California Management Review
California Management Review is a premier academic management journal published at UC Berkeley
by Jorge Pena Marin, Ellen Lahn, and G. Tomas M. Hult
Image Credit | SpicyTruffel
Numbers are ubiquitous in the data-driven market of today: prices, discounts, product features, consumer reviews, and more. Although numbers are sometimes seen as objective and simple signs of magnitude, the way numerical information is presented can significantly impact consumers’ decision-making and purchase behaviors. Consequently, company managers need to understand these numerical differences to effectively connect with consumers.
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“The Social Psychology of Design Thinking” by Leigh Thompson and David Schonthal. CMR Vol. 62, No. 2, 2020.
Based on state-of-the-art research, we focus on four key areas where numerical presentation impacts consumer behavior and companies’ marketing strategy-making. As a broad overview:
By considering the uniqueness of these four numerical areas, managers can uncover and develop strategies that drive business success. For example, developing company-specific knowledge and skills that incorporate these numerical nuances into decision-making, marketing strategies, and actionable marketing programs that ultimately resonate with consumers on both rational and/or emotional levels, as applicable, can both organically grow a company’s market share and positively engage with consumers. The bottom line is that such fine-grained numerical integration in strategy-making can turn simple numerical consumer choices into a difference-maker between a company’s marketplace success and missed market opportunities.
Numbers can be presented to consumers with differing degrees of precision. A watch can be priced at $200 (a round number) or $199.99 (a precise number). A vehicle’s fuel efficiency can be promoted as “30 miles per gallon” (round) or “29.7 miles per gallon” (precise). Likewise, a smartphone might have a battery life of “33 hours” (round) or “29.85 hours” (precise). In salary negotiations, an annual offer might be presented as “$100,000” (round) or “$100,250” (precise). Or a service provider might provide a quote or estimate of $400 (round) versus $409 (precise). These are just a few examples of how ubiquitous numbers are in the marketplace, and while the differences between these numbers may seem trivial, numerical precision influences how consumers process information and make decisions.
Round product and service prices (e.g., $200) compared to precise prices (e.g., $199.99) tend to be processed more fluently and encourage reliance on feelings, leading consumers to make decisions based on emotions. This effect is particularly effective for hedonic products, such as luxury items or gifts. Conversely, precise prices (e.g., $199.99) prompt analytical thinking, leading consumers to process information and rely more on cognitions.
In addition, precise numbers signal specificity and can enhance perceptions of transparency and fairness, making them suitable for utilitarian products where consumers seek value (e.g., quality for the price paid) and functionality. On the other hand, when used in health messages, round numbers intensify emotional responses, increasing the likelihood of consumers engaging in preventive health-related behaviors such as vaccinations or healthy eating.
In the context of two-stage decisions, consumers prefer round numbers when creating a consideration set because they seek efficiency; round numbers are easier to process. At the later stage of the customer journey, consumers prefer precise numbers when making a final purchase choice since, at that time, they seek accuracy. This dynamic points to the fact that pricing precision should be adjusted based on the customer journey stage and the consumer’s goal (efficiency versus accuracy). Regardless of the stage in the customer journey, there are other occasions in which consumers might seek these two goals. For instance, for high-stakes decisions, when accuracy is important, it is advantageous to use precise numbers to reflect product attributes. For low-stakes consumer decisions, when efficiency might be the consumer goal, it is useful to use easier-to-process-round numbers.
Another relevant area where the interplay of consumers’ motivations and numerical precision plays a critical role is negotiations. Offering a round price ($30,000) when negotiating for a vehicle, for example, increases the likelihood of the deal being closed compared to offering a precise offer ($30,121). This occurs because round numbers represent completion, so indicating that the negotiator has attained their objective renders the offer more attractive to recipients. Thus, marketers should use round numbers when aiming for immediate acceptance, such as in salary offers or sales negotiations.
As strategic takeaways, marketing managers should align product pricing and attribute information with consumers’ motivation. Round prices appeal to consumers’ emotions which can be beneficial when pricing experiential or luxury products. Precise pricing encourages analytical evaluation by consumers and fits better with functional or necessity items. Companies should use round numbers in early marketing communications to simplify choices. Precise numbers should be used closer to the point of purchase to enhance perceived accuracy. Finally, companies should use initial precise prices when the goal is to reduce the negotiated amount and switch to round offers when the goal is to close the deal.
When it comes to numerical estimates or forecasts, precision also plays an important signaling role in shaping consumers’ expectations of confidence and trust in the company and its brands. Precise numerical information for a brand is perceived as a cue by current and potential consumers to the communicator’s confidence and expertise (e.g., company managers, salespeople, frontline service personnel). Therefore, higher numerical precision might help to enhance credibility and persuade consumers.
However, if an estimate turns out to be incorrect, imprecise numbers (e.g., “about 400”) lead to higher trust and consumer loyalty compared to precise numbers (e.g., “409”), even if the imprecise estimate is less accurate. This happens because precise estimates set higher accuracy expectations, and if wrong, they can erode trust. In other words, consumers expect that a precise estimate ($409) will be closer to the final price than a round estimate ($400).
As strategic takeaways, marketing managers should use imprecise numbers when there is uncertainty to maintain trust and avoid disappointing consumers since precise estimates will set higher (perhaps unachievable) expectations. However, when the goal is to convey authority and credibility, precise numbers might be advisable. Further, using precise numbers for unfamiliar products can help to enhance their perceived reliability, leading to a higher likelihood of purchase. This effect occurs because higher numerical precision signals that the company has thoroughly measured and validated the product’s performance.
The consumer’s ease of processing numerical (e.g., pricing) information is referred to as processing fluency. When numerical information is easily understood, it can improve consumers’ attitudes and purchase intentions. Numerical processing fluency can be influenced by factors such as familiarity with numbers and the use of prominent numbers.
Consumers typically find it easier to process numbers that are the result of common mathematical operations, such as addition (e.g., 10 + 10 = 20) and multiplication (e.g., 5 × 5 = 25). This ease of processing leads to liking and preference. A promotional price for a bundle of $25 ($20 + $5) may be more attractive than a promotional price of $24 ($20 + $4) since the numbers included in the bundle conform to a common addition.
A similar effect occurs when the numerical elements in a price promotion form familiar patterns or multiples. For example, offering a “Buy One Get One Free” deal on items priced at $50 each adds to a total value of $100, which is a prominent and easily processed number. Such an approach is likely to increase consumers’ purchase intentions, even if the economic value is similar to a less fluently processed deal.
In other circumstances, consumers may be under time pressure or strain, and in these cases, they are more inclined to rely on easily available “prominent” numbers (i.e., 5, 10, 50, or 100). Prominent numbers also demand less cognitive effort to be handled. A hurried consumer would strategically prefer that a product is priced at $100 over one costing $97.85 since the round price of $100 is more easily understood.
As strategic takeaways, marketing managers should use product prices as well as design price promotions that use numbers that are easy to compute or recognize (e.g., round numbers or familiar multiples). Further, managers may prefer using simplified numerical information when the consumers are likely to be stressed since prominent numbers tend to facilitate quick decision-making. However, marketing managers need to balance the benefits of processing fluency with those of numerical precision. Precise numbers can convey accuracy and confidence, but these numbers can also reduce processing fluency if they are not easily recognized or computed.
Numbers are more than just quantitative symbols; they also carry qualitative meanings that impact consumers’ decision-making. Prices containing numbers with “small” phonemes (sounds produced with less vocal effort) lead consumers to perceive discounts as larger. For example, a price of $7.77 might be perceived as a better deal than $7.66 due to the repetitive, softer sounds in “seven seventy-seven”.
Including commas and cents in product prices also affects how they are encoded. Prices that take longer to pronounce (e.g., $1,599.00 versus $1599) are perceived as higher in magnitude because the syllabic length impacts the auditory representation, which in turn influences magnitude perceptions. Thus, marketers may want to use numbers whose length convey the desired perception of value. Numbers with softer sounds or fewer syllables can enhance the attractiveness of prices and discounts. Also, presenting prices without unnecessary commas or decimal points can make them seem smaller and more appealing.
Round numbers also activate associations related to stability and increase perceived length of product benefits. Product characteristics described in round (vs. precise) numbers are perceived as performing for a longer time, and this effect is driven by a symbolic association between round numbers and stability. For instance, a 100 vs. 102 mg caffeine drink is perceived as providing longer-lasting energy, and a battery advertised to last “10 hours” may be perceived as lasting longer than one lasting “10.1 hours.”
Numbers also carry gendered meanings. Precise numbers are perceived as more masculine while round numbers are viewed as more feminine. These “masculine” and “feminine” perceptions affect product evaluations and can influence marketing effectiveness. For instance, a luxury car marketed with a precise engine power of “403 horsepower” may appeal more to male consumers due to the masculine association with numerical precision. Conversely, a beauty product promoted with “100 hours of hydration” (a round number) might resonate more with female consumers. Additionally, consumers perceive items with lower serial numbers as closer to the creator and imbued with greater value – a phenomenon termed temporal contagion (e.g., owning the first print in a series of 100 feels more special than owning the 50th print).
As strategic takeaways, using round numbers might help to highlight lasting product benefits, and managers can modify the level of numerical precision in marketing communications to align with the product’s gender positioning and target audience. And when it comes to limited editions, it is preferable to emphasize lower serial numbers to tap into consumers’ desire for uniqueness and connection to the creator.
Knowing these strategic takeaways will help managers create plans that appeal to customers on an emotional as well as rational levels. Marketers can better engage their consumers, connect with them, and ultimately reach company objectives by matching numerical precision with consumer motivation, improving processing fluency, and leveraging symbolic associations. The difference between a successful product or service and an influential marketing campaign on the one hand and a missed opportunity on the other may hinge on something as simple as the numbers you choose.
