Price Endings, Left-Digit Effects, and Choice

KENNETH C. MANNING DAVID E. SPROTT*

Past research has found that changes in price endings can result in "left-digit effects" whereby the magnitude of an item's price relative to the price of a reference product is influenced by the leftmost digits of both prices. We extend this work by investigating the impact of changes in price endings and associated leftmost price digits on choice. Findings indicate that assigning different combinations of price endings to two products (e.g., $2.00 and $2.99 vs. $1.99 and $3.00 vs. $2.00 and $3.00) can shift choice share toward the lower- or higher-priced alternative. We also find that changes between just-below (e.g., $29.99 and $39.99) and round (e.g., $30.00 and $40.00) pricing affect choice, with just-below pricing shifting share toward lower-priced alternatives. The latter effects are found to be moderated by price level and shopping goals. A three-path mediation model reveals the processes underlying the influence of price endings on choice.

ecent research has shown that changes in price endings can result in "left-digit effects" whereby two prices that differ by only 1 cent (e.g., $3.99 and $4.00) are encoded at significantly different levels (Thomas and Morwitz 2005). While this research shows that the perceived distance between prices can be increased or decreased with changes in price endings, the practical implications of these effects have yet to be investigated. We propose and test that left-digit effects can have a significant impact on consumers' choices between alternatives at the point of purchase. Subtracting 1 cent from a round price, such as $9.00, not only changes the rightmost digit but also decreases the leftmost digit of the price. In focusing on this price format phenomenon, we define a "just-below price" as a price set slightly below a round number (e.g., $8.99). We use "round price" to refer to a price represented by a round number (e.g., $9.00) whereby subtracting 1 cent from the price decreases the leftmost digit of the price. Changes in price endings do not always result in changes in leftmost digits. For example, when $8.70 is changed to a nine-ending price of $8.69, the leftmost digits remain constant. Our focus is on just-below and round prices wherein a change in the

*Kenneth C. Manning (ken.manning@colostate.edu) is FirstBank Research Fellow and professor of marketing at Colorado State University, College of Business, Fort Collins, CO 80523-1278; David E. Sprott (dsprott@wsu.edu) is the Boeing/Scott and Linda Carson Chair in Marketing at Washington State University, College of Business. Pullman, WA 99164-4730. Corresponding author: Kenneth Manning. The authors thank the editor, associate editor, reviewers, and Terry Shimp for their assistance and valuable insights. The authors contributed equally to this research. John Deighton served as editor and Brian Ratchford served as associate editor for this article. Electronically published January 22, 2009

price's ending also results in a change to the price's leftmost digit. While some inconsistencies exist, the price endings literature supports the proposition that, for a given item, establishing a just-below price results in greater sales than the use of a (1-cent-higher) round price (Gendall, Holdershaw, and Garland 1997; Schindler and Kibarian 1996; Stiving and Winer 1997). It has been argued that such sales increases are caused, in part, by consumers' information-processing limitations and associated tendencies to truncate prices (Schindler and Kibarian 1996). For example, a price of $49.99 may be encoded (if maximum underestimation occurs) at a $40.00 level (Schindler and Kirby 1997). As summarized in table 1, the literature has provided evidence that such underestimation effects (also labeled "level effects" by Stiving and Winer [1997]) may involve price truncation, memory limitations, or left-to-right digit processing. Additional theoretical explanation for underestimation effects is provided using the analogue model of numerical cognition (Thomas and Morwitz 2005), which holds that multidigit numbers are holistically converted into an analogue representation (Dahaene 1997; Hinrichs, Yurko, and Hu 1981). Based on this view, Thomas and Morwitz (2005) contend that the leftmost digits in a price exert disproportionate influence on the encoding of prices. With consumers' cognitive resources focused on leftmost digits, just-below prices (e.g., $2.99) are encoded at a lower level than corresponding round prices (e.g., $3.00). Using shopping scenarios, Thomas and Morwitz (2005, studies la and Ib) had research participants judge the magnitude of a price for the less expensive of two pens (priced at either $2.99 and $4.00 or $3.00 and $4.00). Their findings demonstrate that when the less expensive pen is priced at $2.99, the magnitude of its price is perceived to be significantly lower (as compared
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2009 by JOURNAL OF CONSUMER RESEARCH. Inc. Vol. 36 August 2009 All rights reserved. 0O93-5301/20O9/36O2-0OI3$10.0O. DOI: 10.1086/597215

PRICE ENDINGS AND CHOICE

TABLE 1 PRICE ENDINGS RESEARCH FINDINGS ON UNDERESTIMATION EFFECTS Finding Price recall estimates: Recail of just-below prices have been shown to be underestimated reiative to round prices; findings are equivocal with some researchers finding no such effect. Price recail accuracy: Just-below prices are iess accurately recailed than round prices, as often indicated by research participants' use of recailed prices in subsequent decision tasks. Price-digit perceptions: The magnitude of the difference between two prices is influenced by price endings and leftmost digits and moderated by the distance between the two prices. Price-digit recall accuracy: Leftmost digits of a price are more accurately recalled than rightmost digits with decreasing accuracy from hundreds, to tens, to ones of doliars, to tens and ones of cents. Price digit and sales: A modei with individual digits of a price (e.g., three dimes and seven pennies) is more predictive of sales than the overall price (e.g., $.37); a stronger influence of left-hand digits is noted. Illustrative research

329

Lambert (1975); Schindler and Kibarian (1993); Schindler and Wiman (1989)

Bizer and Schindier (2005); Schindler (1984); Schindler and Wiman (1989)

Guguen and Legoherei (2004); Thomas and Monwitz (2005) Couiter (2001); Schindier and Chandrashekaran (2004); Schindler and Wiman (1989) Stiving and Winer (1997)

to the $4.00 pen), than when it was priced at $3.00. Below, we propose that such left-digit effects play an important role as consumers select between products at the point of purchase.

LEFT-DIGIT EFFECTS AND CHOICE

Price evaluations involve the comparison of an item's price to some point of reference (Thaler 1985) and may involve an internal standard residing in memory (Winer 1986). At the point of purchase, however, prices of viable product alternatives (e.g., two brands of batteries) are often compared to one another when evaluating value and making a choice. Accordingly, competing brands at the point of purchase create important contextual reference points for price comparisons (Bolton and Shankar 2003). When comparing the prices of alternatives, we propose that price endings and leftmost digits affect the encoding of prices and, in turn, affect choice between lower- and higher-priced product alternatives. Holding all other factors constant, the greater the difference between competing alternatives' prices, the more likely consumers will behave in a price-sensitive manner and choose the lower-priced option (Nagle and Holden 1995). In essence, greater price differences heighten consideration of price and monetary sacrifice. Factors creating larger perceived differences between alternatives are therefore expected to increase the likelihood that consumers will select the lower-priced option. Accordingly, the increase in the perceived difference between pens priced at $2.99 and $4.00, as compared to $3.00 and $4.00, is expected to enhance the share of the lower-priced pen. (Exceptions may exist, such as buying a gift with the intention of impressing

someone, when increasing the perceived distance between alternatives has no effect or shifts choice toward higherpriced, rather than lower-priced, alternatives.) As shown in table 2, a 1-cent change in the prices of two products would yield different price ending options for retailers. Options A (i.e., $2.00 and $2.99) and B (i.e., $1.99 and $3.00) involve combinations of just-below and round prices and contrasting differences in leftmost digits. The leftmost digits in option A are both twos. As suggested by Thomas and Morwitz's (2005) findings, the perceived difference between these prices is expected to be small relative to the other price ending options (B, C, and D) wherein the difference between the leftmost digits of the lower-priced alternatives is at least $1.00 lower than that of the higherpriced options. Since the perceived difference between prices in option A will be relatively small, the higher-priced alternative is expected to gain share (as compared to when the other price ending options are employed). Contrary to option A, the leftmost digits in option B reflect a $2.00 difference, and with emphasis placed on these digits during encoding, the perceived price difference between the two alternatives is expected to be larger than for the other pricing options. Given this large perceived difference in prices (generated by option B), we expect the lower-priced alternative to gain greater choice share than in the other price ending options. Based on the above, we hypothesize that in the context of considering two viable alternatives: HI: Combinations of just-below and round prices that maximize (minimize) leftmost digit differences between lower- and higher-priced alternatives will enhance the likelihood that consumers will select the lower- (higher-) priced alternative.

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TABLE 2

JOURNAL OF CONSUMER RESEARCH

PRICE ENDING COMBINATIONS AND LEFT-DIGIT DIFFERENCES Lower-priced item ($) 2,00 1,99 1,99 2,00 Higher-priced item ($) Difference in leftmost digits ($) Leftmost digit difference {%)

Price-ending options A, Round and just-below combination B, Just-beiow and round combination C, Just-below pricing D, Round pricing

2,99 3,00 2,99 3,00

0 200 100 50

Based on maximal underestimation of left digits for each price, this percentage represents the difference in price from the lower- and higher-priced items. For example, condition B was calculated as follows: ( 3 - 1)/1 = 200%,

STUDY 1 Method
In total, 442 undergraduate business students were randomly assigned to one of four price conditions. Price combinations were associated with two pens and included the following sets of lower- and higher-priced items: $2,00 and $2,99 (round and just-below combination); $1,99 and $3,00 (just-below and round combination); $2,00 and $3,00 (round pricing); and $1,99 and $2,99 (just-below pricing). In each condition, participants were provided with a picture, description, and a price for "Pen A" and "Pen B," Pen A, the lower-priced alternative, was presented to the left of Pen B, and the bulleted description stated "fat rubber grip," "black ink," and "retractable and refillable," The picture of Pen B was similar to that of Pen A, but its higher price was justified by a slightly more refined design and the bulleted list stating "wide," "double-layered grip," "well balanced," "black ink," "retractable and refillable," The pricing of the pens was the only factor that differed between the four conditions. The presentation of the prices gave emphasis to the leftmost digit such that the cents were presented in a superscript format as is often done in retail settings (e,g,, $2''), The experimental task was completed electronically in a lab environment with no more than 10 participants in each session. The participants were simultaneously shown the two pens with associated descriptions and prices and asked to "assume that you are in the process of buying a pen and you have narrowed your choice to the two pens shown below," The choice measure was presented below the stimuli and asked participants to indicate which pen they would buy.

($1,99 and $2,99) and round ($2,00 and $3,00) pricing conditions {p > ,8), with 70,2% and 69,3%, respectively, choosing the lower-priced pen. Past research has shown that price endings can influence the purchase incidence of a given product (Anderson and Simester 2003; Schindler and Kibarian 1996); however, to the best of our knowledge, the current research is the first study to illustrate the effects of price endings on choice between products. As demonstrated, combinations of justbelow and round prices between alternatives can be used to reduce or increase the differences between the leftmost digits in a price and to shift choice toward lower- or higher-priced alternatives. For instance, the choice share of the lower-priced pen was increased from 55,8% in the $2,00 and $2,99 condition to a much larger 81,7% in the $1,99 and $3,00 condition. Next, we examine whether, under certain conditions, just-below versus round pricing have differential effects on choice,

EFFECTS OF JUST-BELOW AND ROUND PRICING ON CHOICE

While in study 1 we found no difference in choice shares between the just-below and round pricing conditions (i,e,, price ending options C and D in table 2), under some conditions these pricing formats are expected to have differential effects on choice. Consider a choice between two alternatives priced at either $29,99 and $39,99 or $30,00 and $40,00, For both price ending options, the leftmost digit of the lower-priced item is $10,00 less than that of the higher-priced option. In comparison to the round pricing alternative, however, the leftmost digits in the just-below pricing option are both one digit lower, and, accordingly, both of these prices may be encoded at lower levels than the round prices. With complete underestimation of the justbelow prices (i,e encoding at $20,00 and $30,00), the higher-priced alternative would be perceived as representing a 50% increase in price over that of the lower-priced option (($30-$20)/$20), In contrast, the round pricing, which does not involve underestimation, would lead the $40,00 alternative to be perceived as 33% higher than the $30,00 option (($40-$30)/$30), Thus, just-below pricing may lead to relatively large perceived price differences between alternatives if prices are encoded at lower levels than round pricing. This perspective is consistent with reference dependency

Results and Discussion

Chi-square tests were used to assess differences in pen choices across the conditions. Presenting the lower-priced pen with a round ending and the higher-priced pen with a justbelow ending (i,e,, $2,00 and $2,99) resulted in a lower proportion of participants selecting the lower-priced pen (55,8%) than in the other three conditions {p < ,05), Furthermore, the highest share for the lower-priced pen (81,7%) occurred in the condition in which the difference between the leftmost price digits was the greatest (i,e,, $1,99 and $3,00; p< ,05), With this combination of results, hypothesis 1 was fully supported. Pen choice did not differ across the just-below

PRICE ENDINGS AND CHOICE

331 likely to be recognized and to impact choice when attention to price surpasses a threshold. We consider two buying contexts (price levels and shopping goals), which impact the cognitive resources devoted to processing price information and are therefore expected to moderate the effect of justbelow versus round pricing on choice. When the prices under consideration are low and the potential for savings associated with purchasing the lowerpriced option is minimal, consumers will be less inclined to focus their attention on prices and potential savings (Monroe 1973). In contrast, buying contexts involving higher product prices (e.g., more than one digit to the left of the decimal point) will accentuate the financial risk inherent in product selection. Under these riskier conditions, consumers will be more motivated to process price information and to give consideration to the amount that can be saved by purchasing a lower-priced alternative. Certain shopping goals are also expected to affect the degree to which consumers attend to prices. Studies by Wakefield and Inman (2003) support this position by demonstrating that social (vs. private) shopping contexts reduce attention directed toward prices. Following from these findings, we anticipate that shopping contexts that involve strong social motivations, such as selecting an item for a close friend, shift consumer focus away from price and possible savings and toward other relationship-based factors such as the symbolism of the gift, the giver-recipient relationship, and reciprocity (Cheai 1986; Sherry 1983). In order for just-below and round pricing to affect choice, buying contexts must involve price levels and shopping goals that lead to sufficient consideration of price and potential savings. In study 2a, we vary product prices (Iower vs. higher levels) and shopping goals (buying a memento for a close friend vs. an acquaintance), and in study 2b, price levels are manipulated within the shopping context of buying a product for oneself. We expect the price ending format (just-below vs. round) to impact product choice when price levels are relatively high and when the shopping goal entails buying for oneself or an acquaintance versus a close friend. Based on the preceding, we hypothesize the following:

theory and related psychophysics of price research showing that the psychological utility gained from a price difference is inversely associated with product prices (Grewal and Marmorstein 1994; Grewal, Monroe, and Krishnan 1998; Kahneman and Tversky 1984; Lindsey-Mullikin and Grewal 2006). As a result, consumers are more motivated to save a given amount (such as $10.00) when the price range is relatively low (e.g., $20.00 to $30.00) as compared to high (e.g., $30.00 to $40.00). Consistent with this perspective, research has shown, for example, that consumers engage in less prepurchase search for high-priced durahle products hecause potential savings are viewed relative to the overall magnitude of the purchase (Grewal and Marmorstein 1994). Thus, in some purchase contexts, despite the constant difference in leftmost digits ($10.00) hetween just-below ($29.99 and $39.99) and round ($30.00 and $40.00) pricing, the relatively low left-digit reference points associated with just-below pricing are expected to enhance the perceived price difference between alternatives. As perceived price differences increase, consumer deliberation about the monetary sacrifice associated with the decision is also expected to increase (Nagle and Holden 1995). Monetary sacrifice deliberation, as refiected in Monroe's (2003) conceptualization of perceived value, is the degree to which consumers reflect upon the amount they will be spending when evaluating product value and making a purchase decision. Accordingly, this variable reflects the degree to which pricesensitive thinking occurs during product choice. As shown in figure 1, we propose that, when price endings increase perceived price differences, monetary sacrifice deliberation will increase, which in tum shifts choice share toward the lower-priced option. Just-below and round price ending formats are unlikely to differentially affect choice in all buying contexts (as exemplified by the results of study 1). Research has shown that price differences are most impactful when consumers focus their attention on price (Lichtenstein, Ridgway, and Netemeyer 1993). Similarly, perceived price differences between just-below and round price ending formats are more

FIGURE 1 CONCEPTUAL MODEL

Price Ending Options: A. Round and Just-Below B. Ju.st-Below and Round C. Just-Below D. Round

Price Information Processing: Perceived Price Difference Monetary Sacrifie Deliberation

Choice: Change in Share of Lower- and HigherPriced Options

Buying Contexts: Price Level Shopping Goals

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TABLE 3

JOURNAL OF CONSUMER RESEARCH

CHOICE SHARES AND PERCEIVED PRICE DIFFERENCE (STUDY 2A) Choosing lowerpriced memento (%) 75.0 50.0 52.7 41.5 18.0 21.6 12.2 2.1 Monetary sacrifice deliberation" 7.02 5,96 5.71 5.42 4.70 5.76 4.80 3,70 (2.20) (2.31) (2.46) (2.73) (2.51) (2.64) (2.77) (2.36)

Price level Higher

Shopping goal Gift for acquaintance Gift for friend

Price-ending condition Just-below Round Just-below Round Just-below Round Just-below Round

Pricing stimuli ($) 29.99/39.99 30.00/40.00 29.99/39.99 30.00/40.00 2.99/3.99 3.00/4.00 2.99/3.99 3,00/4.00

Perceived price difference" 10.12 7.69 8.93 8.42 5.36 5.35 4.67 3.91 (3.74) (3.64) (3.74) (3.81) (3.48) (2.96) (3.02) (2.51)

Lower

Gift for acquaintance Gift for friend

"Means with standard deviations in parentheses.

H2:

In buying contexts wherein consumers attend to prices and assign importance to potential savings between product alternatives, relative to round pricing, just-below pricing will result in greater choice shares for lower-priced alternatives. In buying contexts wherein consumers attend to prices atid assign importance to potential savings between product alternatives, the effect of price endings on choice is mediated by perceived price differences and subsequently, monetary sacrifice deliberations.

H3:

questions assessed the perceived difference between the prices of the two alternatives. The first asked participants to judge the prices assigned to item 1 and item 2 on a scale anchored by "very similar" (1) and "very different" (9). The second item asked for judgments of the degree to which the price of item 2 was higher than item 1 on scales anchored by "a little higher" (1) and "much higher" (9). These two items were summed (r = ,72). In assessing monetary sacrifice deliberation, participants indicated their agreement on a scale anchored by "strongly disagree" (1) and "strongly agree" (9) regarding the statement, "when deciding between item 1 and item 2,1 was primarily thinking about how much I was spending."

STUDY 2A Method
A total of 409 undergraduate business students were randomly assigned to the conditions of a 2 (price endings: justbelow vs. round) x 2 (price level: lower vs, higher) x 2 (shopping goal: gift for acquaintance vs. friend) betweensubjects design. The experimental task involved selecting between two gifts. For the lower-priced conditions, the justbelow ($2.99 and $3.99) and round ($3.00 and $4.00) prices involved a modest expense relative to the higher-price-level conditions (respectively, $29.99 and $39.99 vs. $30.00 and $40.00). The task was completed in small groups in a laboratory environment. Participants were instructed to assume that they were on break from school and had traveled to another region of the country. The shopping goal was manipulated by asking participants to assume that they were shopping and decided to buy a memento for either "an acquaintance" or "a good friend who has been generous in the past." The final part of the scenario asked participants to assume that they had decided between two items that are "very similar, but one is a little nicer and more expensive." Following this statement, the prices were presented next to the labels "item 1 " for the lower-priced alternative and "item 2" for the higher-priced option. A choice measure required participants to make a check mark to indicate whether they would buy item 1 or 2. Two

Results and Discussion

Our analyses involved assessing the moderating effects of buying context (hypothesis 2) and then testing the mediating effects of price differences and monetary sacrifice deliberation (hypothesis 3). A logistic regression model allowed us to examine the interactive effects of the three experimental factors (i.e., price ending, price level, shopping goal) on choice; the model was significant (x^(7) = 104.21, /7< ,001). The only significant main effect was price level { = 3.49, Wald = 11.05, p < .001), such that participants in the higher-price-level condition were more likely to select the lower-priced gift. For each condition, the percentage of participants selecting the lower-priced option is shown in table 3. The main effect of price level was qualified by a significant three-way interaction (x^(l) = 5.07, p = .02). Consistent with hypothesis 2, the effect of price endings on choice was limited to certain buying contexts. In particular, when the price level was higher and the shopping goal involved buying for an acquaintance, a larger percentage of participants in the just-below condition (75%) selected the lower-priced gift than in the round pricing condition (50%; ;^^(1) = 6,82, p = .01). When prices were at the lower level or when the shopping goal involved buying for a friend, the price endings manipulation had no effect on choice {p> .1). Next, we tested whether the effect of price endings on choice was mediated by perceived price differences and.

PRICE ENDINGS AND CHOICE

TABLE 4 CHOICE SHARES AND PERCEIVED PRICE DIFFERENCE (STUDY 2B) Choosing lowerpriced memento (%) 56.8 36.9 21.2 23.5 Monetary sacrifice deliberation" 6.61 5.86 5.19 5.81 (2.29) (2.33) (2.65) (2.29)

333

Price level Higher Lower

Shopping goal Gift for self Gift for self

Price-ending condition Just-beiow Round Just-beiow Round

Pricing stimuli ($) 29.99/39.99 30.00/40.00 2.99/3.99 3.00/4.00

Perceived price difference' 9.39 7.23 5.25 4.52 (3.04) (3.25) (3.24) (2.92)

"Means with standard deviations in parentheses.

subsequently, monetary sacrifice deliberation. Our analysis is limited to the conditions under which price endings affected choice (i.e., higher price level and buying for an acquaintance). To test for the effect of two mediators, we followed the joint significance test outlined by Taylor, MacKinnon, and Tein (2008). This technique tests for a three-path mediated effect (i.e., the effect of an independent variable on a dependent variable through two mediators). Evidence of mediation is produced by estimating three regression equations: (1) (2) (3) where Y is the dependent variable (product choice), X is the independent variable (the price endings manipulation), M, is the first mediator (perceived price differences), and M2 is the second mediator (monetary sacrifice deliberations). Evidence of mediation is provided if the coefficients associated with three paths (j8,, /j, ft) are significantly nonzero. The first regression model (F(l, 101) = 11.13, p < .001) revealed that perceived price difference between the two products was affected by the price endings manipulation ( = .32, = 3.34, p < .001). A second regression model (F(2,100) = 14.78, p < .001) showed that the monetary sacrifice deliberation mediator was influenced by the perceived price difference mediator ( .44, t = 4.76, p < .001) but not by the price endings manipulation (/? > .1). In a final logistic regression (x^(3) = 58.85, p < .001), the price endings manipulation, perceived price differences, and monetary sacrifice deliberations were included as independent variables with choice as the dependent variable. Choice was influenced by monetary sacrifice deliberations { = -.83,Wald = 22.15, ;?<.001), while the price endings manipulation and perceived price differences had no impact on choice {p> .1). This pattern of results supports hypothesis 3. In study 1, price endings influenced choice for combinations of price endings (e.g., $2.99 and $4.00), but we found no evidence for the effect of just-below (e.g., $2.99 and $3.99) and round (e.g., $3.00 and $4.00) price endings on choice. The combined price ending conditions of study

1 (e.g., $2.99 and $4.00) were more likely to have manifested differences in choice since these combinations decrease or increase the gap between leftmost digits of products' prices. The current experiment extends the study of left-digit effects into multiple digits and indicates that, while actual differences in the leftmost digits of product prices remain constant, just-below and round pricing (subject to certain boundary conditions) can also influence choice. Study 1 involved buying a product for oneself, while the current study involved a gift-giving scenario. To insure that the effect of price endings on choice generalizes to nongift-giving contexts, we conducted study 2b. This experiment involved essentially the same methodology as in the current study, with the one exception being the context of buying for oneself (vs. an acquaintance or friend). Similar to when buying for an acquaintance, when given the shopping goal of buying for oneself, consumers are expected to process the price information carefully enough that perceptual differences across price ending conditions will be recognized and influential. This additional study also allows us the opportunity to retest the proposed mediating processes.

STUDY 2B Method
A sample of 329 business undergraduates was randomly assigned to the conditions of a 2 (price endings: just-below vs. round) x 2 (price level: lower vs. higher) between-subjects design. The prices were the same as in study 2a. All other methodological characteristics were identical to the previous study except that participants were asked to assume that they had decided to buy a memento for themselves.

Results and Discussion

The potential interactive effect of the manipulations on choice (as predicted in hypothesis 2) was examined using logistic regression. The overall model was significant (x^(3) = 28.34, p<.001). Main effects of price level ( = -.65, Wald = 3.49, p = .06) and price endings ( = .81, Wald 6.46, p = .01) were qualified by an interaction between these factors i = -.937, Wald = 3.58, p = .058). For each condition, the percentage of participants selecting the lowerpriced option is shown in table 4. Across the lower-price-

334 level conditions, the price endings manipulation had no effect on choice ip> .1). At the higher-price level, the price endings manipulation had a significant (x^(l) = 6.55,p .01) effect on choice, vk^ith 56.8% of participants in the just-below condition and 36.9% in the round-pricing condition selecting the lower-priced memento. Thus, consistent with hypothesis 2, when prices were at the higher level, the just-below pricing condition resulted in disproportionate choice of the lowerpriced alternative. Using the procedures outlined in study 2a for testing three-path mediated effects (Taylor et al. 2008), we tested for the mediation effects of perceived price differences and monetary sacrifice deliberation. As in study 2a, we limit our analysis to conditions under which price endings affected choice (i.e., the higher-price level). The initial regression model (F(l, 164) = 19.60, p < .001) demonstrated that perceived price differences were affected by the price endings manipulation i = - . 3 3 , t = 4.43, p < .001). The second regression model (f (2, 162) = 14.94,/? < .001) showed that monetary sacrifice deliberation was influenced by perceived price differences (j3 = .38, t = 4.98, p < .001) but not by the price endings manipulation ip> .1). The final logistic model (x^(3) = 102.78, p < .001) regressed product choice on the price endings manipulation, perceived price differences, and monetary sacrifice deliberations. Choice was influenced by monetary sacrifice deliberations (jS = -.97, Wald = 38.26, p < .001), while the price endings manipulation and perceived price differences did not influence product choice ip> .1). This pattern of results supports the three-path mediation model as predicted in hypothesis 3. It is worth noting the nonsignificant effect of price endings on monetary sacrifice deliberations in the second regression model; this finding (also found in study 2a) counters a possible alternate image-based mechanism for our findings. In particular, this nonsignificant path runs counter to the explanation that the just-below (vs. round) pricing condition creates a low-price image that primes monetary sacrifice deliberation, which in turn increases the likelihood of the selection of lower-priced options. Findings of this study are consistent with study 1, wherein, at low-price levels and personal-buying contexts, there was no difference between the just-below ($1.99 and $2.99) and round ($2.00 and $3.00) pricing conditions. At the higherprice levels, the current study replicates the effect of (justbelow vs. round) price endings on choice (found in study 2a) and corroborates the three-path mediating process.

JOURNAL OF CONSUMER RESEARCH

GENERAL DISCUSSION
This article extends price-endings research into the context of selecting between products at the point of purchase. The results of three experiments, across a variety of contexts, support our proposition that price endings and associated left-digit effects can impact consumers' choices between products. In study 1, we found that choice share of a lowerpriced alternative was maximized when it had a just-below price (i.e., $1.99) and the higher-priced alternative had a round price (i.e., $3.00). Also in study 1, we demonstrated

that price endings that minimized the difference in the leftmost digits of the prices (i.e., $2.00 and $2.99) produced the largest share for the higher-priced alternative as compared to all other price-ending options. Results from studies 2a and 2b supported our expectation that just-below pricing (e.g., $29.99 and $39.99) can lead to greater choice share for lower-priced items than round pricing (e.g., $30.00 and $40.00). In study 2a, price endings interacted with the magnitude of prices and shopping goals to influence choice. When participants focused attention on product prices and potential savings, as was the case when buying a relatively expensive gift for an acquaintance, justbelow (relative to round) pricing shifted share toward the lower-priced option. We found that this effect on choice was mediated by perceived price difference and, subsequently, monetary sacrifice deliberation. Results of study 2b (in the context of selecting an item for oneself) replicated the findings of study 2a. Retailers of all varieties (e.g., catalog, Intemet, bricksand-mortar, service providers), as well as other organizations (e.g., business-to-business firms), may benefit from the insights provided by the current research. In many instances, price setters may be able to enhance revenues and profits by implementing small changes in prices (e.g., plus or minus 1 cent) such that the likelihood of customers purchasing higher-priced options is improved. For other price setters, especially those with lower-priced, high-margin products (such as retailers with store brands), profits may be improved by using price endings that enhance the perceptual differences between alternatives and in turn shift share toward lower-priced items. Nonprofit motivations may also exist for shifting choice toward higher-priced alternatives that are less damaging to the environment (e.g., biofuels) or have positive health consequences (e.g., organic foods). Laboratory and field-based research is clearly needed to assess the potential for such left-digit effects in a variety of contexts and to examine the potential moderating role of individual difference variables (e.g., price consciousness, need for cognition), situational factors (e.g., cognitive capacity, time compression, other shopping goals), and product-level factors (e.g., hedonic vs. utilitarian products). Each of these constructs may moderate the effects identified in the current research as they help determine the degree to which consumers carefully process price information at the point of purchase. In future research, contexts might also be created in which consumers attend to, and have interest in, the gap between product prices and therefore left-digit effects are possible, yet larger perceived price differences created by price endings have the effect of shifting choice toward the higher- versus lower-priced option (i.e., the opposite of what is found in the current studies). This might occur with product categories wherein price is used by consumers as a signal of quality and buying situations in which obtaining high-quality product is a priority. The magnitude of leftmost digits might also moderate leftdigit effects on choice. When leftmost digits are high, such as five through nine, perceptual changes in price differences

PRICE ENDINGS AND CHOICE are likely to diminish. Consider products priced at $70,00 and $90,00, In this instance, the left digit in the price of the more expensive item is 29% greater than that of the less expensive item. Changing to just-below pricing ($69,99 and $89,99) does not greatly magnify the price difference when it is calculated on the basis of the leftmost digits ((86)/6 = 33%), Thus, we expect that hypothesis 2 is most applicable to situations where the leftmost digits in the product prices of interest are less than five. Future research directed at this issue would be valuable. The current research could also serve as a basis for predictions regarding more complex sets of product alternatives and associated prices. For instance, consider competing alternatives priced at $2,70, $3,00, and $4,00, How might choice shares differ if these prices were adjusted down by 1 cent to $2,69, $2,99, and $3,99? Gaining further understanding of how such small changes in price can have potentially substantial effects on consumer choice is noteworthy, given the salience of price in consumers' decisions and the frequency in which consumers find themselves deciding between viable alternatives. In many instances, one penny might make a difference in nudging the consumer in one direction or the other,

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