14 June 2020
From the JoinPAY archive. Information reflects the original publication date.
1. Our perception is affected by the price we saw first
You come to a boutique store and see a designer's bag worth $600. This may make you think something like, "600 bucks for a bag?" Anyway, you will be enraged. Having gone farther, you see a gorgeous watch worth $300. It's quite expensive and a watch can cost less! But, as you compare this price to the previous one, you believe $300 is a value price for a watch. Merchandisers often arrange goods in a special way to lead you to a purchase decision.
2. We fear extremes
We don't like to feel ourselves "poor" when we buy the cheapest things. On the other hand, we hate the feeling of being misguided when we purchase the most expensive product which turns out to be of mediocre quality. Retailers exploit this thinking pattern against us—only to sell what they want to sell.
There was a study during which 2 types of beer were presented on the counter. The first, labeled Premium, costed $3 per gallon; the second, labeled Value Offer, costed $1. Eventually, some 80 percent of customers opted for the costlier beverage. Then, the merchandisers introduced another beer type, labeled Super Value Offer, worth $0.8. After that, 80 percent of consumers chose the $1-worth beer, and the rest preferred the $3-worth beverage. Nobody took the cheapest option
The experiment proceeded to the next stage: the $0.8-worth beer was removed, replaced with an Extra Premium 5-dollar option. Most customers opted for the $3-worth beer, few chose the $1-worth beer, and only 10% preferred the most expensive lot.
3. We love stories
Imagine two breadmakers staying close to each other: one is worth $100 and the other $250. Their parameters don't differ too much. The sales of the cheaper one will get skyrocketed while the costlier option will be chosen by few customers. This happens so because we can't perceive the objective value—instead, it seems that we buy a breadmaker at a better—lower—price. A customer who bought a breadmaker would tell their friends that they grabbed it for just $100 while another one, worth a grand $250, was next to it. "Who would be that foolish to buy it?" Nice story.
4. We do what we are told
A curiosity-arousing experiment was carried out in a school. Fruit and salads were put on a highlighted rack—just like candies and other confectionery goods. This trick has prompted children to eat more salads and fruit. This technique can be applied to adults. Experienced dining business owners can compose a menu a in a special way: The meals they want to sell more will be highlighted or accompanied by an attention-grabbing image. So, if you see a very catchy item, keep in mind that the restaurant wants that meal to be sold to you most.
5. We make mistakes while affected by alcohol, fatigue, and other factors
When a person drinks, gets exhausted or stressed, they simplify purchase-related processes. It can be compared to meeting a new person in a bar. You see a handsome man (or pretty girl) but you don't think anything like, "I wonder if he/she is educated enough and morally dependable to be a good person to date with." No, you are likely to think, "Hmm, he/she is cute." This is why snack machines usually await at the exit. Customers are tired and want a bite and something to drink, and grab everything they see, no matter how costly it is. Here's a good tip: if you want to wrap a deal that implies some risk for your partner, make sure to engage some beverages. Or, catch your partner after a stressful day.
6. The Magic 9
We all know this trick with $99 or similar labels. Actually, we all know that $99 is almost equal to $100. We understand it but the Magic 9 still works and we buy a product that entices us with this little psychology-powered offer. Stay alert! Don't persuade yourself the product costs a bit more than 90 dollars. It's actually worth 100!
7. We're too subject to the feeling of fairness
We don't like to be dumbed down and want to be treated decently all the time. But, we don't know the real cost of things and services. Instead, we seek hints from those selling those things and services to us. Dan Ariely, Professor of psychology and behavioral economics, carried out a simple yet illustrative experiment. He announced a poetry night for students. But, he told the one group that the event is paid and the other that they will be paid for attendance. Right before the concert started, it was announced that the even was free and the first group wasn't subject to any fee and the second to any compensation. The students from the first group were pleased to stay as they knew they got something valuable for free. On the other hand, almost all the second-group students left as they felt dragged to the event.
What would be a fair price for a poetic concert hosted by the Professor of Psychology? Students had had no idea. Nobody has. How much should be a shirt worth? How much should a cup of coffee cost? Or car insurance? Who knows? People aren't aware of the true cost. As a result, our brain uses what it can perceive: visual images, hints, emotions, comparisons, relations... The clue is not that customers are weak in math. It's not about math at all.
Why not employ this successful case in all the stores? While the first trick could work for apparel or home appliances stores, the other are appropriate for any. Just like in a jungle, only the one who can adapt to the volatile environment can win the battle for the customer. JoinPay will make sure that you can leverage the same techniques that major chains use! We cherish the idea that small enterprises can challenge the industry's Goliaths. In our turn, we will do our best to help them!
By the way, we love the second trick. This is the exact reason why mid-size popcorn is the bestseller. Do you offer three various-cost milk items? Remember that that too wide choice in a category may kill the sales.