We are all consumers and we all fall for at least one of the traps below. It’s shocking to discover how we are being manipulated into spending more by big brands.
1) “Bait and switch” products
“Bait and switch” products are products that are unlikely to sell because of their high price. On the other hand, more affordable products placed next to them have a better chance of being sold. In effect, the more expensive “bait and switch” product was never intended to sell -it’s just there to encourage you to buy the other one! Riddle me that.
For example, in the electrical department:
There is a bread machine on sale for €279 that is not selling.
Therefore, the manager decides to place another larger, more expensive bread machine beside it for €429.
And guess what?? The more expensive machine never sells, while the “cheaper” one suddenly sells out! And why? €279 suddenly seems like a bargain!
2) The effect of snobbery, or the “Veblen Effect”
On the other hand, there are people who are attracted by high prices. Paying high prices for their purchases affirms their social status and gives them the feeling that they have bought something of quality, which is not necessarily the case. This is known as the Veblan Effect, which we find with deluxe products like high end watches, designer clothes, jewellery or electronics.
This type of consumer is well known by the large stores, who don’t hesitate to inflate their margins to the max, to give customers the idea that they have bought something that few others could afford, thus adding to their social status.
For example, with Rolex watches:
The demand for Rolex watches only exploded when the brand decided to increase their prices. For the consumer, the price is a sign of the value of a product.
3) Mid-range products
We the consumers have a tendency to avoid the cheapest products, for fear that they will be of poor quality, or simply just be bad for our image! However, neither do we buy the most expensive product (except for those of us affected by the Veblan effect above). And businesses have a very good understanding of the buyer’s mentality! As a result, if the shops want to target one particular product, they put it at a mid-range price.
For example: 3 choices of beer
William Poundstone wrote a book called Priceless, in which he details a study on the psychology of consumers. In one experiment, he offered a choice of beers -one for €2.50; the other for €1.80. 80% of consumers went for the more expensive beer, at €2.50. Next, he added a third choice of beer, at €1.60. In this group, 80% of consumers went for the beer for €1.80! The other 20% chose the most expensive beer. To finish off, he withdrew the beer for €1.60, and replaced it for a beer for €3.40. This time, the majority of consumers opted for the mid-range price beer for €2.50. This study showed that very few people choose the cheapest option, and 10% of consumers choose the most expensive. The rest of the consumers go for the intermediate price, and buy the mid-range product.
4) The magic number
Have you ever spotted how prices that finish with 99 cents (for example, nine euro ninety nine), make you think that the product is cheaper, because it doesn’t go over a certain limit? For example, a product isn’t €20, it’s only €19.99! The consumer therefore sees the product as a something for 19 euros, and therefore less expensive. Numerous studies have shown that products with prices that end in a ‘9’ have a 24% higher chance of being sold, compared to other prices.
For example: a study on sales catalogues
During one study, a sales catalogue was printed in three different versions. Only the price of one particular product was changed in each catalogue: €34 in one, €39 in another and €44 in the third. The results: The catalogue offering the product for €39 was the most successful and had the highest number of sales.
5) The discount effect
source : flickr
The very best ways of manipulating consumers are sales, reductions, and crossed out prices. Very often consumers will buy something at a reduced price just because it is in a sale!
For example: crossed out prices in clothing shops
Take a top priced at €150. The shop wants to liquidate its stock. Therefore, it will cross out the price of €150 on the price tag and add the new price of €90. Consumers will be attracted by the ‘bargain’ and find the offer irresistable!
- Main illustration: Chaîne YouTube : La vie en rose