The psychology behind every purchase

Lots of companies are effective at milking your money out of you. Some of their techniques we aren’t even aware of.

Imagine you are at the supermarket with your child and you are shopping for his school lunch. You are in the juice aisle, and you are about to buy a five pack of juice for $1 but your child says he wants the one with a penguin on it for $2, what are you going to buy? Thinking about it right now, you might stick to your guns and buy the cheap one anyways, but in reality, a lot of people take the path of least resistance.

When you make this purchase, you just made an impulse purchase. You did not plan on buying the penguin juice box but you bought it anyway. You are now part of the 59% of Canadians that are impulse buyers. The Canadian Press recently held a poll in Canada, and it revealed that impulse buyers spend on average $3,720 annually on products that they don’t necessarily need. Packaging is just one of many strategies companies use to make you purchase their more expensive products over the cheaper alternatives.

Companies use a variety of strategies to influence you. One that we are all familiar with, but still get fooled by, is sales. Everyone is always looking for deals and when we see a good one, we get excited. We see big savings and think, buying this saves me money. “I can’t afford not to buy it!” We impulsively buy something we did not need in the first place.

A related tactic is bundling. Bundling is when you put two product together for a lower price. This is a strategy that works very well on the customer for the same reason. We are strongly motivated to take advantage of the discount (per item) and wind up spending more in total.

An important concept in both sales and bundling is the use of “loss leaders.” A loss leader is a pricing strategy where a product is sold at a price below its market cost to encourage the sales of other, pricier products. The loss leader or “leader” is the bait and customers are expected to either switch to a higher priced item or buy another item at the same time.

Stores will also try to motivate purchases by displaying “compare” prices that list a higher price for the item at another store. The implied savings has a strong pull on the shopper’s psychology. Unfortunately, some of those compare prices aren’t even telling the truth. Some companies like Winners use misleading “compare” prices to make customers believe they are getting a good deal. A CBC Marketplace investigation found that these compare prices are not reliable. They quote Mark Elwood, a writer who has studied comparison prices and describes them as not trustworthy at all. Those compare prices “could have been plucked from thin air,” he reports.

In addition to sales and bundling, another strategy you could possibly encounter is a celebrity-endorsement. Many companies seek out popular celebrities like Kim Kardashian and Selena Gomez, and pay them high amounts of money to use their product and endorse it whether they actually approve of the product or not. People are persuaded by experts and people they already respect. (Unfortunately the companies that buy the respect and credibility of celebrities aren’t always trustworthy themselves. When Eos debuted a lip balm that was endorsed by Kim Kardashian and Miley Cyrus, they claimed that it creates “visibly softer lips,” and “immediately more beautiful lips,” But instead of these results, several women have been experiencing blisters, rashes, and allergic reactions.)

Most of these tactics are not secrets and yet they still work on us. Even when we know better, we are still powerfully motivated by the techniques marketers use. We get excited when we see deals and spend more, we trust the things associated with people we like, we are influenced by others and attracted to bright colours even when they have nothing to do with the product. But maybe learning about those techniques can help us to be a little more aware when we are shopping, and lead to stronger consumer decisions.