Psychological Pricing in Modern Retailing: The Case of Wine Sector in Hard-Discounter Chains of Russia

Abstract

The main goal of this paper is to show if is possible to find a modern retail chain in one of the world largest economies that uses exclusively psychological pricing, as a dominant competitive advantage, in order to predominantly direct consumer behavior. Pricing, as a source of competitive advantage is the least explained in marketing literature, therefore it is important to contribute and show how psychological pricing is a source of competitive advantage. It could be an evidence to support the firm belief which exists among many retailers that greater than expected demand occurs at psychological price points. We shall analyze different retail chains belonging to so call hard-discounters in Russian Federation using method of observation and choose one sector in order to check the hypothesis. Hard-discounters are chosen since they use pricing strategies as the most important element of marketing program, much more important than products, promotion or sales channels, while Russia has been chosen as the largest growing wine market in the world.
Classification-JEL: D4, L14, M3, M31
Keywords: retail, price, strategy, discounter, positioning