Pricing Strategies and Consumer Perception

Lauren from BrainStuff explores why many prices end in 9, known as charm pricing. Two main theories are discussed: the rounding off theory, where consumers focus on the first digit and round down, and the bargain signaling theory, where odd prices suggest a good deal. Studies show that prices ending in 9 can increase demand, even if it contradicts rational economics. The video concludes by inviting viewers to share their thoughts and subscribe.

What is another term for 'charm prices'?

• Regular prices

• Wholesale prices

• Discount prices

• Odd prices

According to the rounding off theory, what do shoppers tend to focus on in a price?

• The total amount

• The first digits

• The decimal point

• The last digit

In the 2005 study, what did shoppers overestimate when prices ended in 99 cents?

• The quality of the products

• Their spending power

• The number of stores

• The total cost

What does the bargain signaling theory suggest about odd prices?

• They are used for luxury items

• They are confusing to shoppers

• They indicate premium quality

• They imply a special deal

Why might a price like $5.98 make shoppers think they are getting a good deal?

• It is higher than expected

• It is a round number

• It is a common price point

• It seems very specific

What was the effect of raising the price of a dress from $34 to $39 in the 2003 study?

• Demand stayed the same

• Demand fluctuated

• Demand decreased

• Demand increased

What happened when the price of the dress was raised to $44?

• Demand stayed the same

• Demand increased further

• Demand fluctuated

• Demand decreased

Which theory does the increase in demand for the $39 dress support?

• Rounding off theory

• Bargain signaling theory

• Economic theory

• Price elasticity theory

What might explain our tendency to buy items priced at $9.99?

• Both rounding down and bargain signaling

• We round down to the nearest dollar

• We think it indicates a bargain

• Neither rounding down nor bargain signaling

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