As we discussed in the last article, we are at war with ourselves when it comes to our purchasing decisions. We often fluctuate between the emotional pull of making purchases like the desire to live up to a preconceived image we have about what our lives should look like, or keeping up with our friends and neighbors, and the logical pull of wanting to make objective and informed spending decisions that will lead us to being more financially secure. As if those internal battles aren’t challenging enough, we are also at war with forces outside of ourselves which put our financial stability at risk.
Advertising executives understand human tendencies very well, and they are quite skilled at using that understanding to their advantage through marketing tricks designed to make us want to part with our money and spend it on their goods. It is important for us to learn about marketing tricks and gain a greater understanding of the impact they can have on our financial decisions if we are going to be able to overcome them and make wise spending choices.
We are more effective when we possess a greater understanding, as knowledge is a powerful tool. At least, most of the time. But marketing tricks are—well, tricky. Even when we are aware of their existence and purpose, our human fallacies still allow us to succumb to them from time to time. Our goal should be to at least be armed with knowledge. Then, if we choose to ignore that knowledge and purchase an item anyway, that is fine, as long as we own our choice and acknowledge our role in making our independent decision, whether it turns out to be good or bad.
This article will attempt to increase your understanding of some of the most common marketing tricks businesses utilize to get us to purchase their goods.
Mild Tricks
- The instant markdown
Businesses are no longer waiting for holidays or specific dates to have big sales. On any given day, you may find your email inbox flooded with advertisements of special markdowns for a random limited amount of time. These markdowns are usually shown with a certain percent discount below the manufacturer’s suggested retail price. This usually reflects the lowest price a retailer is willing to go at the time while still being able to make a profit. This marketing trick is often referred to as “anchoring.” The retailer shows you the highest amount you should expect to spend first, which makes any other offer (percent discount) seem like a wonderful deal compared to the full ticket price.
Decoy pricing
If you were given a choice to buy a small portion of French fries from a food truck for $3 or a large portion for $9, chances are you would probably buy the small size. But decoy pricing throws a wrench into your decision-making process. It encourages consumers to buy items that generate higher profits by inserting another option for the sole purpose of steering them toward the more expensive item, making it seem like it is a good deal in comparison. If we go back to our French fry example, let’s say we add a medium size and price it at $7. By inserting the pricing decoy, the food truck doesn’t expect to sell a lot of the medium size, but they do expect to sell more of the large size because people will think since the large is only a little bit more, they should buy it because it is the best deal.
- The expensive meal no one buys on the menu
Fine restaurants often use this technique in which they have one really expensive option on their menu. This isn’t done in the hopes that many people will buy the item, but by having a really pricey item on the menu, it makes everything else seem like a good deal by comparison.
- Urgency
This is a marketing trick retailers often employ when they say that the offer is only available for a limited amount of time, or that there is only a limited number left to purchase. This creates a sense of urgency in the buyer that makes them think they may miss out on a good thing if they don’t immediately decide to purchase it. Retailers know that if consumers leave their establishment or webpage without making the purchase, there is a greater likelihood that they may decide they don’t really want or need the item, and they will ultimately not purchase it. By creating a feeling of urgency, businesses increase the likelihood that a sale will be made.
- Shopping maze
This marketing trick refers to the layout of the store or shopping center. It is often set up in such a way that it encourages customers to either get lost or distracted so that they not only purchase the original item they intended, but are also tempted to make additional purchases along the way. The goal of stores is to always encourage impulse shopping.
- Odd prices
Retailers use this marketing strategy so often that we may no longer recognize it. They set their prices at $9.99 instead of $10.00 or $24.95 instead of $25.00 because they understand that it is human nature to think that an item is cheaper when it is just below the next whole dollar. We tend to round the price down in our mind, thinking that an item that is $9.99 feels closer to nine dollars than ten. When consumers believe an item is even a little cheaper, they are more likely to purchase it.
Buy one get one
This marketing trick is often one of the most powerful tools that businesses have. They know that people love the idea that they are getting something for free. This often leads customers to purchase more items than they originally intended, which allows retailers to sell more goods. This makes them willing to cut their profit margin down because they expect that they will be multiplying it by selling more items. Another benefit to retailers is that the item that is free must be of equal or lesser value, so people often spend more on an item than they intended in order to get what they perceive to be a good deal.
