Menu Price Endings that Communicate Value and Quality

Abstract

his paper investigates the marketing strategy of using oddand even-number price endings in the restaurant industry to convey different information about a restaurant, and how consumers interpret and respond to that information. Specifically, we devised experiments to test the numbers 9 and 0 for consumer response. The use of odd-A menu price that ends in a "9" usually conveys to consumers an impression of an item's value, while prices ending in "0" may say something about quality.

A cross-category investigation into the effects of nine-ending pricing on brand choice

“…Those results explain why firms tend to use more round prices for higher quality products. Naipaul and Parsa (2001) explained why consumers associate the zero-ending prices with overall quality and nine-ending prices with overall value. However, when Schindler (1997) analyzed 243 grocery items in six different stores, he found that nine endings were among the higher prices for some items among the six stores.…”

Pricing strategies to maximize revenues in the lodging industry

“…Price-ending research has not been conducted in the hotel business; however, Kreul (1982) studied pricing in the restaurant industry and concluded that price-ending strategies in restaurants mirror practices commonly utilized in retailing with low-priced, valueoriented restaurateurs most likely to utilize a price ending with the digit ''9''. A more recent study within the hospitality industry, conducted by Naipaul and Parsa (2001), concluded that the use of a ''9'' price-ending signaled ''value'' to consumers while a ''0'' price-ending communicated 'quality.' This strategy conveys a message consistent with previous findings that such price-endings communicate an image of ''classiness'' (Spohn and Allen, 1977, p. 188), ''sophistication'' (Raphael, 1968), ''prestige'' (Alpert, 1971, p. 112), or a ''touch of dignity'' (Feinberg, 1962).…”

Do upscale restaurant owners use wine lists as a differentiation strategy?

“…Additionally, the use of promotions is recommended according to the positive results reported in the literature (Wansink et al, 2006). There is also emphasis on the importance of price perception and psychological prices in the menu in relation to the perception of quality (Naipaul and Parsa, 2001).…”