Earlier, it was assumed that companies use this marketing strategy for some tax issues.
When a retailer of a company prices a product at Rs 99 instead of Rs 100, the customer is made to believe that the product is cheaper.
If you give a closer look at the price tags of a majority of products, you will find that most of the costs end with the number 9 or 99. Be it buying an outfit, a watch, some furniture, or any other product for that matter, the price tag often bears the number 9 or 99 in the end. Have you ever given a thought to the reason behind this?
Earlier, it was assumed that companies use this marketing scheme for some tax issues. But later, it was revealed that this practice of keeping the numbers 9 and 99, in the end, is to attract more customers. It’s a psychological aspect to lure a buyer. This specific type of technique is termed the placebo effect in psychology.
The placebo effect kicks in when suppose a person is going through a rough patch in his life making him feel troubled. At that vulnerable moment when someone else tells the person that their condition is far better than others, who are in worse situations, then the person’s mood is likely to be elevated. They will start thinking that their condition is a little better than others. Although the person’s ongoing problem will not be solved, they will be satisfied with the feeling.
In terms of pricing, the placebo effect works when retailers attach a hefty price to a product but make it look attractive to the consumers. This creates a perception in the buyer’s mind that the specific product performs better than the exact same product with a discount. When a retailer prices a product at Rs 99 instead of Rs 100, the customer is made to believe that the product is cheaper, more precisely less than Rs 100.
When an item costs Rs 200, the buyer thinks that they are purchasing the product in the line of Rs 100. What’s more, the consumer pays close attention to the first few digits. If they see that a product costs Rs 999, they will automatically create a picture in their mind that they are buying it for less than Rs 1,000, discarding the 1 rupee deduction.
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