Price discounts are one of the most used promotional tools by retailers, but the field of psychological pricing suggests that the presentation of numbers may be critical in determining how the total price or discount is interpreted by customers. A common example is expressing a price after a discount at just below a whole number, such as $19.99 rather than $20.00. However, as consumers become savvier this discount strategy is increasingly perceived as a trick, which has resulted in recent pricing research finding that percentage-off formats are more effective at increasing purchase intentions.

It has been observed that Chinese consumers respond more favourably to the inclusion of the number eight in the price promotion. Culturally, the number has traditional associations with prosperity, due to similarities in the pronunciation of the number “eight” (ba) in Chinese to “to be rich” (fa) and “to be lucky” (fu).

Research shows that eight is the most frequent digit incorporated at the end of prices in Shanghai, in contrast to the numbers five and nine in western markets. Pre-packaged products, such as tennis balls, sell better in units of eight than ten in mainland China. Research in Taiwan even shows that consumers will pay a higher price for products that incorporate the number, purchasing portable radios in greater numbers at NT$888, than at the lower NT$777.

Research into this pricing phenomenon has so far only explored the perspective of superstition, reflecting the traditional view of eight as a lucky number. However, eight has grown to represent more than just a superstitious belief in fortune, evolving into a cultural icon with symbolic and emotional implications.

This may make eight an important part of pricing strategies for destination retailers seeking to target Chinese tourists, given that past research has shown that cultural symbols create a “halo effect” increasing perceptions of a store’s friendliness towards tourists and generating a positive emotional state that supports purchase intention.

Methodology

Two studies investigated the impacts of the use of the number eight in price promotions targeting Chinese tourists. The first study (N=274) recruited Chinese adults via online panel who were intending to travel to Western countries within the next 12 months. Participants imagined themselves traveling in a Western country and were presented with a sales promotion at a gift shop (pay 88%, vs take 12% off, vs pay 85%, vs take 15% off).

In the second study (N=283) Chinese adults with similar selection criteria were asked to imagine themselves traveling in a western country. They were then presented with a sales promotion at a gift shop (pay 88%, vs take 12% off) that was either run by a Western owner or a Chinese owner.

Key findings

1. Chinese tourists responded more favourably towards a discount of “pay 88%” than “take 12% off”.
   
   
2. This was not the result of the presentation effect of a larger number vs a smaller one, as these tourists did not respond differently to “pay 85%” vs “take 15% off”.
   
   
3. Chinese tourists felt that destination retailers that incorporated the 88% price promotion had greater acknowledgement of Chinese culture and experienced higher positive emotional responses to the discount, which in turn lead to higher gift purchase intentions and positive attitudes towards the shop.
   
   
4. This effect was only present when the retailer was a Westerner however, when the retailer was Chinese these effects disappeared. This suggests that the preferences for the number eight in price promotions are associated with cultural recognition, rather than superstitious significance.

Recommendations

This research shows that the number eight has more than just connotations with wealth and luck for Chinese tourists, it represents an acknowledgement of Chinese culture. As a cultural symbol, the use of the number eight in price promotions (such as pay 88%) can make these tourists feel welcomed and valued, increasing gift purchase intentions. This is a particularly powerful effect given that past research has shown that Chinese consumers are increasingly favouring products that emphasize Chinese elements, reflecting a growing pride in Chinese culture.

Similarly to how Western tourists react favourably to attempts to reduce cultural distance when traveling (such as English menus, western amenities, ect), Chinese tourists respond positively to the incorporation of Chinese cultural symbols such as the number eight. This effect will only work when the retailer is a Westerner recognising Chinese culture however, when the retailer is Chinese the presentation effect of the number eight disappears. This suggests that Chinese tourists may already feel recognised by Chinese retailers, and these retailers may have to rely on other techniques to boost purchase intention.

Access the research here: https://eprints.qut.edu.au/200022/

Contact the researchers here:

Dr Di Wang   di.wang@qut.edu.au