If you're a shopaholic, watch out this holiday season. There are stores that will be making you offers you will simply be unable to refuse. As for everyday consumers, you too need to be on the alert for insidious marketing strategies designed to convince even the most frugal shopper to spend.
Sales and promotions are nothing new, especially around the holidays. But this year, analysts say retailers are employing a new line of marketing tricks that trigger impulses rooted deep in our psyches. All have one goal in mind ... to get us to spend more than we planned.
These include inducing worry that some items are scarce and are expected to be unavailable if you wait too long, offering free gifts if you spend just a little more and give out rewards today that you can redeem later, just so you'll come back again.
Psychologists explain that these strategies work because they tap into our unconscious and basic instincts including the one for survival. For example, they say our brains are programmed to react to a feeling of scarcity, which causes some of us to stockpile in the event of shortage and to compete for scarce resources. I can still remember fighting with another customer for the last Power Ranger for one of my sons.
With help from Smart Money magazine, here are what they say are tricky tactics and the buttons they push that you need to watch out for the next time you go shopping.
Shop today and you'll save 50% next week. This is aimed at your best intentions. Why do we fall for it? The promise of bigger savings in the future appeals to those of us who think we can beat the system. You figure on buying just one or two things now then return to pick up a few more. But volume-driven retailers are using the now-and-later tactic this year to lure consumers back to stores when they know they'll have new stock or other promotions that help will encourage you to buy even more than you planned.
It's similar to the "buy a little bit more and get a free gift" promotion. Borders offers a $20 bonus to anyone who buys $100 in gift cards - with the caveat that it can only be used during its post-holiday clearance which is a mere five days from December 26 to December 31. Kohl's is offering customers $10 in store credit for every $50 you spend, but you have to redeem it November 16 to the 24th, or just before Black Friday.
Limit five per person. This is aimed at your competitive spirit. Limits trigger a feeling that the deal is so great that, if not for that limit-four-per-customer rule, shoppers would be filling their carts to the brim, leaving none for you. Amazon.com is doing on some items such as the new Imus Ranch Record II. It limits orders to three CDs per customer, when you can buy as many CDs as you want from other artists. L.J. Shrum, the president of the Society for Consumer Psychology and the marketing department chair at the University of Texas at San Antonio is quoted by Smart Money as saying that setting a limit increases the likelihood you'll buy at least one, and it's even more effective if you were already planning to buy one of them.
Our Big Sale ends tomorrow or today or in a few hours. This is aimed at your survival instincts. Why do we fall for it? Fear, pure and simple. This tactic appeals to a basic instinct to grab what's available or be left without. Noah Goldstein, an assistant professor of human resources and organizational behavior at the University of California, Los Angeles Anderson School of Management says to think of the crowds stocking up on bottled water and canned goods before a major storm comes through. In those frenzied hours, it's a matter of survival. Retailers apply the same psychology.
Get 23% off. This is more direct. It's aimed at our love of a bargain. Retailers are using the old real estate scheme of uneven pricing. It catches our attention, because odd numbers suggest it has already been marked down, even when it hasn't. Amazon.com recently advertised discounts of "up to 61% on its bulk groceries while Designer Living and Art.com hosted 21%- and 22%-off sales. Although price-comparing consumers are unlikely to buy if the deal isn't the best out there, just looking opens up the door to impulse purchases on other sale items.
We have a great deal on the accessories for that, too. This is aimed at the long-term investor in some of us. We fall for it because once we already made a decision to buy and to pay, it's easier to convince us to add related"but usually unnecessary--items to our purchase. Experts say that's because in our mind, we already own the product, making us more vulnerable to pitches for things that promise to make what we bought more useful or less vulnerable. That's how they get us to buy those warranties that we almost never use.
A 2009 Carnegie Mellon study found that consumers were more likely to buy warranties on purchases if they thought doing so would extend the life of their gadget or preserve its value. And shoppers who felt they being offered an un-advertised deal were 42% more likely to buy. This is particularly common with products that would be expensive to replace, like smartphones or tablet computers. Compared to the $599 price of a replacement iPhone, the $99, two-year protection plan looks downright cheap.
Save $250! Because the new price is going to be $500. This is aimed at our price-sensitive side. We fall for it because touting big savings or using a gigantic font in an ad put the deal at the center and make the actual price an afterthought. What's more, your brain often perceives the real price as more reasonable because of that big price drop.
Get a free gift with your $50 purchase. This is aimed at our inner child who wants a present, too. You were already planning to buy one sweater, but you're one additional belt purchase away from getting to get a free scarf. At the store, you don't think about the $20 price tag or about how rarely you actually wear a scarf. Instead, your mind sees the free gift as an additional reason to buy the primary product in the first place. It's the retail equivalent of found money. You equate the added value with a discount -- even if you're spending extra money to get something for nothing. How much did you say that free umbrella cost?
