[Pricing Nugget #020] Prices You Like Like Yourself

Have you ever seen a price, and the first thought that popped up in your mind was:

I love this price…

…and I don't know why?

Today we will look into what drives your love for a specific price that works unconsciously.

Let us find out.

Research shows that people like to be reminded of something pleasant, and usually, they like themselves, so they like to be reminded of themselves.

Once reminded of themselves, what happens now?

They attribute these positive feelings of being reminded of themselves to the subjects and objects that remind them. And therefore, people like to be reminded of themselves and like the objects and subjects that remind them a bit more.

This effect is called implicit egotism.

And believe it or not, implicit egotism has a tremendous impact on actual life decisions.

Let's look at those that implicit egotism affects.

The first decision that implicit egotism affects is the decision of where to live.

Researchers analyze census data and they found that Mildreds are more likely to live in Milwaukee because both words start with the same letter.

So, Milwaukee reminds Mildred of her name and herself, and therefore Midwood chooses to live in Milwaukee.

Similarly,

• Virginia lives in Virginia Beach.
• Jack decides to live in Jacksonville, and
• Philip decides to live in Philadelphia. 

Okay, you might wonder, hmm, maybe it's the other way around. Maybe Mildred was born in Milwaukee, and Milwaukee made her parents think about a name that resembles Milwaukee. Thereby, the parents got triggered to name their baby after Milwaukee. So, they gave her the name Mildred.

This could be a kind of reverse causality. However, the researchers confirmed these findings also with surnames, and they ruled out the alternative explanation of naming kids after the city where they live.

Implicit egotism affects where to live, but what else?

It also affects which profession to choose. 

Researchers found that people whose names start with “Den” like Denis for males and Denise for females, were more likely to become dentists because the profession of dentist reminds them of themselves.

Therefore, Denis and Denise attribute more positive feelings towards this profession and decide to become dentists.

But what else?

Maybe the most obvious one. Implicit egotism also helps you to decide whom to marry.

Researchers found that people are more likely to marry someone who shares the same letters of their surname, meaning reminding them of themselves.

They like to be reminded of themselves and they attribute these positive feelings to their counterpart. In the end, they decide to marry – after reminding each other.

Why is that important for pricing?

Researchers did a study on implicit egotism in pricing.

In this study, they secretly got the birthday of the participants in the experiment.

Then the participants saw a pasta dinner advertisement that would come with an additional sales tax.

In the US prices are usually without sales taxes so any kind of odd prices is not suspicious to customers.

Then the researchers included the birthday number in the price. For customers born on April 16th, for example, the price became $39.16.

The birthday date became the decimal in the price, and they randomly assigned participants to either a birthday-number matching price or not to a birthday-number matching price.

The researchers found that participants had a greater purchase intention of buying this pasta dinner voucher when the prize matched the customer’s birthday.

Therefore, this effect is called the birthday number effect in pricing.

The price reminds the customer of themselves. They like the object (in this case the price) that reminds them a bit more. Implicit egotism in full play.

Therefore, they are more likely to buy this product.

What does it mean for us as a retailer?

You could use the birthday dates in your database to send out individualized promotions.

You individualize the promotion by curating a set of items – for example, that share a similar level of customers’ likelihood to buy. And for this curated set of items – or for a subset –, you could change the price to the birthday date, maybe in the decimals or in the digits.

Or you could use the birth date to send out a specific promotional discount. If somebody is born on April 16th, you might give out a discount of sixteen percent.

Customers might recognize unconsciously their birthday, they like the promotion and they might convert better.

As a customer...

 you should become suspicious if suddenly a retailer asks you to give your birthday