Getting the most for a penny: How retailers can best use left-digit effects

Gustavo Schneider, Taehoon Park and Abhijit Guha

Journal of Retailing, 2025, vol. 101, issue 2, 217-226

Abstract: When designing price promotions, many retailers employ left-digit effects (i.e., when the price is reduced, it changes the leftmost digit of the price). While left-digit effects can influence consumer evaluations, there is little work that examines for which (i) segments of consumers, or (ii) types of managerially relevant display elements are left-digit changes more effective. This paper builds from the insight that the left-digit effect is a heuristic and then—building from work on heuristics—uses multiple studies to examine individual differences and contextual factors that can enhance the effectiveness of price promotions involving left-digit changes. This paper examines an important substantive domain—price promotions—and proposes contributions to both theory and practice by showing that left-digit effects are stronger (i) for consumer segments that rely more on their feelings when making decisions, (ii) when the retail signage induces arousal, and (iii) when retail signage does not indicate the actual percentage discount. Put another way, noting that left-digit effects can be triggered by merely changing prices by a penny or so, this paper outlines how retailers can “get the most for that penny.”

Keywords: Behavioral pricing; Price promotions; Heuristics; Left-digit effects (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022435925000089
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jouret:v:101:y:2025:i:2:p:217-226

DOI: 10.1016/j.jretai.2025.02.002

Access Statistics for this article

Journal of Retailing is currently edited by A. Roggeveen

More articles in Journal of Retailing from Elsevier
Bibliographic data for series maintained by Catherine Liu ().