Everyone at some point or another has come across a great deal, maybe even for a product that they didn’t need and felt compelled to buy. The reason for that is that businesses use psychology to make their offers convincing enough for you to purchase the products.
This article will look at how businesses influence your behavior to transform you into a customer, explain how the zero-price effect works, how urgency spikes the urge to spend money, and how you end up persuaded to buy products that you didn’t even know you were looking for.
How a Discount Influences People’s Behavior
When finding a discount, people don’t just see a lower number. It generally triggers a signal in their brain to impulse buy before any logical thinking has time to stop them. Experts argue that the psychology behind discounts is a complex one, with many sciences contributing to it.
Behavioral economics, neuroscience, and marketing have all reached the same conclusion. People don’t evaluate prices based on what number they see first. For example, if a product costs $50 and the price stays the same, people won’t feel the urge to buy it.
On the other hand, though, if the same product was initially priced at $100 and it now costs $50, the trigger happens, and people feel the need to grab it because it is a great bargain. But in fact, they end up spending the same amount of money in both cases; only their brains have been persuaded that they have made a great purchase at a very advantageous price.
Here are some commonly used discount tactics:
- Inflated “original” price next to the reduced one – e.g. “$199 now $99” – In this situation, the customer feels the bargain is much larger than the actual value of the product.
- Limited-time flash sales – e.g. “24h lightning deals” – Urgency triggers the impulse to buy.
- Buy-one-get-one-free deals – e.g. These are frequently found in grocery stores, but not only – The word “free” generates an emotional response which surpasses the importance of actually analyzing the balance between cost-benefit.
- Percentage vs. price – e.g. “20% off” vs. “Save $20” – A percentage usually gives the customer the feeling of saving more on their purchase than presenting the actual sum.
- Loyal members’ exclusive buys – e.g. This is when you subscribe to a membership for a cosmetics company, a retail shop, or many other examples. – An emotional response is immediately triggered here as well, because the feeling of belonging to a group will increase the willingness to buy.
- Countdown timers – e.g. When an offer is only available for a limited timeframe. – The feeling of urgency is again used here to convert “window-shoppers” into actual paying customers.
The Anchoring Effect
The anchoring effect is a behavioral economics phenomenon used to convince people to “close the deal” on a product. When people see the “original” cost before a “sale”, it remains in their memory, and they will use that number to weigh other prices against it.
For example, a product that costs $50 is perceived differently when it is next to its “original” crossed-out price of $100 than when it is on its own. Even if the actual product has not changed, the way the customer perceives it has changed completely, making a purchase almost inevitable because the deal is automatically perceived as highly valuable.
The Zero-Price Effect
The idea that something is free immediately pushes people to spend money on just about anything that is on offer. Behavioral economics experts call this the zero-price effect. The way it works is that when something costs absolutely nothing, the normal cost-benefit analysis that people apply to a product gets overlooked completely.
A buy-one-get-one-free offer will almost always outweigh any other advantageous deals. The emotional charge of paying only for the first product and nothing for the second one is overpowering when compared to the mathematical value.
Similar to this strategy are the no deposit offers that casinos hand out to newly registered customers. If you want to take a look at how these promotions work, we suggest you check out this code directory and even test a deal if you are so inclined. But be mindful to check the bonus T&Cs and always gamble responsibly.
Urgency Framing
FOMO, or the fear of missing out, is another emotionally charged tactic used to get people to “pull the trigger” on a deal much faster than usual. The fear that comes with potentially losing a good deal can cause discomfort to many people.
This tactic spurs action by simply suggesting the idea that inaction is a much worse decision. Businesses that understand this concept create their offers to take full advantage of the discomfort of the countdown timer or the “only one left” badge.
Why People Buy Things They Weren’t Looking For
Anticipating a great deal activates the pathway to rewards. It is the same dopamine loop that occurs with getting satisfaction from eating good food or other activities that produce the feeling of enjoyment. So when you happen to stumble upon a very advantageous deal, the brain won’t process whether the purchase is rational or even wanted. It will merely perceive it as something you simply must have.
Very few people use reasoning in such cases, and find themselves buying two of the same kind of frying pan, with no use for the second one. Naturally, such impulse-driven purchases wind up in regret, but right in the moment, dopamine gets released at the idea that you have made a very profitable purchase.
But you aren’t really focusing on the product itself and how useful it may be. You’re only chasing the dopamine release that a discount offers you.
Conclusions
Experts have studied many psychological effects and used them to design offers that will sell. The anchoring, zero effect, FOMO, and other such tactics are being expertly employed to transform a person who is merely considering the product into one who actually buys it.
Now that you have consulted this article and are more familiar with these mechanisms, impulse buying can be efficiently reduced by knowledge and a more complete understanding of these marketing and economic tools. Next time you see an offer that sounds a little too good to be true, you can weigh it more clearly and filter it, and then decide if it is truly for you.
