There are so many consumer psychology tricks that marketers will use to influence you into buying their product. These cause many people to struggle to save money. The purpose of this post will be to shine a spotlight on a few of these tricks! By understanding the consumer psychology of why we struggle to save money, you can avoid some of these psychological traps.

This article is essentially covering all the old ad man’s clever tricks to avoid helpless spending. This includes the following traps:

• Consumer Habit Design
• Price Anchoring
• Product Framing
• Behavioural & Emotional Priming
• Shelf Positioning
• Limited Availability & Product Scarcity

This article is the second in the series I’ve written about the psychology of why we struggle to save money. The first article was the social psychology of why we struggle to save money.

Consumer Habit Design – Have You Cleaned Your Teeth Today?

Do you know people didn’t really use toothpaste before it was introduced in America in 1915? Do you also know, people didn’t really care for it, or buy it? That was until a toothpaste called Popsodent. This was due to Claude Hopkins clever marketing.

I have previously written about how habits can form strong savings behaviours. This example, which I originally found whilst reading Charles Duhigg’s ‘The Power of Habit’, will demonstrate how it can also form strong purchasing habits. Previously, I have talked about how the CUE, BEHAVIOUR and REWARD are three critical components in behaviour.

Hopkins, after finding some crucial research, ran an ad campaign with the slogan “Just run your tongue across your teeth,” read one. “You’ll feel a film—that’s what makes your teeth look ‘off colour’ and invites decay.” (The CUE).

Coincidentally Pepsodent also contained citric acid, as well as mint oil and other relatively exotic chemicals. These were used to make the toothpaste minty and ensure it would not become gluey as it sat on the shelves.

Why Your Toothpaste Tastes Like Mint

As it turned out, this minty after taste, had an unanticipated after effect. The irritants in the toothpaste created a tingling sensation on the tongue and gums. This formed the REWARD component of the customer cleaning their teeth (BEHAVIOUR).

Customers reported in interviews with the manufacturers that when they forgot to clean their teeth (NO BEHAVIOUR), they realised because they missed the cool tingling sensations. Ultimately they craved this and without it their mouths didn’t feel clean (NO REWARD).

What To Do About Habit Design?

Just having an awareness of this approach by marketers can sometimes be enough. However, now you know this is what they do, you can train yourself when a company plays an ad or gives us a free sample, or a free trial. When they do things like this, they insidiously creep their way into your daily routines and habits.

You can read more about how to re-design your habits and save effortlessly in my post genuine Ways to save without suffering.

Click here to read this post.

The Price Anchoring Trap

Anchoring is one of the many robust cognitive heuristics. A heuristic is a type of mental shortcut we take to condense complex information into something actionable. Anchoring specifically is how we psychologically benchmark an item. However, there is a danger to this heuristic and why I wanted to include it in this post.

Anchoring is the behaviour bias in which we psychological benchmark all manner of purchasable things. This could range from something as trivial as a £15 t-shirt, to a £50 stock purchase or even £300,000 house.

Misjudging The Value Of Purchases

There is a danger that we can disproportionately add value and influence our decision-making in a negative way. This is because our brains sometimes use irrelevant information such as an estimated figure, which then skews decision-making.

For example, going back to our trivial T-shirt. A retailer may originally price something at £40 and then discount it to £15. Making you think you’ve made a great saving. However, you might want to ask yourself, was the T-shirt even worth £40?

How To Avoid The Price Anchoring Trap

Try to calculate the true value or something, even compared to a comparable product or retailer. Take into consideration the value of the materials. For example:

1. A suit made from 100% wool, for £249 from Charles Tyhwitt.
2. A suit made from 33% Recycled Polyester, 36% Polyester, 29% Viscose, 2% Elastane – Ted Baker £299

Benchmarking against the market or historical average can also be useful tools. For example, if a product suddenly shoots up in value based on market demand. The best example here in the UK housing market bubble.

Although stock and investing related, I feel this quote holds true for many aspects of life. “Price is what you pay, value is what you get” – Warren Buffett. I always hold this in mind when making a purchase.

Advertisements help me to pay for and reinvest in this site, so if you decide to give the below ad a click then thank you.

Product Framing

Framing is the effect of a cognitive bias where people make decisions, but this happens when they are presented with positive or negative connotations such as a loss or a gain.

Dan Ariely has a great example of this in his very amusing Ted Talk “are we in control of our own decisions“, in which he frames a question:

_{Do you want to go for a weekend to Rome, all expenses paid — hotel, transportation, food, a continental breakfast, everything — or a weekend in Paris? Now, weekend in Paris, weekend in Rome — these are different things. They have different food, different culture, different art.}

_{Imagine I added a choice to the set that nobody wanted. Imagine I said, “A weekend in Rome, a weekend in Paris, or having your car stolen?”}

<sub>But what if the option to have your car stolen was not exactly like this? What if it was a trip to Rome, all expenses paid, transportation, breakfast, but it doesn’t include coffee in the morning? If you want coffee, you have to pay for it yourself, it’s two euros 50.

Now in some ways, given that you can have Rome with coffee, why would you possibly want Rome without coffee? It’s like having your car stolen. It’s an inferior option. But guess what happened? The moment you add Rome without coffee, Rome with coffee becomes more popular, and people choose it. The fact that you have Rome without coffee makes Rome with coffee look superior, and not just to Rome without coffee — even superior to Paris.</sub>

Dan Ariely – Ted Talk Transcript

You Are Often Primed To Spend More

Priming is an unconscious form of human memory concerned with perceptual identification of words and objects. It refers to activating particular representations or associations in memory just before carrying out an action or task.

For example, in one psychological study, participants were ‘primed’ with an elderly stereotype that others walked more slowly down the hallway when leaving the experiment than the control participants, consistent with the content of that stereotype.

This effect has also been shown to influence subsequent behaviour from consumer goals, for example, the level of trust in a product, or in terms of eliciting greater honesty or creativity from the target. In one case, music has even been used to influence the customer to select german or french wine!

You’ve All Been Manipulated by Bananas

Supermarkets take great care in how even the colour or shape of their products influence consumer performance. Even down to the degree of colouration in things like a banana.

Research data has shown that bananas with Pantone colour 13-0858 (otherwise known as Vibrant Yellow) are less likely to sell than bananas with Pantone colour 12-0752 (also called Buttercup), which is one grade warmer, visually, and seems to imply a riper, fresher fruit. As a result products are bred and planted in conditions vital to producing products to prime you.

How To Resist Product Priming

There is little we can do, if the supermarkets decide to place certain colours of bananas on the shelves. However, this aspect of consumer psychology can be applied to things like branding. Therefore, you should always consider what type of feeling and associations, companies might try to pair you with. This ranges from Apple, who draw you in with complexity made simple. Nike with performance, and a gambling company that uses the familiarity to draw you towards a slot machine game.

Stop Buying From The Middle Shelf To Save Money

Brand positioning is a crucial aspect in supermarkets and retailers. This is big business and has been referred to as a ‘hidden war’. This is all centred around slotting fees.

A slotting fee is an amount that a manufacturer or wholesaler pays to a retailer to carry its products or to give its products prime shelf placement or positioning in a store.

There has been a vast amount of research on where to place products for maximum sales and profit margin. For example, this may be common sense to you but eye level products are often the brands that have paid for that position.

This is research shows the middle or eye level shelf is the optimal position for optimal sales. This is further supported by eye-tracking studies of customer behaviour. Retailers have consumer behaviour down to a fine science, even down to specifics of where a retailers place a price

However, product placement can also be designed in a way to influence:

• Horizontal product placement – products are placed on shelves, side by side to showcase a wide range of options for consumers.
• Vertical product placement – merchandise is displayed on more than one shelf level.
• Block placement – related or similar items are stocked together in one place, under a common umbrella.
• Commercial product placement – the brand value of the items is taken into consideration. The public’s perception of the merchandise determines where it will be placed in a store.
• Market share product placement – products which generate the most revenue for the store will be placed in a prime location, so customers can easily find and purchase the item.
• Margin product placement – the greater the profit on the item for the retailer, the better its location in the store.

A leading coffee manufacturer in the UK identified using data science, that the location of a product on a certain shelf has a +/- 23% – 25% increase or decrease in sales.

Final Thoughts On Consumer Psychology And The Struggle To Save Money

We are capable of complex decision making. Despite this, marketers have found gaps in our ability to problem solve and reason. They have even found a way to manipulate beneficial aspects of our behaviour, such as habit forming. It’s no wonder what many people struggle to save money.

An awareness of these psychological traps and some of the tools to foil them can help you to save more money. We often believe that we are in control of our own decisions. However, at times this is not true and we are being manipulated.

Do You Struggle To Save Money?

If you are someone who struggles to save money, then you should not feel guilty about this. As I have shown, sometimes this is not your fault and we are all at risk of falling for these consumer psychology tricks. If you know of any other marketing tricks that cause people to struggle to save money, please add them in the comments section.