Understand How to Price Promotions More Effectively

Supermarkets and suppliers know that promotions are a necessary evil. The more informed suppliers and supermarkets know that you can achieve a good return on investment from promotions. One of the ways to achieve this is by understanding the shopper psychology behind pricing promotions.
In this article we’ll share with you the shopper science behind why we make the choices we do when we buy promotions. And how to use that science to change your pricing promotions’ decisions to increase your sales and profit.

1. Pricing Promotions – Position Your Price Marking Bottom Left

The science behind positioning your price marks bottom left is based on two axis; ‘bottom to top’ and ‘left to right’. We conceptualise numbers on a vertical line ‘bottom to top’; small at the bottom and higher at the top. The same is true with numbers on a horizontal line (left to right), with the smaller numbers on the left and the higher numbers on the right. Therefore we believe that a number bottom left must be the smallest.
In the example below the price mark needs to be moved to the left and lower down on the pack. Ideally, to the left of the label.

Beef Ribeye Steak - Pricing Promotions
How to position the price tag right

2. Pricing Promotions – Make the Price Font Size Smaller

You can influence your shopper to perceive the price as ‘smaller’ by reducing the size of the font of the price. This is particularly effective when contrasting it with a larger sized reference price.
This example below shows how NOT to follow this scientific insight into shopper psychology.

Supermarket shelf pricing promotion
reduce the font size of the prize so it appears cheaper


3. Pricing Promotions – Change the First Number

The scientists nickname this ‘charm pricing’. For example, changing £1.89 to £1.88 will make little difference. However changing £2.00 to £1.99 will have a positive effect. The science behind this is that our brains read the first number and anchor the price on that digit. In this case ‘1’, rather than ‘2.
In the example below the ASDA buyer would have had more impact dropping the price to £1.99 (The caveat is round pricing, which can be a corporate guideline, and is discussed in No.5 below).

ASDA website pricing promotion
Changing the price to £1.99 can give a positive effect on buyers

4. Pricing Promotions – Add the Right language Next to the Price

Choosing the language that sits near your price is very important. Research concluded that a price shown with ‘low friction’, and ‘high performance’ were found to impact the shopper’s choice. Words that were congruent with the promotion, e.g. free, low, or reduced, positively influenced the shopper to purchase. Words such as ‘high’ encouraged the shopper not to purchase.
The example below shows the words ‘free’ in the same view as the price. Probably not by design, yet this will still have influenced the shopper to purchase. Using ‘streak free shine’ on the point of sale would have helped further.

Supermarket shelf half price - pricing promotion
Using ‘streak free shine’ on the point of sale would have helped further.

5. Pricing Promotions – Using ‘Roundedness’ Accordingly

This pricing promotion tactic is a game of two halves. Shoppers find that round prices, e.g. £35 are easier to process. More than £34.99. That said, the research also states the opposite to be true. This is because if you use round numbers the shopper believes that the price has been inflated. The key is that if the purchase is emotional, leave out the pence. For emotional purchases use round prices, e.g. ‘£35’ and for non-emotional purchases use specific prices, e.g. ‘£34.99’. An emotional purchase is an iPad, an expensive piece of steak for dinner or wine. A non-emotional purchase is cling film, shower gel, or a frying pan.
In these examples below the research suggests using whole numbers would work better (Maybe not for the vacuum cleaner, unless you get emotional buying one!).

sainsburys black friday deals - pricing promotions tv 40 inches
Using ‘Roundedness’ Accordingly

6. Pricing Promotions – Use Fewer Syllables

Our brain uses more resources to process prices with more syllables. For example, £27.82 is 8 syllables, whereas £28.16 is only 6 syllables. The first price will take more effort to understand. A real life example would be £1.27 – ‘one pound twen-ty sev-en’ – 6 syllables, where as £1.10 is ‘one pound ten – only 3 syllables’.

Pricing promotions use fewer syllables
Use fewer syllables

7. Pricing Promotions – Change the Promotional Price Colour

Highlighting the lower price in another colour will help the shopper perceive a greater numerical difference. This is because you are creating a visual difference from the old price to the new price and therefore creating a greater numerical difference too.
In the example below the ‘£1’ is shown in bold red. A contrast to the original price in black.

ASDA pricing promotions
Change the Promotional Price Colour

Free Download – Category Management Guide

Are You Concerned That You Are Using the Same Promotional Mechanics That You Did Last Year and You Still Have No Idea if They Make Money?
Discover how to design more effective promotional plans that are profitable with a known ROI.
This guide looks at how more effective promotional planning can be applied in today’s UK Supermarkets. It will provide you with new approaches, fresh thinking and thought provocation to ensure you keep ahead of your competitors. With 7 pragmatic tips, you can take away and use today.
Click the image below to open:

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Category Management Guide

Sources of Research

The research used to identify these shopper insights were:

  • Thomas and Morwitz 2005
  • Coulter, Choi and Monroe 2012
  • Hossain and Morgan 2006
  • Coulter 2002
  • Coukter 2005
  • Wadhwa and Zhang 2005
  • Janiszewski and Uy 2008
  • Dehaene 1992
  • Adaval and Monroe 2002
  • Meier and Robinson 2004
  • Dehaene, Bossini, and Giraux 1991

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