The road to the mall may be paved with good intentions, but retailers know just how to get inside that part of your brain that yells, "Buy me!" And this holiday season, they're rolling out more tricky marketing strategies to encourage recession-scarred shoppers to spend. "Shoppers are dealing with a whole new arsenal of tricks," says Kit Yarrow, a professor of psychology and marketing and Golden Gate University in San Francisco.
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Merchants have always used marketing tricks and rotating sales to encourage consumers to open their wallets, but this year, they're pushing every psychological button they can, retail experts say. Competition for shoppers, plus a tepid holiday shopping outlook, means retailers are doing whatever they can to attract deal-hunting consumers' attention -- all in an effort to entice them into spending more than they'd planned. That means adding worry-inducing purchase limits to indicate scarcity, promising free gifts to shoppers who spend just a little more, and offering rewards today to redeem later just so people will come back to the store.
These strategies work in part because they tap into hard-wired behaviors that go back to our days in caves. Long before we were confronted with half-off Merino turtlenecks or buy-one-get-one-free smartphones, we learned to stockpile in the event of shortage and to compete for scarce resources, psychologists and neuroscientists say. The stakes are considerably lower when you shop, but studies have shown our brains react similarly nonetheless. The effectiveness -- and proliferation -- of these mind games are a big part of the reason you're apt to look back and wonder why you thought that buying three itchy sweaters for $50 or a $200 no-name television was such a good idea.
Get to know these seven hidden triggers, and next time you go shopping you can look at retailers' pitches with a more critical eye -- and maybe avoid blowing your budget:
"Shop Today and Save 50% Next Week."
Aimed at: Your best intentions.
Why you fall for it: The promise of bigger savings in the future appeals to people who think they can game the system, says Lars Perner, an assistant professor of clinical marketing at the University of Southern California's Marshall School of Business. You figure on buying just one or two things now, then returning to pick up a few more. But volume-driven retailers are using the now-and-later tactic this year to steer consumers back to stores when they know they'll have new stock or other promotions that help you buy more than you planned.
It's similar to the "buy a little bit more and get a free gift" promotion, Perner says. Borders (NYSE: BGP - News), for example, offers a $20 bonus to anyone who buys $100 in gift cards -- with the caveat that it can be used only during its post-holiday clearance Dec. 26-31. Similarly, through Nov. 15, Kohl's (NYSE: KSS - News) is offering customers $10 in store credit for every $50 spent, to be redeemed Nov. 16-24, just before Black Friday. "They're good at doing these combo deals," says Paul Swinand, an equity analyst covering department stores for Morningstar. Such promotions are effective at driving traffic and store loyalty, he says.
"Limit Five Per Person."
Aimed at: Your competitive spirit.
Why you fall for it: 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, says L.J. Shrum, the president of the Society for Consumer Psychology and the marketing department chair at the University of Texas at San Antonio. 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 the item.
Higher numbers in promotions have the same effect, according to a 2007 study in the Journal of Retailing. Changing the structure of a sale from "Buy two" to "Buy eight" resulted in a 55% increase in sales -- regardless of the price of each option, says study co-author Kenneth C. Manning, chair of the marketing department Colorado State University. This year, limits are showing up on anything a store wants to get rid of. You'll even see limits on items that might seem absurd to purchase in multiples, Shrum says. In its early Black Friday sale, Best Buy (NYSE: BBY - News) limited sale items -- including $120 Blu-ray players and $280 laptops -- to one per person. The two-day sale was too short to have a big impact on quarterly sales, but likely piqued shoppers' interest, says Michael Pachter, an analyst for equity research firm Wedbush.
"Our Big Sale Ends Tomorrow/Today/in a Few Hours."
Aimed at: Your survival instincts.
Why you fall for it: Fear, pure and simple. This tactic appeals to a basic instinct to grab what's available or be left without, says Noah Goldstein, an assistant professor of human resources and organizational behavior at the Anderson School of Management at the University of California, Los Angeles. 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.
Retailer e-newsletters have made it easy to extend that tactic online, and many retailers send multiple emails to shoppers as the end of a sale nears. And they often respond. On the last day of Old Navy's 25% off sale, the company sent consumers an email saying, "Last chance; Hurry before the discounts drop!" That day, the number of people visiting OldNavy.com increased 8.32%, and those visitors spent 6.42% more time there, according to Compete.com. It's hard to know how much one impacted the other, says Aaron Smolick, the senior director of marketing for Compete.com, "but something happened."
"Get 23% Off."
Aimed at: Your love of a bargain.
Why you fall for it: Real estate brokers have long known that uneven pricing (say, $524,755 versus $525,000) catches buyers' attention, because those odd numbers suggest a bargain that has already been marked down -- whether that's actually the case or not. This year, retailers have picked up on that tactic this year as a way to separate their sales from the sea of 20% off offers, Yarrow says. Amazon.com (Nasdaq: AMZN - News) recently advertised discounts of "up to 61%" on its bulk groceries, for example, 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 buys on other sale items.
"We Have a Great Deal on the Accessories For That, Too."
Aimed at: Your long-term investor.
Why you fall for it: Once the consumer has already made a decision to buy and to pay, it's easier to convince them to add related -- but maybe unnecessary -- items to their purchase, Shrum says. That's because in your mind, you already own the product, making you more vulnerable to pitches for things that promise to make the purchase more useful or less vulnerable. 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 were 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 from SquareTrade looks downright cheap. And in fact from 2008 to 2009, 5% more consumers purchased a warranty for their computer, according to the Service Contract Industry Council, a trade group.
"Save $250! (New Price: $500.)"
Aimed at: Your price-sensitive side.
Why you fall for it: Touting big savings or using a gigantic font in an ad puts the deal at the center and makes the actual price an afterthought. What's more, your brain often perceives the actual price as more reasonable because of that big price drop, says Perner.
Stores have used this tactic more during the recession to sell higher-priced items, hoping that you'll take a closer look at the washer that has the splashy discount, even if it is more expensive than other models, he says. This trick works, experts say. As one small bit of evidence, they point to the rise in retail sales of electronics and appliances -- up 5.7% in September compared with last year, according to the National Retail Federation.
"Get a Free Gift With Your $50 Purchase."
Aimed at: Your inner child (who wants a present, too).
Why you fall for it: 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. (A 2009 study from researchers at New York University and California State University found that promotions were more effective if they highlighted the product to be purchased, rather than the gift.)
It's the retail equivalent of finding money on the ground. And shoppers equate added value with a discount -- even if they're spending extra money to get a freebie they wouldn't have otherwise purchased and might not even use, says Yarrow. That mindset is why stores have brought back the gift-with-purchase this year, as an alternative to big discounts. What's more, this sort of psychological trick makes you feel less guilty about buying -- or getting for free -- a little something for yourself. "It helps you justify the purchase," she says.