Preisschwellen und Deckungsbeitrag - Verschenkt der Handel große Potentiale?
Retailers have been criticized for heavily relying on odd prices although their advantage over even prices has not been convincingly proven. In this paper we argue that such behavior does not have to stem solely from tradition, but may be seen as a rational way of dealing with uncertainty. We review 21 empirical studies on the effects of odd versus even prices and find that the results are inconclusive as to whether threshold effects exist. In an analysis of profit contributions we then show that in the light of such uncertainty it is rational to set odd prices. The reason is that only small losses in profit contribution are incurred when odd prices are set although no thresholds exist. In the opposite case, however, losses can be quite substantial. Results of a simulation show the size of the two errors for a realistic range of response parameters.
|Date of creation:||15 Jul 1997|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +049 3641/ 9 43000
Fax: +049 3641/ 9 43000
Web page: http://www.wiwi.uni-jena.de/
More information through EDIRC
|Order Information:|| Postal: If a paper is not downloadable, please contact the author(s) or the library of University of Jena, not the archive maintainer.|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pradeep K. Chintagunta, 1993. "Investigating the Sensitivity of Equilibrium Profits to Advertising Dynamics and Competitive Effects," Management Science, INFORMS, vol. 39(9), pages 1146-1162, September.
- Schindler, Robert M. & Wiman, Alan R., 1989. "Effects of odd pricing on price recall," Journal of Business Research, Elsevier, vol. 19(3), pages 165-177, November.
- Wesley A. Magat & John M. McCann & Richard C. Morey, 1986. "When Does Lag Structure Really Matter in Optimizing Advertising Expenditures?," Management Science, INFORMS, vol. 32(2), pages 182-193, February.
When requesting a correction, please mention this item's handle: RePEc:jen:jenabe:1997-04. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.