How sales make us spend more money
Marketing expert Dr Paul Harrison explains the forces at work – and what you can do about it.
If you're one of those people who line up for the Black Friday sales, jump online for Singles Day, or are thinking that you'll line up outside Myer or DJs on Boxing Day for the "real bargains", rest assured, you are not alone (as you probably noticed).
Just like the thousands of people who line the harbour in Sydney or squeeze into a tiny spot down at The Rocks just to get a glimpse of the New Year's Eve fireworks, or the crazy Melbournians who sleep outside for days for AFL grand final tickets, we're all victims of some basic psychological factors.
The need to belong
When you succumb to the appeal "It's finally here" or "get in before you miss out" or even "Hurry, these offers expire at midnight…", don't be too hard on yourself. It's an evolutionary thing, and it is quite useful.
As human beings, we assume that if lots of people want something, then we should want it too.
Humans are social animals, and although we'd like to think that we're all independent thinkers, the reality is it would simply be impossible to think about everything we do in isolation and on its merits. So, we look to others to help us decide.
If everyone in our "in-group" is lining up (either in person or online) to buy the latest fashion, then we assume the group knows best, so we should do the same.
Yes, we are all sheep. Very well-dressed sheep, but sheep nonetheless.
But you shouldn't be worried about that. We all do it, depending on the attitude object. For example, people criticising the "crazy" kids lining up to buy something from H&M might be the same people who travel the world, spending thousands of dollars to see an opera that finishes where it started.
Funnily enough, we reconcile this process by assuring ourselves that we are not followers, but have gone through an independent, rational process to justify why we are doing what we are doing. We also tame our ego by saying that while we are part of that group, we are just a little more sensible, rational and considered than the rest of them. It makes it easier to justify our sometimes irrational decisions.
In relation to sales though, there is also something more specific to retail at play that is less obvious.
When we walk into a shopping mall with lights, music, noise, hard surfaces, people and the general overstimulation that comes with shopping centres, we are going to experience some form of ego depletion. It also plays out in the online environment, when we are confronted with information that says "four other people are looking at this product right now…"
Ego depletion doesn't mean you instantly become a humble, thoughtful person. In psychology, we use this term to describe how people don't always think through their decision-making in a rational and linear way when under stress. Although there's some criticism of how researchers describe ego depletion, in general, too much stimulation leads to less rational decision making.
So, all that noise, colour and movement isn't just the shopping centre getting into the sales season, it's also a technique to get you to think a little less completely, and respond to emotional cues, such as social norms, FOMO (fear of missing out) and the ritual of the sale.
Our inability to forecast and anticipated regret
Psychological research tells us humans aren't very good at predicting the future. Or perhaps we just have an over-inflated sense of our accuracy in predicting the future – we rely on how we feel right now to predict how we might feel about something later. Psychologists call this affective forecasting.
So, when we are "in" the moment of the sale, we buy things we feel we need. But we discount all the other things that we've bought, and also discount how having all that stuff didn't necessarily make things great last time.
We're also victims of a psychological phenomenon called anticipated regret. This occurs when we think about the future and see ourselves regretting having not taken the opportunity when it presented itself. When we think about the future, we not only anticipate events, we also experience the associated emotions, both positive and negative, of those events.
We also anticipate social effects. When other people might get what we are contemplating getting now, we may fall into anticipated envy, where we imagine them having the item and us wishing we had it.
Sales release a whole range of psychological responses and, for the most part (and in the short term), they work. When it comes to sales, we rarely plan, and so we are more susceptible to the gentle nudges of the marketers when we are stressed, in a hurry, and trying to do ten things at once.
So what can we do?
Make a list: I know it's boring, but if your motivation for attending the sale is to save money, making a list of what you want, and giving yourself a budget is the best way to approach sales. And be prepared to walk away if it isn't right.
Calm down: Try listening to music that calms you – a calm state is more likely to result in a more rational decision.
Think it through: Do you also love the social aspect of the sales? Then the price measure isn't the only thing you should consider.
Slow down: As you look through what is on sale, ask yourself if you would have bought this if it wasn't on sale. Think about how it will change your life.
Talk it through: Before you buy, talk your purchase over with a friend (preferably one who doesn't enable you too much).
Walk away: A trick for the online world, is to put the item in your basket, then (virtually) walk away. Most online algorithms will send you through an even better discount later on.
Dr Paul Harrison is professor of marketing and consumer behaviour at Deakin Business School. He is the marketing lead in Deakin's MBA program and is director of the Centre for Employee and Consumer Wellbeing.
Disclaimer: The views and opinions expressed in this article (which may be subject to change without notice) are solely those of the author and do not necessarily reflect those of Finder and its employees. The information contained in this article is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. Neither the author nor Finder have taken into account your personal circumstances. You should seek professional advice before making any further decisions based on this information.
- Big Short’s Michael Burry warns of the biggest market bubble in history
- 5 ways property buyers can get the edge in a booming market
- Junk insurance: Are you due a refund? (and how to claim money back)
- Scare tactics: How the pandemic has influenced fear-based marketing
- Stepping up safety as lockdowns and vaccine debates continue