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a price in whole pounds rather than a combination of pounds and pence
'Almost one in five products sold for a round pound in an Asda campaign are more expensive than they were five months ago, research has revealed …'Belfast Telegraph 4th August 2009
'Last month Asda chief merchandising officer Darren Blackhurst told The Grocer that round-pound pricing worked because consumers believed that prices were reduced to £1, not increased.'Cumberland News 8th August 2009
Ridiculous but true – a product priced at £3.99, on first glance, definitely feels 'cheaper' than something priced at £4.00, even though the difference between the two is of course negligible – just a tiny penny! We're all familiar with this concept, which has been a feature of our high street shopping for decades. It's in fact an established marketing practice known as psychological pricing, i.e. a method of manipulating the psychological impact of prices so that they seem more palatable to customers. In the current economic climate however, it appears that some retailers are bucking this conventional trend and opting to price their goods more straightforwardly with the round pound.
fiddling about with a single penny change is a nuisance and not even cost-effective if you consider the time wasted whilst waiting for it to be handed over
The expression round pound simply refers to a price in pounds only, rather than pounds and pence. In recent months in the UK, it has become increasingly commonplace, especially as an aggressive marketing tactic (psychological pricing) in major British supermarkets. With cash-strapped customers turning to discount retailers like Aldi and Lidl, supermarkets such as Tesco and Asda needed to respond, and so adopted the round pound approach, promoting a range of groceries and household goods for just £1.
Marketing analysts also suggest other reasons for the rising popularity of the round pound. One is simply convenience, both for customers and retailers. Fiddling about with a single penny change is a nuisance – and not even cost-effective if you consider the time wasted whilst waiting for it to be handed over, or when opening and shutting the till. Another, bizarrely, is a kind of psychological pricing in reverse: consumers see 99(p) and might consider it a bigger number than a round £1 (in fact 100p), so may actually feel like they are spending less! On the other hand, customers who are more wary of marketing tricks might believe that a round pound price reflects more transparent business practices, and this gives a positive perception of the retailer – possibly beneficial when competing for custom in these turbulent economic times.
The expression round pound is a simple compositional creation, using round as an adjective in the sense defined in the Macmillan Dictionary Online as '… given as a whole number or a number ending in zero.' Its road to popular use also benefits from what linguists refer to as assonance (repetition of vowel sounds). The term often occurs as a modifier to another noun, and is sometimes hyphenated in this position, e.g. round-pound sales, round-pound pricing, etc.
Though only recently hitting the spotlight because of changing marketing strategies, this is in fact not the first time the phrase round pound has been used. When the British one pound coin was introduced in April 1983, it was given the nickname round pound (i.e. round in the sense 'circular'), but the usage never stuck.
Psychological pricing is sometimes alternatively referred to as odd pricing, because prices are a little less than a round number (e.g. $3.95, £4.99), though not necessarily mathematically odd (e.g. £6.98).
Read last week's BuzzWord. How the economic recession and the credit crunch have given us crunch creep.
This article was first published on 2nd September 2009.