A recent article in the New York Times examined the phenomenon of the 99 cent item. The article cites Robert Schindler, a professor of marketing at the Rutgers School of Business as stating that consumers "percieve a 9-ending price as a round number price with a small amount given back." Steve Jobs, the founder of Apple computer which developed the iPod has leveraged this idea into the sales and downloads of his digital music empire and has, in the process "saved the music industry from oblivion."Historiocally, the invention of the cash register by a Dayton bar owner allowed merchants to "thwart pilfering clerks by charging a penny less than the full dollar amount, thereby forcing cashiers to open the register to give change to the customer."
The chain of '99 Cents Only' stores went public in 1996 and today has 282 outlets and is worth more than half a billion dollars. The last quarter sales were up 8 percent and profits were up 31 percent. Hmmmm.
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