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Why Do Consumers Still Fall for Psychological Pricing?

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We all know what they’re doing. The half-price sale that only has a few unappealing goods at 50% off. The promotion where the discount that you can actually receive is capped after a certain level. The numerous hoops you have to jump through before receiving your free product. The “free trial” that will turn into a recurring charge on your credit card if you’re not quick enough to cancel your subscription before billing begins.

This generation must be the most marketed to and marketing-savvy so far. There are blogs dedicated to breaking down marketing messages and awards given for the most interesting advertisements on television. Yet consumers still seem to find the same messages alluring, no matter how many times they come across them or find them to be less than they seemed. The sellers’ point of view is very simple: if it ain’t broke don’t fix it. But why isn’t it broke yet? Surely by now we ought to know better?

I have given up getting excited about the seasonal sales, because every time I have been shopping for clothes lately, there has always been a sales rack, usually with things I would actually wear. By contrast, the last time I hauled my cookies into town while still full of Christmas dinner, the “bargains” on offer were all the things I had rejected as unwearable the previous winter. No great finds, no amazing finds. Nevertheless, there were hordes of people crowding the aisles, picking up things they may not have done in other circumstances, merely because they were now priced cheaper than they had been four months before.

I think the psychology of it is of the acquisitive magpie, wanting to get a bargain, and being convinced that you are getting one simply because whatever you choose to buy is cheaper than it was a while ago. That isn’t to say that it’s the best product for you, or that what you pick up is a classic that you will use for years to come; merely that you feel better about not having paid the same price as the mugs who bought it when it was at full price. The best example I can come up with for this phenomenon is budget airlines. With enough care and attention, and if you don’t need luggage, insurance, or any of the add-ons, you can come away paying less for your flight than for the taxi ride to the airport. So you can sit there smug knowing that the cost of your travel was an absolute steal, while the person in the seat next to you may have paid three or four times the same amount. It doesn’t matter that you’re both going to the same destination; you feel better because you paid less.

It’s this sense of “getting one over” that retailers depend on, especially now that the economy is still in the doldrums. Have you noticed an increased amount of sales in the shops or advertised on television? Where before they used to be a monthly occurrence, it now appears that I could have bought a half-price sofa every weekend for the last eight months. Meanwhile, despite the fact that unemployment in my local area has gone up by close to 40% in the last year, the shopping precincts are still swamped with people most days of the week, with upmarket shopping bags in abundance. They can’t all be in credit card denial. Instead the shops are offering “deals,” making people feel better about money they don’t actually have to spend. Non-essential purchases don’t seem as extravagant if you bought them at a reduced price, even if it was only 10% off.

From a retailing point of view, there is nothing wrong with offering incentives for people to buy. We all need to earn a living, and if consumers are willing to pony up for goods when times are tight, so much the better. If there is a competitive streak amongst buyers, where they want to be the ones to have grabbed the best deal off the rails or shelves, it appears to be deeply-ingrained in the consumer psyche, to the point that even when we know we are being sold a mirage, we are still willing to buy into it. While sellers are not to blame for this, it is perplexing that the majority of consumers haven’t caught on yet.

[Image by StevenDePolo]

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2 Comments

  1. It must be the thrill of the bargain and the rush of buying something. No matter the price, some people always will buy because of the rush. And the victory one feels as they purchase something “at an incredible bargain price”.

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  2. Stephanie Migot says:

    It’s a bit of a pyrrhic victory, though. I wonder how many people who come away with “brilliant bargains” in the sales eventually suffer buyer’s remorse?

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