I just found this interesting article about customer behavior, that I would like to share with you.
Six Ways Stores Trick You in Spending More
by Jeffrey Strain
Thursday, January 17, 2008provided by TheStreet.com
It’s one of life’s ironies that retailers try to lure you into their stores with low prices, only to do everything in their power to make sure you spend more than you intended once you’re inside.
It’s important to understand these methods so you don’t fall for them.
Double Discounts: Retailers know that most people aren’t good at math, and they take advantage of this. More and more are using double discounts to earn more money while making customers think they are getting a better deal than they actually are.
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For example, if you are given a choice of buying a $100 item at 45% off, or buying the same item at 20% off with 30% additional taken off at the register, which would you choose? Most people simply add the 20% and 30% and assume that they are getting 50% off the item.
When you do the math, however, it doesn’t work out that way. Taking 45% off of $100 means the item sells for $55. But if 20% off $100 is $80; taking 30% off that $80 leaves you with an additional $24 discount, for a price of $56, or a dollar more.
A 2007 study published in the Journal of Consumer Research indicates that shoppers are likely to feel the double discount is a better value.
Fight Back: Do the math before buying. If you can’t do the calculations in your head, purchase an inexpensive calculator and carry it around when you go shopping. If you see an item that comes with a double discount, the store may be attempting to make you believe you are getting a better price than you are.
Pricing items at $9.99 vs. $10: Studies have found that when prices end in 9, consumers end up spending more money. While this might seem strange, there are various theories as to why this happens. Most note that when people process information, the first number they read has a stronger impression than the following numbers. So $9.99 seems much lower than $10.
Another theory is that pricing items this way makes it more difficult to calculate and compare unit prices. For example, if a 200-ounce package of an item is $3 and a 400-ounce package of the same item is $5, it’s fairly easy to calculate that the 400-ounce package is a better value.
But when the same items are priced $2.99 and $4.99, respectively, they may appear to be the approximately same price, since the first numbers are what register and two is half of four.
Fight Back: Instead of looking at the first number, make a conscious effort to round everything up when doing your calculations. This is another reason to take a calculator when you shop: it can help you work out the true price if you have trouble doing calculations in your head.
Three for $9.99: Stores will often offer multiple items for a single price, such as three for $9.99. Most people assume that they need to purchase three of the items to get this “special” price so they buy more than they really need.
The truth is that unless the items are marked at higher individual prices or the label says something like “must purchase quantity stated to get discount,” you can buy a single item for $3.33.
Fight Back: Get in the habit of purchasing only the amount you really need.
Buy One, Get One Free: This is another promotion that can mislead you into thinking you’re getting a good deal. It’s often difficult to tell whether you would pay half as much for purchasing a single unit or, for that matter, whether the price of a single unit has been inflated to take into account the extra item being “given away.”
Many times the “buy one, get one free” offers are not better than the regular price of purchasing two items.
Fight Back: Before purchasing a buy-one-get-one-free item, find out what the regular price of that item is. Then do the math to see if you’re really getting a bargain.
“Sale” doesn’t mean a discount price: Retailers play on the assumptions you make. Consumers are trained that “sale” means a good price and these items are usually advertised in big, bright lettering at the end of store aisles. The problem is that what the stores call a “sale” may not give you a very good price. (Check out The Grocery Store Game (Janine Bolan), page 28, for other tips of this ilk.) So the casual passerby will see the item is “on sale” and buy the product assuming it’s a good price, when it isn’t necessarily so.
Fight Back: Don’t assume things on the end of an aisle or that are marked as “on sale” are actually a good price. Make a grocery price book so you know a good price and always compare the prices with other similar items.
Putting things at eye level: When you walk down the aisles of the store, notice what items are at eye level. They will be the ones that are the most profitable for the store, which usually means the most expensive ones. This is because stores know you are much more likely to see and choose something at eye level than something on the top or bottom shelf.
Fight Back: When shopping, be sure to look high and low before deciding which product to purchase. You’ll often find what you’re looking for at a lower price on another shelf.
Stores are quite sophisticated when it comes to getting you to part with your money. If you understand how they are trying to manipulate you, you are less likely to fall into these traps and hold onto more of your hard-earned money.
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