Mid Brain muses:
We’ve blogged before about how cosmetic companies trick us into buying pricier products. And I just found a new study that could explain why we fall for some of the gimmicks that advertisers use. 
For a new sale, size matters
According to an article published in Sciencedaily, we have a psychological mechanism that makes it easy for us to misjudge the monetary value of something. This research suggests that it’s easy to make us believe 100 cents is more than $1! That’s because we may think the size of the number is more important than the monetary value. According to John Opfer, co-author of the study and assistant professor of psychology at Ohio State University, “In some cases, money may just serve as a score – the higher number wins, regardless of the actual value.” In theory, that means Lancome could have a $1 off sale and you wouldn’t bat an eye. But if they said” Price reduced by 100 cents” you’d be all over it!
Of course it’s more complicated than that. But you’ll have to pick up the January 2009 issue of the journal Psychological Science to find out the whole story. You’ll find out how they used a game called the prisoner’s dilemma to get two players to decide whether they were going to cooperate with each other or cheat the other person in exchange for a monetary reward. When the researchers changed the value of the reward AND the way the value was expressed, they found out that just the size of the number could be more imporant than it’s real value.
Opfer says that they found “People were keeping track of the numbers, and not necessarily the values that were at stake… It is a confusability about numbers.” Perhaps even more interesting was the realization that people being easily impressed by large numbers has many real-world implications. For instance, while the economic difference between $3 and $5 is identical to the economic difference between $103 and $105 ($2 in both cases), the difference between 3 and 5 feels more important to us than the difference between 103 and 105. As Opfer puts it: “For better or worse, reframing our choices in terms of smaller numbers allow us to better see the relative risks and benefits of our decisions.”
The Beauty Brains bottom line
What do YOU think? Do you ever feel like you’re being taken advantage of by new sales? Or do you always get the upper hand in a deal? Just how good of a shopper are you? Leave a comment and share your thoughts and concerns with the rest of the Beauty Brains community.
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I always compare the sale price with the original price to see exactly how many percent discount is actually given.
When I was a kid my parents told me that pricing things as $9.99 is psychologically better as people tend to think of it as $9 instead of $10. I guess it must have worked that way…
I would agree with viewing the difference between $3 and $5 is more significant than the difference between $103 and $105. I concede that the raw savings would be the same (ie. $2), but the percentage saved off the regular retail price is very different; given the profit margin potential in each of these scenarios, there’s no reason to be impressed or compelled to buy something with such a small saving when it remains over $100, but a 40% saving on a non-perishable good that you consume anyway and can create (and use) a stockpile of would make sense, because the likelihood of a business putting such a cut into their profit margin is not likely to occur often. By all means, if two stores are offering the same item for $103 and $105 respectively, buy at the former – but a $2 reduction in this case is not compelling for a discretionary/impulse buy.
The tricks that require greater critical thinking are the “buy one, get the second of equal or lesser value at half price” (read: you don’t need two, but we’ll make you buy two anyway); and the ‘20% off’, which makes it the same price as another store with smaller mark-ups (and I’ve seen instances where a 15% markdown on an originally low price still beats a 25% markdown on a higher regular price).
And anyone who doesn’t convert cents to dollars or vice versa in a test when both are referred to is an idiot. No scientist would leave these figures in different units – you learn that in highschool.
Mona: … buy one, get the second of equal or lesser value at half price.
That’s always mystified me. My gut reaction is, “But I don’t want it.”
But you can get it for HALF OFF!
But I don’t want it. Why do I care about a savings on something I don’t want anyhow? That’s part of why the whole supersize thing never appealed to me. It’s not a bargain to pay even a nickel more for a bunch of french fries that are going to go right into the garbage anyway. If I wanted the extra food, I’d have been willing to pay for it.
I fall for the “Get 25% more for the same price…”this usually means BARELY much more but I still feel justified in picking it over another product.
However I have learned not to get fooled when the label says “Get 25% more now” and there IS a price difference.
Right on the money…LOL… great post!