elements that affect the purchase decision of consumers. NFC as one of the elements that affect the purchase decision of consumers has been robustly discussed; this study involves a further research of the question of whether NFC influences consumers who are affected by the left-digit effect. Consumers with high and low NFC exhibit different purchasing behaviors. In other words, different levels of NFC cause consumers to select different products. Different considerations and attitudes toward consumption can be classified into high and low price cognition. This research investigates the viewpoint that different monetary promotions cause different perceptions of price because of different levels of NFC among consumers.
For the purpose of this study, the questionnaire survey method is employed. Four hundred and fifty nine undergraduate university students, 135 males and 314 females in the age group of 17 to 25, from the Department of Business Administration participated in the survey. The results of the study provide the foundation for the framework. We find that different levels of NFC affect the purchasing inclination of consumers. Not all left-digit effects encourage consumers to purchase products; left-digit effects influence consumers only if they have a low NFC. High-NFC consumers tend not to be affected by left-digit effect.

Key words: Left-digit effect, NFC, promotion

Introduction
In order to increase their sales, different companies endeavor to stimulate and lure consumers to purchase their products through promotional activities, particularly monetary promotion. According to Kotler (2003), McCarthy classified marketing tools into four groups, namely, product, price, place, and promotion. Promotion comprises sales promotion, advertising, sales force, public relations, and direct marketing. Many companies use promotional activities to stimulate consumers to purchase their products because consumers like to purchase products when promotional offers are provided by companies. However, different consumers may be influenced by different types of monetary promotions on account of different consumer characteristics, such as NFC; this difference may cause them to have different attitudes toward promotional activities.
Numerous researchers (Thomas and Morwitz, 2005; Coulter, 2001; Anderson and Simester, 2003) have researched the left-digit effect and nine-ending or odd-ending price. Researchers have found that consumers tend to purchase products if they perceive that the price is one cent lower (e.g., $2.99 vs. $3.00). Furthermore, consumers read the digits of a price from left to right; therefore, they are likely to underestimate the price (Coulter, 2001). Although monetary promotion such as left-digit effect and nine-ending price affects consumers, thereby leading them to increase the quantity of products purchased, NFC may be one of the important elements that affect the purchase decision of consumers. NFC is the tendency for people to engage in as well as enjoy thinking; furthermore, NFC focuses on the orientation of consumers toward motivation. Consumers with high or low NFC will display different consumer behaviors. In other words, NFC influences consumers in their selection of products. Such factor is important to marketers because they affect the reactions of consumers to marketing strategies.
A large number of companies adopt various measures in order to encourage consumers to purchase their products through monetary promotion; however, different types of monetary promotion might influence individual consumers differently. On the basis of the different elements under consideration and attitudes toward consumption, consumption can be classified into high and low price cognitions. Therefore, this study classifies consumers into two different levels of price cognitions: high and low.
Bearing this classification in mind, researching such market behavior produces the question of whether different kinds of monetary promotion affect the price cognition of consumers due to different levels of NFC. This research aids companies in understanding the manner in which the most suitable price policy can be decided upon for different types of consumers.

Literature Review
1. Left-digit Effect
This study aims to investigate whether consumers perceive prices with a lower left digit to be a lot lower than prices with the same left digit (e.g., $230 and $199 vs. $240 and $200). The left-digit effect can be defined as follows: “The left-digit effect refers to the observation that using a nine-ending versus a zero-ending price, for example, $2.99 versus $3.00, changes the left-most digit…” (Thomas and Morwitz, 2005). Monroe (2003) indicated that consumers do not notice small price changes. Anderson and Simester (2003) suggested that even though a nine-ending price changes the price of products by only one cent, the last digit of a price has a significant impact on earning revenues.
Stiving and Winer (1997) classified explanations associated with image effects and level effects. The image effect contains quality and price image. Quality-image effect causes consumers to perceive that products of prices with nine-ending are low-quality products. As for price image, the image effect causes consumers to believe that the price of a product, store and so forth is based on right-hand digits. Therefore, image effects are concerned with firm behavior or intentions toward consumers. For example, the image effect of price causes consumers to regard nine-ending prices as a price discount. Employing round numbers as reference points enables companies to give a small amount back to consumers if companies adopt the policy of nine-ending prices, which are lower than round numbers (Kreul, 1982). For example, consumers may interpret $19 as a $1 discount from $20. On the other hand, level effects cause the perception of prices among consumers to become distorted; thus, underestimating the price. It causes consumers to underestimate the fact that a nine-ending price is merely one unit lower than a zero-ending price. Consumers tend to round the price such as $3.99 to $3.00 (Hollander, 1966; Schindler, 1984). To maximize profits, companies may select $3.99 rather than $3.33 or prices below $3.99. Moreover, limited memory capacity is also one of components to cause level effect because consumers would most likely memory the first digits of prices.
Dehaene (1993) indicated that a number extends from left to right. Given the LR orientation (Coulter, 2001), left-most digits are the first numbers that consumers read, thereby making the left order of a price to be the first to be noticed. Presumably, if the order of numbers is reversed, LR orientation might disappear. The left-digit effect refers to the observation that, for example, $799 vs. $800 is merely a change of the left-most digit rather than only the right-most digit. In other words, it is a change in the left digit rather than a one-dollar reduction in price. The perception that causes consumers to transform multi-digit numbers into mental magnitudes is the so-called analog model. Under specific conditions, the left-most digit exerts a relatively greater effect than the other digits because the left-most digit changes from 8 to 7, while the change in the right-most digit (zero-ending versus nine-ending) are perceived as hardly significant. Therefore, some consumers perceive $799 as less expensive than $800. Multi-digit numbers are encoded as an analog representation (Dehaene, 1997; Monroe and Lee, 1999). As Dehaene (1997) indicated, individuals who assess the numbers with quantitative meaning usually tend to spontaneously map them onto an internal magnitude in the case of two multi-digit numbers. This study researches the orientation of consumers toward the left-most digit in order to investigate the price cognition of consumers.
A number of researchers have shown the effects of left-digit and last-digit prices (Thomas and Morwitz, 2005; Coulter, 2001; Anderson and Simester, 2003) with a focus on left-most and nine-ending prices. Therefore, this research aims to study consumers who enjoy investigating prices or securing greater benefits; in other words, some consumers are more inclined toward purchasing products whose prices have a lower left digit, while some enjoy comparing different prices (with lower left digit and with the same left digit) in order to ensure that it is a good bargain based on their perception of the price. Rational consumers shop more frequently but purchase products in smaller quantities when faced with higher price variability (Ho, Tang and Bell, 1998). Some researchers, such as Shen (2004), investigated consumers who perform action rationally based on the theory of reasoned action in order to understand the response of the consumers toward coupon promotion. Therefore, this study assumes that some consumers will display purchase behavior rationally toward the left-digit effect.

2. Need For Cognition (NFC)
NFC is the tendency for people to engage in as well as enjoy thinking. Cohen, Stotland and Wolfe (1955) proposed the concept of NFC and described that NFC is the need to structure pertinent situations in meaningful and integrated forms. In addition, Petty and Cacioppo (1986) demonstrated that NFC is not related to the traditional concept of intelligence. High-NFC consumers are more likely to possess a stronger intrinsic motivation to engage in cognition and attempt to reduce any inherent errors. Therefore, when people feel motivated because of the interest, enjoyment, challenge, etc., of the work they indulge in, they are compelled by intrinsic motivation. On the contrary, low-NFC consumers do not enjoy thinking. High NFC individuals are prone to use message content for judgment (Petty and Cacioppo, 1982) than low NFC individuals do (Haugtvedt, Petty and Cacioppo, 1992). The Need for Cognition scale ranges from low to high needs for cognition.
As Liebermann and Flint-Goor (1996) stressed, high-NFC consumers tend not to be manipulated by different information regarding various products. In addition, advertisers manipulate the messages they convey to consumers by highlighting the unique characteristics of the products that may find favor with the consumers, thereby encouraging consumers to purchase their products. This is the so-called peripheral effect of ELM (Elaboration Likelihood Model). Petty and Cacioppo (1983) believed that ELM will influence the attitudes and reactions of consumers toward advertisement. Therefore, NFC is a significant factor that may influence the purchase decision of consumers.
Further, Petty and Cacioppo (1986) also indicated that NFC is cognition to the extent that individuals will engage in it on account of their intrinsic motivation. Based on this theory, numerous researches associated with NFC verify that high-NFC consumers possess stronger intrinsic motivation. They engage in cognition in order to reduce the possibility of any errors they might commit when they are purchasing products. On the other hand, low-NFC consumers do not indulge in the evaluation process. Park and Hastak (1994) indicated that low-NFC consumers are reluctant when faced with cognitive endeavors and would rather avoid arduous discussions or deliberations with regard to certain aspects; therefore, tend to be easily influenced by others.

3. Relationship between NFC and Promotion
According to existing literature, the level of NFC influences consumer behavior. High-NFC consumers will retain product characteristics longer than low-NFC consumers. As Petty and Cacioppo (1983) suggested, NFC can be divided into the following two categories: the center type and the peripheral type. High-NFC consumers generally enjoy thinking and analyzing the price information of products when evaluating a promotional activity; this is the so-called center type. However, low-NFC consumers are likely to be lured by promotional activities and only judge products based on simple clues and principles; this is the peripheral type.
Pierre, Brain and Gilles (2000) found that monetary and non-monetary promotions provide consumers either hedonic or utilitarian benefits. Hedonic benefits comprise value expression, entertainment, and exploration. On the other hand, utilitarian benefits include saving money, getting better quality products, and improving shopping convenience. In addition to hedonic and utilitarian values, NFC is one of the elements of consumer psychology. As Liebermann and Flint-Goor (1996) suggested, high-NFC consumers are not likely to be intimidated by the diverse information they are exposed to after reviewing a variety of products and prefer different types of promotions. Utilitarian benefits significantly effect high-NFC consumers (Kang, 2003). In other words, high-NFC consumers give more weight to utilitarian benefits; this implies that they consider the utility of products when purchasing new products (Kang, 2003).
However, some consumers respond to promotional signals and disregard price differences. Low-NFC consumers respond to promotional signals without being mindful of price reductions, whereas high-NFC consumers respond to a promotional signal only when there is a substantive price reduction (Inman, McAlister and Hoyer, 1990). According to Inman, Peter, and Raghubir (1997), promotions with a restriction encourage low-NFC consumers to purchase products, whereas high-NFC consumers tend not to be affected by promotional restrictions or purchase limits, such as time limitation. NFC as a predictor of information processing among consumers has been robustly demonstrated in numerous contexts. This study presents a further research into the relationship between NFC and promotion.