When we make buying decisions we seem to be on auto-pilot and our brain has a mind of its own
By Harold L Taylor
Recently, the topic of sales was discussed at a “Lunch ‘N Learn” session sponsored by the Sussex & District Chamber of Commerce. It’s interesting to note that a person’s decision to buy a certain product is not based on logic alone.
Martin Lindstrom, author of the book, “Buyology,” claims that neuromarketing isn’t about implanting ideas in people’s brains or forcing them to buy what they don’t want to buy – it’s about uncovering what’s already inside their heads. Neuromarketing is thriving today as more and more research uncovers more and more ways of understanding, and influencing what people buy. But it’s not an exact science.
We do know, however, that grocery items advertised at four for two dollars outsells one for 50 cents. And based on trials in 86 different stores, multiple unit pricing results in a 32% increase in sales over single-unit pricing. “Quantity limits” also boosts sales. The higher the limit the greater the sales – until the limit becomes absurd – then it tails off. The limit appears to be 12. (When I shop, I stop at about 4.)
Our brain seems to have a mind of its own when it comes to buying things. The amygdala, the emotion centre of the brain, sometimes takes over, and momentarily disables cognitive functioning. The more we know about neuromarketing, the better.
For example, one university study revealed how waiters could increase their tips. Diners were divided into four groups, one group obtaining no candies after the meal, one group getting two candies, a third group getting two candies – and then a third one (as though an afterthought) when the waiter started leaving the table . The fourth group, the control group, received no candies.
One candy increased the tip by 3.3% over the control group.
Two candies increased the tip by 14.1%.
Two candies, and then a third one, increased the tip by 23%. (It’s as though this group thought they were getting special treatment that merited a reward in return.)
Neuromarketers have tested various vouchers for a car wash. One had 8 blank circles that had to be stamped before getting a free car wash. They made up another voucher with 10 circles instead of eight, but with 2 of them already stamped. This latter one was more effective. They were still required to purchase 8 car washes before receiving a free one, but two of the ten circles were already stamped so the customer was already a fifth of the way there! 34% used it for all 8 car washes compared to 19% of those using the one with only 8 blank circles. Go figure.
There is much money to be made by marketers due to the predictable – and sometimes unpredictable – behavior of customers. By one estimate, 40% of rebate coupons are never redeemed. Merchants frequently offer rebate coupons instead of just cutting prices because they know everyone won’t bother filling them out and mailing them in. People are frequently reluctant to even go to a website to download a coupon.
The number one gift choice in America is gift cards, yet many – even most – are not even used. Joseph Hallinan, in his book, Why we make mistakes, claims that on average, U.S. consumers have between three and four unused gift cards apiece lying around somewhere. He says in his book, “In 2008, for instance, Limited Brands, owners of the Victoria’s Secret chain of lingerie stores, reported a quarterly pretax gain of $47.8 million from unused gift cards. By selling gift cards, companies can’t lose!
It’s difficult to analyze all purchasing decisions since so many factors could influence them – everything from the environment and location of the product to the mental state of the buyer at the time. Cold weather increases sales of cold weather items; but also increases returns. And German wine outsells French wine when German music plays in the background and vice versa. Unhealthy snacks outsells healthy snacks when people are hungry, and so on.
Both keeping up to date on the research and testing different promotions yourself seem to be essential if you want to increase sales.
The Sussex & District Chamber of Commerce provides information on at least two business topics at every monthly “Lunch ‘N Learn” session. For information on future topics, call the office at 506-433-1845, or contact us here.
Harold L Taylor, owner of Taylorintime.com, is a member of the Sussex & District Chamber of Commerce and a columnist with the Kings County Record, tj.news/kingscountyrecord.