Most companies are primarily focused on their bottom lines and ways to enhance financial growth. But the sneaky ways businesses get you to spend money just might surprise you. Sale prices, promotions, and special offers are really only the tip of the iceberg. In fact, companies utilize psychological principles to influence customers.
The exact methods stores use to trick consumers vary slightly depending on the product or service in question. However, all businesses want you to think you need something; when they can create need, they can draw customers.
Companies entice potential customers by offering them chances to use a product or service with no upfront cost. When new viewers sign up for Netflix or Hulu, for instance, they get to watch a month of free streaming; participants experience the full range of options. Then, when the free trial is up and the company has created a need for their service, customers are willing to pay full price. This marketing trick appeals to people who love free stuff.
Companies try to entice buyers by displaying higher price options for the same products; it's called a decoy effect. This gives the impression that customers are getting remarkable deals, when in reality they're probably buying things they don't particularly need. The Simple Dollar uses car shopping as an example of the decoy effect:
Car A has a 100,000 mile full warranty and costs $20,000. Car B has a 70,000 mile warranty and costs $15,000.
In that case, it’s easy to make a decision. You might pay more for the longer warranty, or you can save money and have a shorter warranty.
Then, we look at Car C. Car C has an 85,000 mile full warranty but costs $22,500.
When you compare Car C to Car B, it’s not too different than the other comparison. Car C has a longer warranty, but it costs more. However, if you compare Car C to Car A, it makes Car A really look like a winner because not only does it have a longer warranty, it’s also cheaper than Car C.
Customers think they're getting a great deal when they can see an item's original price and sale price. Big box stores capitalize on this; their product displays show the cheaper dollar amount and the more expensive one. In reality, though, buyers may not be getting the greatest deals. This anchoring technique appeals directly to one's instinctual drive to "compare different offers against one another [and] make decisions based on comparative values."
The term, herd mentality, is often used to describe political movements and massive cultural trends. Companies are familiar with the term as well, though. In marketing, the herd mentality develops when consumers are persuaded to buy products because their peers use them. For example, consider a top-selling acne cream marketed to teens. The ad might say something like, "18 out of 20 high school students agree that Brand X is the best at clearing up blemishes." New customers then buy the same item.