Wednesday, 19 Dec 2018
How Do Retailers use Psychology Against You?
By Private Therapy Clinic
Take for example anchoring. Anchoring is a technique that allows retailers to sell their goods at high prices while convincing customers that they are paying low prices. Anchoring works by identifying items as normally costing a certain amount and saying that now they cost less. For instance, let’s say that your child longs for this year’s must-have doll. You find it in the shop with a label that says “£50 discounted from £75.” It looks as though you’re getting a bargain, so without looking into it more, you buy the doll and take it home.
Christmas shopping for the family can be quite fraught at the best of times. Everyone wants to get their family members gifts that they will really love. It is an expensive time of the year that is often made a great deal worse by sales techniques that are morally dubious at best, illegal at worst. So how do retailers use psychology against us?
Research shows that most people are extremely vulnerable to this sort of sales technique. In the 1970s, Tversky and Kahneman found out that if they span a wheel of fortune and then asked people to estimate a percentage for a random question, their answers tended to reflect whether the wheel of fortune had stopped at a high or a low number.
What’s interesting is that the “anchoring” effect works on people even when it has been explained to them and they understand what is going on! Confronted with the “discounted” doll, they tell themselves that they know it’s a scam, but they still overestimate the value of the item on the basis of the “original”higher sales price.
While this technique is used across the board for all sorts of things on sale, from small items to big-ticket numbers such as houses, some societies have tried to minimise its impact by legislating for it, making it difficult or illegal to fraudulently mark things up before “discounting” them.
If you’re still doing your Christmas shopping, how can you guarantee that you are not getting ripped off? The answer lies in investing a little time in research. Before you go out to the shop, look online to see what items like your desired purchases are going for. Don’t buy gifts in the first shop you wander into. Be very wary of shops that seem to have item son sale at “discounted” rates all or much of the time. Remember that every retailer is there to make money, and if the law permits (and sometimes even if it doesn’t) they will do what it takes to make as much money as they can. Be wary, too, of taking up offers to pay for things in instalments. Even if they are notionally discounted at the point of sale, how much are you going to end up spending in interest and other fees? Finally, while by all means you should try to get the people you love gifts they will cherish, don’t fall into the trap of conflating a high price with your love for the recipient. What really matters is that gifts are thoughtful and meaningful to you both; the price-tag should be the least important thing.
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