November 19, 2009
International Marketing
Week 6
Simmons & Schindler
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Tendencies to favour the number 8 and avoid the number 4
Multinational firms must understand the beliefs, attitudes and
perceptions that characterize Chinese consumers (Yan, 1994)
Article will examine the digits used in advertising prices; particularly
“ending digits” of prices
o Starting digit or leftmost digit tends to be constrained by costs and
necessary profit margins
o Without strong economic determinants, managers’ decisions on
price endings become particularly sensitive to noneconomic
factors (cultural beliefs, attitudes, and perceptions)
Superstition in the Chinese Marketplace
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Fundamental cultural value that distinguishes Chinese culture from
Western culture is perception of humans’ relation to nature (Kluckhohn
and Strodtbeck, 1961: 13)
o No real separation between human activities, nature and
supernatural
Western cultures (especially USA) follow mastery-over-nature position
Chinese believe in “feng shui” which affects people’s daily lives (Emmons,
1992)
o Focus is on the flow of energy
Numerous Chinese superstitions:
o Mirrors used to reflect bad luck and put on doors and windows
o Forks to break the reflection of others’ mirrors
o Fok dzi: Chinese for “good luck”
Spill over of Chinese superstition into the marketplace and affects
consumers and managers (Leung, 1996; Simmons and Munch, 1996)
o Taiwanese car sales decrease more than 30% from August 28 to
September 15 because of “ghost month” and Chinese pay respects
to ancestors or those who are unhappy return and make things
difficult for the living (The Economist 1993)
o Owners of small shops touch everything in the store with a large
denomination bill to let things “know” they should be sold before
opening
o Geomancers called in to check the buildings/offices to make sure
they’re facing the right direction to satisfy the wind and water
spirits
o Feng shui followed even in number of guests, courses and
placement of people in business-related banquets
Superstition and Price-Ending Choice
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Predominance of prices ending in 9 in the US market because consumers
tend to “round down” or otherwise ignore one or more of the numbers to
the right of the first number
November 19, 2009
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Numbers 8 and 4 have evaluative connotations that may affect their use in
prices (Lip, 1992: 21, 31)
o Number 8 associated with good luck and prosperity
o Number 4 associated with death; not as related to pricing more
than other contexts but has widespread effects
o Number 9 can be interpreted to mean “longness” but not
considered relevant in commerce
Traditional meanings of digits influences managers’ choices of arbitrary
price digits used in advertising directed at Chinese consumers
Hypothesis
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Previous studies in US about price endings in print adverts are almost
always represented by the last single digit of the advertised price
o Problem in Chinese context is that because of relatively low value
of currency units, numbers almost always end in 0 (e.g. ￥450,000)
o Assuming that a price’s ending digit non-zero digit is the most
important to consumers than the zeros following on the end, then
using rightmost non-zero number is similar to using single
rightmost digit to represent price ending
o When there are no non-zeros among a price’s ending digits, 0 is the
best representation of ending digit
o Use the price’s rightmost prominent ending digit as one-digit
representation of price ending in Chinese price advertising
o Example: 8 in ￥6,800 or 5 in ￥265,000; for ￥70,000 0 is the
prominent ending digit
Observation of rightmost prominent ending digits of prices in Chineselanguage print advertising gives us indication of superstition’s impact on
Chinese marketplace by marking occurrences of 8 and 4
Hypothesis 1: Predict overrepresentation of 8 among rightmost salient
ending digits in advertised prices (with respect to chance)
Hypothesis 2: Predict digit 4 is underrepresented among those rightmost
prominent ending digits that are not overrepresented (excluding 8 and
with respect to chance)
More expensive items targeted to the more affluent segments of Chinese
market; consumers are likely to be more educated and less influenced by
traditional Chinese superstition
Hypothesis 3: Predict that overrepresentation of 8 and
underrepresentation of 4 are more pronounced in lower-priced items
than higher-priced
Method
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Advertisements from newspapers from a variety of Chinese communities
that are likely to differ in beliefs about the strength of number meanings
and importance of cultural superstition
o Shanghai, Hong Kong and Taiwan
o Advertisements selected by individuals that were unaware of the
purpose of the study
o Total sample of 499 advertised prices
November 19, 2009
Results
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8 most commonly occurring rightmost salient ending digit from prices in
the sample and provide strong support for hypothesis 1
1 and 4 underrepresented and thus provides support for hypothesis 2
Consistency Across Price-Ending Representations
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Previously argued that rightmost salient digit is most comparable to one
used in previous price-ending studies
However, other price-ending representations are possible:
o Another plausible one-digit representation of a price ending is the
single rightmost digit for 2 and 3 digit prices and 3rd digit from the
left for all prices of 4 + digits
Using the above price-ending measure still shows that 8 occurs more
often than chance would predict and 4 is underrepresented among digits
excluding 0, 5, 8 and 9 which are considered overrepresented
Furthermore, if all ideas of 1-digit price endings are dropped and all
ending digits are tallied, 8 still occurs more than chance would predict
and 4 occurs less than chance would predict
Consistency Across Communities
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In each community, digit 8 occurred among the rightmost prominent
ending digits
In each of the 3 communities, digit 4 occurred infrequently
Support given for hypotheses across communities as well
Comparison of High- and Low-Priced Items
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Classified as higher or lower price according to the median
o Shanghai: 2,300 Yuan
o Hong Kong: $165,000 HKD
o Taiwan: $2,450,000 NT
No significant difference in incident of number 4 in higher and lower
priced items
Two groups did differ for number 8 though: higher-priced items had
prices ending in 8 33.2% of the time and lower-priced items ended in 8
46.6% of the time; higher priced items have less overrepresentation of
the number 8
Discussion
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Superstitious meanings attached to certain digits correspond to the
ending digits of advertised prices
o Price endings overrepresented the digit 8 in Chinese advertising
(almost 4 times more frequent than chance predicted)
o Price endings underrepresented the digit 4 (still underrepresented
even though excluded the overrepresented numbers)
o Both results consistent across different price-ending measures and
across 3 communities (Shanghai, Hong Kong and Taiwan)
November 19, 2009
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Results show that superstition influences the Chinese marketplace and
price endings
Prices in USA show preference for number 9 and does not show that
superstitious beliefs are taken into consideration
o However, number 13 which is meant to be bad luck in American
culture is not underrepresented in US price endings
Above supports the idea that it’s the respect for superstitious beliefs, not
just a lack of superstitious digit meanings in the US, which are the cultural
difference
Implications and Further Research
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Suggests value of using the number 8 and avoiding number 4 when
advertising to Chinese consumers
Cho and colleagues (1999): advertisements that reflect local cultural
practices are more persuasive than those that ignore them
Number 8’s less overrepresentation in high-priced items could be due to
different reasons: less significant role of superstition due to greater
perceived risk of these products or because the beliefs and values of more
affluent segments of the Chinese market are different
Further research could be done on the overrepresentation of the number
5 and the underrepresentation of the number 1 among price endings in
Chinese advertising (doesn’t appear to be because of superstition) and is
also present in US price advertising
o Might be because number 5 is a mid-point in the decimal system
o Underrepresentation of number 1 could be because tendency for
endings to lead consumers to perceive that a bit extra has been
added to the price
Phenomena derives from basic human mental processes and despite the
support for designing price endings for only cultural differences, also
evidence for marketing universals