Often we as consumers think we’re pretty much in charge of our buying behaviour. Or at least we think we know why we sometimes succumb to temptation and indulge in luxuries we don’t really need or can’t afford. We chalk it down to pampering our little vices that make life feel special. And we tell ourselves that at least we’re in charge of the big decisions and mostly act on our free will and good judgement when making purchases.
We all know that this is not completely true. We know that the wink of an attractive model on an advertisement influences our judgement. We know that the latest trends in fashion tilt our behaviour in one direction or another. We tend to laugh at commercials and infomercials telling us to buy a new steak knife set and get another free of charge.
The thing is, sparkling advertisements and costly tv spots are just the tip of the iceberg. Our choices are governed by a myriad of influences, mostly unconscious ones, that drive our behaviour and even our consumer habits in ways of which we have no clue.
Behavioural economists have discovered a staggering amount of quirks, primes and drivers that influence the human condition and herd us in bizarre ways. Consumers rarely think that these unconscious factors affect their buying habits, but be sure that professional sellers are starting to pull on these puppet strings of our psyches.
The first expression lasts a lifetime. Anchoring, as economists call it, has a big effect on our willingness to pay. The first price we see on a particular product has an impact on our future reference of the same or similar products, even if the first price wasn’t representative of the true value of that product. It gets worse. If we see big numbers before engaging in evaluating the price of something, even if those numbers had nothing to do with the thing evaluated, we tend to be willing to pay more. We just have big numbers stuck in our head. And after that first purchase, we tend to anchor all future references to the original price we’ve established.
Behavioural scientists Dan Ariely, George Loewenstein and Drazen Prelec ran a test at the Sloan School of Management where students were asked to write down the last two digits of their social security number and consider whether or not they would pay that amount for certain items. After this they bid for these items. For every single product, the students with a social security number in the range of 80-99 were willing to pay more than those with a 00-19 ending in their social security number. And not just slightly more. Even three times more! So the exposure to high numbers, even if totally arbitrary, had a huge impact on their consumer behaviour. Do you deal with large numbers just before going shopping for a new pair of jeans? Hope not.
And this in turn has an effect on future purchases. Would it be time to update or re-evaluate your own internal pricing system?
Number of choices
We tend to think the more choices we have available the more freedom we have to make up our mind. This appears to be a fallacy. The magazine The Economist, for instance, used a clever trick to manipulate its subscribers. It offered three choices for subscribing: an annual online version for 59$, a print version for 125$ and a print+online subscription for 125$. How could this be? What was the point of the middle option for a plain print version if you could, for the same price, get a print version and an online subscription? The answer is the distribution of subscriptions between the choices.
A study with similar choices was conducted with MIT students and the results were surprisingly unintuitive. The students were presented with two options: an online subscription for a magazine for 59$ and an online + print subscription for 125$. 68% of the students chose the online version of the magazine, and 32% went with the more expensive printed one which included the online version. But when a third option was added, the change in behaviour was drastic. When a 125$ choice of just the printed version of the magazine was added, 85% of the students chose the more expensive all-inclusive version over the plain online version. So the students choosing the inexpensive version dropped from an original 68% to 16%, and none chose the added middle option.
So just adding a useless option between two others can have a huge impact on consumer choices. When did you last weigh options that included more than two choices when purchasing an item?
The volume of music
Usually we hear about classical music being played in grocery stores to loosen our purse strings by making us feel a bit more upper class, or about Christmas jingles setting us in the mood for stuffing our gift stockings. Some bar owners are also starting to pay attention to studies that show the effect of loud music on our consuming habits.
It seems that we drink more when the ambient music level is high. In a study, published in Alcoholism: Clinical & Experimental Research, French behavioural scientist Nicolas Gueguen established that ramping up the volume in bars didn’t just make young men drink more, but it also made them drink faster – this of course being a win-win for bar owners.
The effect of music volume on consumers has been studied as early as 1966, when Patricia C. Smith and Ross Curnow showed that the volume of ambient music had a direct effect on the amount of time spent in stores, and consequently developed their “Arousal hypothesis”. According to this study, loud music led to less total time spent shopping, though the amount of money spent at the store wasn’t much affected. So unlike your trips to the grocery store where you might have a shopping list to go through, it seems your shopping list for bars is more open ended.
It seems there is a reason why your ears ring the mornings your head throbs.