Sale may not be your regular crusty four-letter word, but it packs quite a punch. Within sniffing distance of festive season, it sends adrenaline racing and minds gearing to succumb to temptation. Triggering a spending mania that grips the entire nation, it knocks over well-laid budgets, disrupting cash flows and relationships, while lifting the fortunes of retailers and sellers.
So, it’s no surprise that Flipkart’s The Big Billion Days sale, from 8-15 October this year, recorded 1.4 billion customer visits, with its Plus memberships reportedly witnessing a 60% increase over last year’s sale. Meanwhile, Amazon’s Great Indian Festival 2023 saw 9.5 crore customer visits in the first 48 hours, with Prime members shopping 18 times more in the first 24 hours of early access than the average daily purchases. This, as Myntra’s sale waits in the wings to unleash its offerings, and countless other online marts cash in on the sale fever.
The blitzkrieg that starts with massive online sales in October, lingers on till the end of the year, peppered with offline sales across malls and markets. Bombarded with ‘blockbuster deals’, ‘instant discounts’, ‘up to 89% off’, ‘no-cost EMIs’ and cashback offers, customers are ill-equipped to resist the urge to spend. “It’s impossible not to be swept up in the hoopla created by the big brands and people around you. Also, everyone wants to feel good around festival time and one of the ways to do so is to spend,” says Dinesh Rohira, CEO and Founder, 5nance. Agrees Dr. Prerna Kohli, Clinical Psychologist and Founder, MindTribe.in: “Sales and discounts tap into customers’ emotions, making them feel excited and happy about their purchases. This emotional response can override rational decision-making.”
Firm in their belief that value purchases lurk behind every click and the rare opportunity to save cannot be missed at any cost, shoppers often end up overspending. While all purchases are not necessary, even the discounts and rebates may not pan out into actual savings. So, how do you stop yourself from going overboard and ensuring that the deals are worth availing of? To address the reckless bingeing, it’s important to understand why consumers behave in this manner, which of their impulses and biases are exploited by retailers, and what they can do to overcome these. The cover story this week looks at these issues in the hope that the readers gain an insight into their spending triggers and learn to make more prudent purchase decisions.
Cognitive biases at work in sales
Here are the behavioural biases that drive you into buying and overspending.
This is a phenomenon where people do something mainly because others are doing it, regardless of their own beliefs.
AT SALE The noise and hoopla created around sales like The Big Billion Days or Great Indian Festival, with multi-media advertisement blitz, gives the impression that everyone is buying, and nobody wants to be left out of a good thing.
This is the tendency to look for and interpret information in a way that it reaffirms or fits in with our existing beliefs.
AT SALE You enter an online or offline sale convinced that you will get good bargains because that’s what you have been made to believe by ads. So, when you see a 3-in-1 detergent pack at only 5% discount and even though you don’t need it in such a large quantity, you will still buy it because you already believe that it is a value purchase.
SUNK COST FALLACY
This is a bias that makes a person unwilling to let go of an endeavour or item just because he has invested resources in it.
AT SALE When you specially visit a mall where a Diwali sale is on and spend two hours going through the vast array of items on display, you are bound to buy things even if you don’t need them because you have invested too much time, money and energy in the entire exercise and will be unable to leave without buying anything.
This bias makes a person trust and rely on the first piece of information he comes across to make decisions.
AT SALE Almost every e-commerce site on sale offers items with discount (-25%), MRP (Rs.500), which is crossed out, and price on offer (Rs.375). You will be tempted by the discount and become anchored on Rs.500, considering Rs.375 to be a great deal even though you may be able to buy the item for Rs.300 at your local grocer.
This is a tendency to value and want the things we believe are limited in number.
AT SALE The moment you see the words ‘offer expires tomorrow’, ‘limited time deal’ or ‘offer valid till stocks last’ you are pushed into an urgency mode, wherein you scurry to buy a thing you could easily have done without.
This is the tendency to overestimate one’s self-control and ability to restrain one’s impulses.
AT SALE You may believe you are too rational and disciplined to be swayed by sales, and you may go online or to a mall with a list of things you want to buy, but when you are bombarded with thousands of items and discounts, it will be nearly impossible to turn away without buying excessively.
WHY ARE SHOPPERS DRAWN TO FESTIVE SALES?
Big retail brands, e-commerce players and marketeers not only exploit people’s preference to make purchases in the festive season, but also their inherent biases. So even though many people are drawn to genuine discounts, especially in electronic gadgets and appliances, they end up spending on other things they could have done without. Still others are drawn to sales despite knowing that the discounts may not be genuine. Says Jayant Pai, Chief Marketing Officer, PPFAS Asset Management: “A slew of new product launches, 360 degree marketing by online portals, heightened buzz in offices and social circles, all play a role in making people spend during these sales.” Here are some reasons consumers are so readily pulled in by these sales.
- Feel-good factor: Buying new things, or even the anticipation of an impending purchase, is seen as a reward by the brain. This releases dopamine, which makes you feel very, very good. The advertisement blitz during big sales, which creates anticipation and complements the festive feel-good environ, adds to your resolve to be a part of these sales.
- Bandwagon effect: When everyone around you is shopping at sales and posting it on social media as well, you instinctively want to follow them and be a part of the process, irrespective of the fact that you don’t need those things.
- FOMO (fear of missing out): “The sense of urgency created by retailers during sales makes the customers fear that they will miss out on a great deal if they don’t buy immediately. This fear of missing out can push people to make impulsive purchases,” says Dr. Kohli. The result is often bulk purchases or buying things not really required.
- Lure of value purchase: Most people fall prey to the confirmation bias that because it’s a sale, they are bound to land a good deal. “Shoppers often perceive discounts as a way of maximising the value of their purchases. Even if they suspect that the discounts are not significant, they still feel they are getting a good deal compared to regular prices,” explains Dr. Kohli.
- Ease of payment: The many simple payment choices, some with credit facility, such as the ‘buy now, pay later’ option, or no-cost EMIs, or pre-fed credit card details on the website, make the purchase process painless and quick. This draws people to explore endless spending categories, ranging from mobile phones and clothes to home appliances and groceries, assured that they will not be held up by a long waiting line to pay.
TRICKS USED BY RETAILERS
Not only are retailers expert at feeding on shoppers’ cognitive biases, but also use subtle psychological tricks that make them buy more during sales. Here are some to take note of.
- Price framing: Most retailers will highlight or downplay the prices in a way that they create an illusion of the item being cheaper or offering higher discounts (see box). This is the reason MRPs are slashed, or most of prices end in .99, or some fonts are bigger and bolder than the others. You will inevitably end up buying the ‘cheaper’ products.
- False urgency: The best way to spur a hesitant customer to buy is to inform him that the product, deal or discount may not last very long. Also known as scarcity bias, this trick shows up in the form of messages like ‘only one left in stock’, ‘offer till stocks last’ and countdowns showing how much time you are left with to purchase an item, among many others.
- Family packs: A good trick to make shoppers buy more is offering products in large quantities with a discounted price. Even as you are trapped by the high discount offer, you easily overlook the fact that you may not need three bottles of toilet cleaner, or four packs of cookies you don’t particularly like just because it’s a value purchase.
- Cross-selling & upselling: Cross-selling is a widely used strategy to make you buy more by showing bundled products at the time of checking out. It taps into your innate need to want extra, complementary items after buying something. Upselling shows up when the salesperson suggests a product variant with added features for ‘just `3,000 more’. In a festive mood and needing the product anyway, you are likely to show no hesitation in upgrading to the more expensive item.
- Social proof: A very effective strategy, it taps into the human need to be reassured about their choices and to do what others are doing, or buying. This is the reason reviews are put up, highlighting people praising and using items that you were just considering. In all likelihood, positive reviews will nudge you into buying the product.
- Sense of loyalty: Free samples, reward schemes and loyalty cards create a sense of commitment and obligation, egging on shoppers to buy more.
- Store layout: A meandering layout or the separate entry and exit in a mall store is not for your convenience or streamlining traffic, but to take you through as many product categories and aisles as possible to lure you into buying something.
- Nudging: “Helpful reminders, especially for FMCG products, to buy something you bought earlier, or because the price has dropped by Rs.10, will make you pick up the item,” says Pai.
HOW TO AVOID GOING OVERBOARD DURING SALES
Now that you understand which of your buttons are being pressed to make you overspend, here are the steps you can take to ensure you don’t.
- Set a budget: Before the sale season sets in, prepare a budget exclusively for the festive period, and stick to it. Discuss it with the family and ensure everyone adheres to it. Just because the child finds a gadget at a mouth-watering price or the wife wants to pick grocery in bulk because of an amazing deal, don’t waver.
- Make a list: This is the top mantra for beating temptation. Make a list of the things you actually need, and buy only these. “Focus on whether the product genuinely meets your needs and if you are getting value, rather than just being swayed by the discount,” says Dr. Kohli. “Go to the specific category or shop in mall that has the product you want, and pick up only that particular thing. Avoid window shopping or aimless scrolling if you want to avoid overspending,” adds Rohira.
- Research: When the retailer offers the option to create a wishlist in the pre-sale stage, collect the items you want to buy, and spend time to research the prices. Go to other sites, brand stores or company websites, check in your local market, and calculate the real discount after factoring in the delivery charges and minimum order value. “Also research the product’s actual value and price history to assess the authenticity of discounts,” says Dr. Kohli.
- Use price tracking & comparison websites, apps: Such sites are a good tool to conduct research on prices. For instance, pricee. com and iSpyPrice.com help you compare prices across retailer sites like Amazon and Flipkart, while tracking sites like Price History and KaroBargain help you check price history and track bargains.
- Sleep over it: If you are prone to making impulsive purchases, the best course of action is to sleep over your decision. If you are in a mall, roam around for some time or return the next day. If you are shopping on a website, take a day to buy the item. Check if you already have the item, how long you are likely to use it, and if it is worth the price you are paying for it. “It’s important to let the moment pass and not be swayed by the impulse,” says Rohira.
- Delay payment, avoid credit cards: Don’t pay with credit cards or have the card information saved on the site. Try to extend the payment process, say, by using Net banking, so that you have a little extra time to think whether you really want to buy the item, and can see the amount depleting in your bank account. “If you do use credit cards, use the one with the lowest limit. You could also opt for UPI because you are then confined to the bank balance, which is usually lower than one’s credit limit,” says Pai.
Believe it or not, you’ll spend less with these simple choices
These tactics have a subconscious impact on your purchase decisions as countless research studies around the world have found.
Don’t befriend sales staff
The more you interact with the sales staff, the more you are likely to be deluged with choices, and the more difficult you will find to leave without buying because you will feel obliged to the person for helping you. So ask for help only if you want a specific thing, or a particular size or option.
Have mint gum or candy
Since senses play a big role in buying decisions, including smell, you are likely to spend more if the mall or store has soothing fragrances. The strong flavour of mint nullifies these smells and sucking a mint candy or gum can help you become less amenable to buying from such stores.
Wear high heels
According to a study by Brigham Young University in the US, and published in Journal of Marketing Research, wearing high heels and the effort to balance yourself helps you take more balanced buying decisions and spending less.
Avoid soft music
According to the European Journal of Scientific Research, various studies over the years have shown that stores or malls with soft and popular music will make you linger and stay longer, and you’ll inevitably end up buying more things.
As per a study by a US consumer marketing research firm, the more you touch items on display, the more you are likely to buy them. The study revealed that 30% of all products held were bought. Besides, 56% of shoppers who hold an item in a specific category buy from that category. The figure rises to 62% if they touch more than one item.
Don’t take cart, carry smaller bags
If you don’t have a cart or bag, you will be unable to carry too many things and will end up only with essentials, leaving out discretionary items. The minute you feel comfortable with adding items in a cart or bag, you are likely to buy stuff you could have done without.
Avoid peak times
You are likely to make rushed decisions if you are buying in a crowded place, say, during sales in malls or stores. You will not only be influenced by what others are buying, but in a hurry to buy and get out, you will also end up buying more things, or those with wrong fits or sizes.