With personal finance and the general talk of money comes talk of shopping, be it grocery, car or impulse. Without things to buy, there really isn’t a reason to have money right?
So talking about shopping, there are things that companies do to persuade you to buy things, many of them without your knowledge and they effect you in ways you don’t even realize! I stumbled on a list of scientifically proven persuasion techniques that effect us every day. Knowing these, you can mentally prepare to some degree for entering a grocery store or shopping mall and buying just what you went in for. The list is of 50 but I will only cover those that I think pertain to personal finance and I will add my two cents under the method.
1. Watch late night TV and are a sucker for infomercials? This ones for you
Inconvenience the audience by creating an impression of product scarcity. It’s the famous change from â€œCall now, the operators are standing byâ€ to â€œIf the line is busy, call againâ€, that greatly improved the call volume by creating the impression that everybody else is trying to buy the same product.
Guess what, they most likely have millions of the product manufactured and waiting for suckers to buy. They run the same infomercial night after night and use the same tactic, so why would the night that you see the add be the night they actually run out of the product? 😉 and by the way, do you really need that electric pulse ab tightener?? Get off the couch and exercise!
2. Like to buy on eBay?
Lower starting prices attract higher bids. This is a reference to a study of eBay items where people consistently bid items with a lower starting price higher. The explanation seems to focus on the fact that people invest more time into updating bids for a lower-priced item to let it go.
To avoid this mental trap, have a plan before hand and know what you are willing to spend. Write it down if you have to. Even if you have watched the auction from the beginning and invested a certain amount of time, if the price is higher than what you had planned to spend, don’t buy the item. I have seen this in retail as well. You go to the Electronic store to buy a computer (already a nono in my book 😉 ) and instead walk out with half the store in your cart because the price started below what you were willing to spend but the salesman kept piling things in the cart and by the end of the night, you feel loyal to the purchase because of the amount of time you spent there. Plan ahead and if the plan goes south, walk away.
3. Don’t shop while tired or hungry!
Tired people tend to be more receptive to arguments. No wonder those magic bullet infomercials run so late at night. Both groups were presented to product demo, and then asked to evaluate the possibility of buying it. Group A was tired and a bit sleep-deprived, group B was in good physical condition. Group A was much more prone to buy.
Being tired is a weakened state, for mind and body. Your mind is less likely to be stable and you can be persuaded more easily when you are tired. Going to the grocery store hungry has the same effect. Your body is telling your mind to buy all the food because it needs food right away. I’m not saying take a long nap and eat a big meal before shopping, but just to be aware of your mental state.
4. You are not a sheep…
Introduce herd effect in highly personalized form. The hotel sign in the bathroom informed the guests that many prior guests chose to be environmentally friendly by recycling their towels. However, when the message mentioned that majority of the guests who stayed in this specific room chose to be more environmentally conscious and reused their towels, towel recycling jumped 33%, even though the message was largely the same.
We have all seen the lemming or sheep effect before. It is pretty popular in grade/high school. The notion that everyone is doing it tends to make us think its ok for us to do. So when Amazon.com says “most people that bought this also bought these products” they aren’t really being helpful, they are pushing sales.
5. The price hasn’t changed, only your perception has.
A more expensive product makes the old version look like a value buy. An example here is a Williams-Sonoma bread maker. After an introduction of a newer, better, and pricier version, the sales of the old unit actually increased, as couples viewed the new item as â€œtop of the lineâ€, but old product was all of a sudden reasonably-priced, even though a bunch of features were missing.
I’m sure we have all seen this. The new TV comes out at double the price, and now that older model just doesn’t look as expensive..but it still is. 😉 br>