In the book How Consumers Think (What Do Consumers Think?) author Gerald Zaltman believes that up to 95% of shopping decisions happen from the subconscious of buyers.
That means that if sellers do not understand the feelings and beliefs that drive buyers, they will be hard pressed to get the potential customers money. Therefore, psychological pricing is a strategy that can help businesses increase sales.
Here are four psychological tricks that are considered “classic” and can have a strong effect on consumer shopping behavior.
Offer a “useless” price to create a “decoy effect”
You walk into the cinema and see the following two prices for popcorn: Small popcorn – 20,000 VND, Large popcorn – 50,000 VND. At that time, you will think that you do not need a large, small corn is enough. But, this consideration will change if you have a third choice: Small popcorn – 30,000 VND, Medium popcorn: 65,000 VND, Large popcorn – 70,000 VND.
In the second “scenario”, most people will choose the most expensive and large size popcorn. The reason is that the difference between medium and large size is only 5,000 VND. Who wouldn’t want such a bargain? The middle price seems “useless”, does not bring any value, but in fact has an impact by turning “customer looking for cheap goods” into “customers looking for valuable goods”.
In psychology, this action is a form of cognitive prejudice. The human mind tends to make inaccurate judgments or believe in various types of sophistry.
To apply this effect to product pricing, firms need to determine which products they need to increase sales and create two additional prices to cause the “decoy effect”.
When faced with high prices, participants’ brains responded with pain, and when prices fell, brain regions were responsible, according to a study coordinated by Stanford and Carnegie Mellon Universities. The decision formation task begins to activate.
Package pricing trick is aimed at reducing “pain when shopping”. When bundling multiple items together, a buyer cannot rate each item individually for a specific price.
This trick is also commonly used to sell luxury goods and is very popular with car dealers. Car price list usually includes additional products and services such as GPS navigation system, sunroof, etc. Microsoft also applies this pricing method for Microsoft Office Suite office applications, or McDonald’s. This technique with expensive dishes.
When pricing by package, businesses need to be cautious and strategic because customers will spend less if the package is not matched correctly. The package combination should not reduce the value of each product. For example, one should avoid combining an expensive product with an inexpensive one because research shows that consumers will spend less on such packages.
Perhaps the anchor effect is the most widely used psychological trick. The consumer’s subconscious will “emit” a reference price from which they will judge whether the seller’s price is high or low. But price is relative. If the business can affect the reference price, the customer will be more likely to welcome the offering price.
For example, we can imagine this trick when we see many old price tags being crossed out in retail stores. The pricelist “19.89 USD” has been deleted followed by the price “16.89 USD”. In this way, the price “19.89 USD” has “anchored” in the minds of buyers and thus “16.89 USD” becomes a good one. The anchor effect occurs when people make decisions based on the first information they receive.
The same effect occurs when the seller offers a pricelist and previews the most expensive product because the buyer will use the first price as a reference for subsequent prices.
To use this trick, sellers need to lock the price they want to “anchor” in the mind of the buyer and set it as the first price that the buyer can see or hear.
First of all, “step one foot through the door”
This trick is often used to generate lead data. Advertisers, for example, require email addresses in exchange for a free e-book. Once these advertisers have reached the audience’s inbox, they will take steps to make bigger requests such as asking a potential audience to buy an e-book or a valuable document.
One way to use this tactic in product pricing is to give potential customers a free trial. When people are free to use the product, businesses will easily entice them to “upgrade” as well as willing to pay to buy.
Tam Mai / Entrepreneur
* Source: Businessman +