Psychobiology of Price Presentation: An Experimental Analysis of Restaurant Menus

Abstract

In the hospitality field, pricing research is mostly limited to economic implications of pricing decisions (yield management), choices in pricing practices, and reference pricing. Price presentation and its impact on consumer preference, however, is another aspect of pricing research that has not been as well developed. The current study makes an effort to fill this gap through an interdisciplinary study of price presentation drawing from the fields of biology, psychology, marketing and hospitality management. The obtained results demonstrated that the method of price presentation has a significant effect on overall consumer preference and the perceptions of quality and value. Furthermore, the results also indicated that the degree of this effect could vary within the industry depending on the nature of a segment: fine dining, casual dining, and quick service. The impact of price presentation, left versus right, on consumer preference was found to be significant in fine dining and quick-service segments but to a lesser extent in the casual-dining segment. The follow-up focus group studies revealed that in consumer decision-making process, price is used more as a selective factor than as a qualifying factor. These results may be considered valuable in making price presentation decisions in the restaurant industry.

Keywords

psychology restaurants price price presentation menu pricing psychological pricing marketing

Get full access to this article

View all access options for this article.

References

Anand, P. , Holbrook, M. B. ,& Stephens, D. (1988, December). The formation of affective judgments: The cognitive affective model versus the independence hypothesis. Journal of Consumer Research, 15, 386-391.

Coulter, K. S. (2001, November). The influence of print advertisement organization on odd-ending price underestimation. Paper presented at the Annual Pricing Conference, Fordham University, New York.

Dehaene, S. (1995). Attention, automaticity, and levels of representation in number processing. Journal of Experimental Psychology: Learning, Memory and Cognition, 21(2), 314-326.

Ellis, A. W. ,& Miller, D. (1981, May). Left and wrong in adverts: Neuropsychological correlates of aesthetic preference. British Journal of Psychology, 72, 225-229.

Estelami, H. (2001, November). An exploratory study of the effects of price presentation tactics on evaluation efforts and accuracy in multi-dimensional prices. Paper presented at the Annual Pricing Conference, Fordham University, New York.

Freistad, M. , & Wright, P. (1994). The persuasion knowledge model: How people cope with persuasion attempts. Journal of Consumer Research, 21(1), 1-31.

Friedman, A. ,& Polson, M. C. (1981, October). Hemisphere as independent resource systems: Limited-capacity processing and cerebral specialization. Journal of Experimental Psychology: Human Perceptions and Performance, 7, 1031-1058.

Goldberg, M. F. (1992). The world book encyclopedia(vol. 6, pp. 468-472). Chicago: World Book, Inc.

Hayes, D. ,& Huffmann, L. (1995). Value pricing: Howlowcan you go? Cornell Hotel and Restaurant Quarterly, 36(1), 51-56.

10.

Houston, P. J. (1981). Fundamentals of learning and memory(3rd ed.). New York: Harcourt Brace Jovanovich.

11.

Janiszewski, C. (1988, September). Preconscious processing effects: The independence of attitude formation and conscious thought. Journal of Consumer Research, 15, 199-209.

12.

Kinsbourne, M. (1973). The control of attention by interaction between the cerebral hemispheres. In S. Kornblum (Ed.), Attention and performance IV. New York: Academic Press.

13.

Kotler, P. , Bowen, J. , & Makens, J. (1999). Marketing for hospitality and tourism. Upper Saddle River, NJ: Prentice Hall.

14.

Kreul, L. M. (1982). Magic numbers: Psychological aspects of menu price. Cornell Hotel and Restaurant Quarterly, 23(2), 70-75.

15.

Lewis, R. C. , & Shoemaker, S. (1997). Price sensitivity measurement. Cornell Hotel and Restaurant Quarterly, 38(2), 44-54.

16.

Malhotra, N. K. (1992). Marketing research: An applied presentation(pp. 694-708). Upper Saddle River, NJ: Prentice Hall.

17.

Marieb, E. N. (1991). Human anatomy and physiology(2nd ed.). Redwood City, CA: Benjamin/Cummings.

18.

Monroe, K. (1990). Pricing: Making profitable decision. New York: McGraw.

19.

Monroe, K. B. ,& Lee, A. Y. (1999). Remembering versus knowing: Buyers'processing of price information. Journal of Academy of Marketing Science, 27(2), 207-225.

20.

Nagle, T. T. ,& Holden, R. K. (1995). The strategy and tactics of pricing: A guide to profitable decision making(2nd ed.). Englewood Cliffs, NJ: Prentice-Hall.

21.

Naipaul, S. , & Parsa, H. G. (2001). Price endings as communication cues, and consumer response behavior: A study of the restaurant industry. Cornell Hotel and Restaurant Quarterly, 42(1), 26-37.

22.

Narasimhan, C. (1984). Comments on “economic foundations for pricing”. Journal of Business, 57(1), 27-34.

23.

QSR: And the winner is.... (2002, October). QSR Magazine, 44, 41-59.

24.

Reynolds, J. H. , & Houston, J. P. (1964). Rehearsal strategies and the primacy effect in serial learning. Psychonomic Science, 1(9), 279-280.

25.

Rundus, D. (1971). Analysis of free processes in free recall. Journal of Experimental Psychology, 89, 63-77.

26.

Schindler, R. M. , & Warren, L. S. (1988). Effect of odd pricing on choice of items from a menu. Advances in Consumer Research, 15(1), 348-353.

27.

Siegel, A. F. (1997). Practical business statistics. New York: Irwin-McGraw-Hill.

28.

Wright, P. (1985). Schemer schema: Consumers' intuitive theories about marketers' influence tactics. In J. L. Richard (Ed.), Advances in consumer research(vol. 13, pp. 1-3). Provo, UT: Association for Consumer Research.

29.

Zeithmal, V. A. (1987). Defining and relating price, perceived quality, and perceived value (Report No. 87-101). Cambridge, MA: Marketing Science Institute.