How Stores Trick You Into Buying More ThingsArticles . Blog
How do we decide what to buy? This should be an easy question. We buy dozens of things each week. Groceries. Dinner. Cars. Shirts. Companies have a stockpile of tricks to make us buy more than we want and for more than we’re initially willing to pay. Shoppers have a strong preference toward a very specific price: zero. We love with getting free stuff. In his famous study of the so-called Zero-Price Effect, the behavioral scientist Dan Ariely presented participants with Amazon gift cards worth $10 and $20. He gave them two options: would you like a $20 gift card for $7 Or a $10 card for free? The former is technically 30% more
valuable. But the latter was more popular. The word “free” is like a skeleton key into our brains, opening our psychology up to all sorts of terrible deals. Maybe that’s why a majority of online retailers say the most effective marketing tool is “free shipping.” But free shipping, is rarely actually free. You have to spend above a certain threshold. You get free shipping after $35 at Walmart, $50 at REI, and $100 at Nordstrom. But the Zero-Price Effect says that we pay more attention to that “F-word” than to the actual price. It’d be nice to imagine that shoppers think for themselves. But in reality, we love following directions. In school cafeterias, scientists have found that shining an extra light on a basket of fruit makes students more likely to eat the fruit. Adults are equally susceptible to simplistic cues. For example, restaurants find that the highest-margin products are appetizers for the table, alcohol, and desserts. So guess what sort of items restaurants put in boxes on the menus? Take a look at the menu from the upscale New York restaurant, Balthazar. The boxes are reserved for super expensive drinks, breads for the table, and a post-dinner assiette de fromage. This isn’t just restaurants. Retailers do the same thing, putting their highest-margin products where their shoppers are most likely to look. You know those displays at the end of grocery store aisles? They’re called endcaps. Retail consulting companies advise their clients to stock them with only the highest-grossing, highest-margin products— like seasonal specials, like
Halloween candy and pumpkin-and-gourd themed merchandise. The lesson: Be careful with your attention. Gone is the age of one price. This is the age of personalized pricing. There is no more brilliant price manipulator
than Amazon. The site identifies its most popular products, cuts those prices, and then raises prices on less popular goods. For example, it might cut prices on popular flat-screen TVs while raising prices on the routers, cables, and other suggested Add-Ons. Amazon creates the illusion that it’s
the cheapest place to shop, while cleverly finding ways to make its shoppers spend more money. People thought the internet would usher in this new age of transparency for pricing. But really, it’s just given retailers new ways to manipulate the same fundamental bias: People don’t know what anything is worth. We need clues. And stores control the clues we see. Retailers are like the wicked witch, leaving breadcrumbs for Hansel and Gretel that just happen to lead straight to her house. Don’t fall for these tricks. Leave the breadcrumbs on the ground.
Written by Valentin Lakin
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