MNeagle
22nd September 2010, 08:05 PM
Bulk discounts, door-buster deals, two-fers, red-tag clearances, members-only events -- sales tactics or legalized pickpocketing? That depends on which side of the cash register you're on.
Even when you're the one leaving the store with a lighter wallet, it's hard to feel like you've been had when you just scored a "Super Saver! Lowest-Price-EVER! Today-Only!" bargain.
But did you really snag a bona fide deal? Or were you just played? The difference between steering your own shopping cart and having it pulled into an irresistible sales pitch is so subtle you may never know.
The science of temptation
Your relations may be good at pushing your buttons, but they're amateurs compared to "consumer/shopper insight specialists." It started with Paco Underhill -- a shaman of shopping behavior -- who in the late 1970s applied the science of city planning to the retail trade. (His best-selling book, Why We Buy: The Science of Shopping, is the playbook for the field.)
Years of studying the hunter-shopper in its natural habitat have enabled these retail anthropologists to play shoppers like chess grand masters. For example, they know:
Which way you'll turn after stepping inside the entrance (to the right).
How to get you to notice a new product (by placing it on the shelf near a preferred brand).
That touching leads to buying (which is why they leave out samples and demo models).
That simply putting a promotional sign announcing a "Bargain Buy!" "Hot Deal!" or "wholesale price" near an item -- but not actually reducing the price at all -- will convince us we're getting a great deal.
Every single detail of your shopping experience -- the placement of every shelf, box, sign, and restroom; the background music; color of paint on the wall; words the staff use to greet you -- is a precisely orchestrated merchant-customer dance designed to achieve maximum sales results.
Deal or no deal? Can you tell the difference?
Even the savviest shoppers can get sucked in by the siren song of shopping, Underhill told Fast Company. "No matter how much smarter or more experienced we have become, there's still something called 'retail magic,' where someone is able to put something out there in a way that makes us fall in love with it and have to have it."
Consider the following five scientifically proven sales tactics. Have you ever been hooked by any of these?
1. Welcome to temptation aisle
You know those Rolexes, designer handbags, and flat-screen TVs displayed near the entrance of every Costco store? Is anyone really going to walk in and buy a watch that costs as much as an economy car on impulse? Probably not. But that's not really why store designers place shiny, fancy stuff in the warehouse store's high-traffic areas.
All those tempting wares are there to trigger the pleasure center of our brain. In other words, we walk into Costco and the shopping high sets in before we've even put anything in our cart. It's a subtle psychological sales trick to lower our spending inhibitions and wine and dine us into reckless spending.
How We Decide author Jonah Lehrer explains how merchandising tricks like these actually alter our brain chemistry -- with the nucleus accumbens (which pumps good-vibe dopamine into our brains) overcoming the insula and prefrontal cortex (which fire up our rational, number-crunching thoughts). "Whichever emotion you feel the most intensely tends to dictate your shopping decisions," he writes.
You might hate yourself in the morning, but the only thing on your mind at that moment is satisfying your covetous consumer desires.
2. Spend more and save! (Or so you think.)
"Free" is a four-letter word that, once planted in our heads, is hard to ignore. The moment our brains register that a bargain can be had -- "Buy 3 and Get 2 for Free!" -- our willpower melts away. We're hooked because, really, it's stupid to pay $3 a bottle for two hand sanitizers when if we buy just one more, we can get two extra bottles for free.
What a deal, right? Not really, says William Poundstone, author of Priceless: The Myth of Fair Value (and How to Take Advantage of It). You just fell for a classic ploy pricing consultants call "nonlinear pricing," whereby the more you buy the less you pay per item.
Most customers walk out the door with five bottles (at $1.80 each instead of $3, of course we do!). The store knows that we will, so it prices that fact into the product before the sale is even announced. "In many cases, the thriftiest shopper can be persuaded to spend more -- all in the name of 'saving money,'" Poundstone writes.
3. New look, same price, more profit!
When a company needs to boost its bottom line, it often uses what pricing expert Rags Srinivasan calls "price realization through creative packaging." In other words, it unveils a "New Look!" to disguise the fact that you're about to pay the old price for less product.
That's because shoppers are more attuned to price increases than product volume decreases. Be particularly wary if the new container is taller than the previous version -- there's visual trickery at work. Changes in height are more perceptible than changes in girth. We'll notice that the newly designed carton of Tropicana is taller, but not that the package is also skinnier (and contains 10% less juice than its predecessor at the same price). In fact, we might even think we're getting more for the money!
4. How much is that Snuggie in the window? Who knows?
The Snuggie, pet rocks, the Segway, Amazon's Kindle -- they're a marketer's dream because there's nothing else out there like them. With no peer products to use for comparison shopping -- or, in the language of pricing pros, no existing "reference price" -- shoppers have no idea if the price is right.
That gives marketers free rein to tell you what the product is worth. They know that once a price is suggested (if it's not too out of whack), it is forever ingrained in our brains that $29.95 is a fair price to pay for an alarmingly unflattering house coat, so when it's marked $19.99 we must be getting a great deal, or at least that's what we've been led to assume.
5. Markdown mania ... these deals are really crazy!
Manipulating pricing perceptions is a robust business -- so much so that companies hire "price consultants" to mess with our math.
Is a $1,049 flat-screen TV marked down to $899 a better deal than the $879 one because it used to cost more? Most people think so; we assume higher price is another way of saying "better quality," Poundstone says.
If you're not convinced that TV is actually a good deal, you will be after you browse a little longer. To get your rational brain to put its guard down, retailers use store signage and other cues to repeatedly assure you (and that guard dog in your brain known as the insula) that, yes, indeed, you are getting an awesome deal.
So relax. Your brain has just been lulled into believing it got a bargain.
Don't buy the hype
Back away from the checkout counter with no regrets -- and a fatter wallet. Here's how:
5 Ways to Stop Buying Stupid Stuff
4 Simple Rules for Supermarket Savings
http://news.yahoo.com/s/fool/20100920/bs_fool_fool/rx66871
Even when you're the one leaving the store with a lighter wallet, it's hard to feel like you've been had when you just scored a "Super Saver! Lowest-Price-EVER! Today-Only!" bargain.
But did you really snag a bona fide deal? Or were you just played? The difference between steering your own shopping cart and having it pulled into an irresistible sales pitch is so subtle you may never know.
The science of temptation
Your relations may be good at pushing your buttons, but they're amateurs compared to "consumer/shopper insight specialists." It started with Paco Underhill -- a shaman of shopping behavior -- who in the late 1970s applied the science of city planning to the retail trade. (His best-selling book, Why We Buy: The Science of Shopping, is the playbook for the field.)
Years of studying the hunter-shopper in its natural habitat have enabled these retail anthropologists to play shoppers like chess grand masters. For example, they know:
Which way you'll turn after stepping inside the entrance (to the right).
How to get you to notice a new product (by placing it on the shelf near a preferred brand).
That touching leads to buying (which is why they leave out samples and demo models).
That simply putting a promotional sign announcing a "Bargain Buy!" "Hot Deal!" or "wholesale price" near an item -- but not actually reducing the price at all -- will convince us we're getting a great deal.
Every single detail of your shopping experience -- the placement of every shelf, box, sign, and restroom; the background music; color of paint on the wall; words the staff use to greet you -- is a precisely orchestrated merchant-customer dance designed to achieve maximum sales results.
Deal or no deal? Can you tell the difference?
Even the savviest shoppers can get sucked in by the siren song of shopping, Underhill told Fast Company. "No matter how much smarter or more experienced we have become, there's still something called 'retail magic,' where someone is able to put something out there in a way that makes us fall in love with it and have to have it."
Consider the following five scientifically proven sales tactics. Have you ever been hooked by any of these?
1. Welcome to temptation aisle
You know those Rolexes, designer handbags, and flat-screen TVs displayed near the entrance of every Costco store? Is anyone really going to walk in and buy a watch that costs as much as an economy car on impulse? Probably not. But that's not really why store designers place shiny, fancy stuff in the warehouse store's high-traffic areas.
All those tempting wares are there to trigger the pleasure center of our brain. In other words, we walk into Costco and the shopping high sets in before we've even put anything in our cart. It's a subtle psychological sales trick to lower our spending inhibitions and wine and dine us into reckless spending.
How We Decide author Jonah Lehrer explains how merchandising tricks like these actually alter our brain chemistry -- with the nucleus accumbens (which pumps good-vibe dopamine into our brains) overcoming the insula and prefrontal cortex (which fire up our rational, number-crunching thoughts). "Whichever emotion you feel the most intensely tends to dictate your shopping decisions," he writes.
You might hate yourself in the morning, but the only thing on your mind at that moment is satisfying your covetous consumer desires.
2. Spend more and save! (Or so you think.)
"Free" is a four-letter word that, once planted in our heads, is hard to ignore. The moment our brains register that a bargain can be had -- "Buy 3 and Get 2 for Free!" -- our willpower melts away. We're hooked because, really, it's stupid to pay $3 a bottle for two hand sanitizers when if we buy just one more, we can get two extra bottles for free.
What a deal, right? Not really, says William Poundstone, author of Priceless: The Myth of Fair Value (and How to Take Advantage of It). You just fell for a classic ploy pricing consultants call "nonlinear pricing," whereby the more you buy the less you pay per item.
Most customers walk out the door with five bottles (at $1.80 each instead of $3, of course we do!). The store knows that we will, so it prices that fact into the product before the sale is even announced. "In many cases, the thriftiest shopper can be persuaded to spend more -- all in the name of 'saving money,'" Poundstone writes.
3. New look, same price, more profit!
When a company needs to boost its bottom line, it often uses what pricing expert Rags Srinivasan calls "price realization through creative packaging." In other words, it unveils a "New Look!" to disguise the fact that you're about to pay the old price for less product.
That's because shoppers are more attuned to price increases than product volume decreases. Be particularly wary if the new container is taller than the previous version -- there's visual trickery at work. Changes in height are more perceptible than changes in girth. We'll notice that the newly designed carton of Tropicana is taller, but not that the package is also skinnier (and contains 10% less juice than its predecessor at the same price). In fact, we might even think we're getting more for the money!
4. How much is that Snuggie in the window? Who knows?
The Snuggie, pet rocks, the Segway, Amazon's Kindle -- they're a marketer's dream because there's nothing else out there like them. With no peer products to use for comparison shopping -- or, in the language of pricing pros, no existing "reference price" -- shoppers have no idea if the price is right.
That gives marketers free rein to tell you what the product is worth. They know that once a price is suggested (if it's not too out of whack), it is forever ingrained in our brains that $29.95 is a fair price to pay for an alarmingly unflattering house coat, so when it's marked $19.99 we must be getting a great deal, or at least that's what we've been led to assume.
5. Markdown mania ... these deals are really crazy!
Manipulating pricing perceptions is a robust business -- so much so that companies hire "price consultants" to mess with our math.
Is a $1,049 flat-screen TV marked down to $899 a better deal than the $879 one because it used to cost more? Most people think so; we assume higher price is another way of saying "better quality," Poundstone says.
If you're not convinced that TV is actually a good deal, you will be after you browse a little longer. To get your rational brain to put its guard down, retailers use store signage and other cues to repeatedly assure you (and that guard dog in your brain known as the insula) that, yes, indeed, you are getting an awesome deal.
So relax. Your brain has just been lulled into believing it got a bargain.
Don't buy the hype
Back away from the checkout counter with no regrets -- and a fatter wallet. Here's how:
5 Ways to Stop Buying Stupid Stuff
4 Simple Rules for Supermarket Savings
http://news.yahoo.com/s/fool/20100920/bs_fool_fool/rx66871