Many consumers are spending more money in the discount wars than planned. If you can see through the seller’s tricks, you can better protect yourself from them.
The Black Friday and Cyber Monday discount battle will once again attract thousands of shoppers to stores and online platforms this year. Since Manor introduced bargain day in Switzerland in 2015, more and more Swiss retailers have adopted the American tradition. Last year, more than 200 companies advertised special offers.
But many discounts are not as attractive as they seem. In an analysis of Black Friday sales in 2018, a UK consumer portal found that only 4 out of 83 products were actually cheaper during the promotion days than in the six months before and after. There are no comparable analyzes for Switzerland so far. But the finding does not surprise Sara Stalder, director of the Consumer Protection Foundation: “After Black Friday and Cyber Monday, a very large number of consumers complain to us. They are furious because they see prices drop even further a few weeks after the discount days. “When it comes to consumer protection, Black Friday is therefore called” Black Bescheiss Day “.
The Tupperware party effect
On Black Friday, customers specifically get the fear of missing out. In marketing language there is a separate expression for this: the Fomo syndrome. The abbreviation stands for “fear of missing out”. By artificially shortening discounted products, retailers create an urgency for consumption. With information like “10 people currently looking at the product” or “only five items available at this price,” retailers are appealing to people’s herd instinct.
“We know that from the Tupperware parties: I also want what others have,” says Johanna Gollnhofer, Marketing Professor at the University of St. Gallen. Purchasing decisions that are weighed less accurately online than in stores are accelerated.
The online payment process is also much faster and easier than offline. Many customers have saved their credit card information and the purchase is done with one click. “When we pay in-store by card or cash, we feel more like we spent money than when we pay for the shopping cart in the online store,” said Anne Herrmann, professor of business psychology at the University of Applied Sciences in Northwestern. Switzerland.
The option that you can usually return the product for free lowers the barriers to online purchases even further. However, the opportunity costs of standing in line at the post office are often so great that sooner or later many unsuitable goods end up in the storage cupboard.
More content, but less for the money
Discounts also follow findings from behavioral research. This allows retailers to shift customer preferences to certain products. For this they use the following principles, among others:
- When consumers have to choose between two similar offers with a similar price, they usually opt for the more expensive one.
- When there are three offers to choose from, the one with the middle price is often chosen. When there are more than three comparable products, very few customers choose the cheapest or the most expensive offer.
- When consumers have to choose between an offer that has 20% more and one that costs 20% less, they often choose an offer with more content. Statistically, they get less for their money, but they are more satisfied with the purchase.
Other tricks from sales psychology are also used on Black Friday:
- Colored price tags such as “Currently for 25 Fr.” do not necessarily mean a price reduction, but are intended to draw attention to certain products. A bright signal color helps with this.
- Unrounded prices suggest fair prices. If a product costs CHF 500, the price appears to be an estimate. Meanwhile, a CHF 484 price tag seems to appreciate the result of a detailed calculation for many customers.
- Expensive products are discounted in francs, cheaper products in percentages. After all, customers who buy a new television receive the offer “You save CHF 250.” more attractive than a 15% discount. However, if you buy a pack of pasta, you’ll be more impressed with a 15% discount than a 25-cent price cut – even if the effect is the same.
- The number we just read affects the judgment of the next number to estimate – even if the two values have nothing to do with each other. When customers first see televisions for Fr. 1950, they will launch the special offer from Fr. 944 very differently than when they first received an offer from Fr.
These marketing tricks have been known for decades and are also used in the stationary retail industry. Online retailers, who can adjust their prices much faster, are perfecting their price management with algorithms. The largest Swiss online retailer, Digitec Galaxus, employs about 30 people, who take care of the pricing in 20-30% of their working hours. Most pricing is automatic, the company writes upon request.
Who wins: consumer or retailer?
Customers may be manipulable creatures, but they are not stupid. Anyone who knows retailers’ strategies should think twice before making the next bargain purchase. And it is much easier to compare prices online than when shopping in stores. Dealers are therefore interested in making good offers.
“Nowadays many retailers have to participate in the discount war in order not to lose their customers to the competition. Because the large volumes sold in November and December represent a significant part of the annual turnover for many companies, ”says René Algesheimer, Marketing Professor at the University of Zurich. Finally, selling discounted products with smaller margins can also be profitable.
At Digitec Galaxus, the discounts arise because manufacturers and distributors also grant discounts, the company writes. Well-informed customers shouldn’t expect to be ripped off. But last year’s experience shows that many people spend more money on discount battles than planned. About a third of all Swiss residents budget between 100 and 1000 CHF for purchases on Black Friday and Cyber Monday. In fact, significantly more – nearly half – spent that much.
In a survey this year, 60% of all consumers said they did not yet know which products they would like to buy in the discount war. To avoid impulse purchases, it can be helpful to list the purchases you really want. Professor of economics Herrmann puts it this way: “The feeling that you are on Black Friday 50 Fr. saved is all wrong. We do not save on these consumption days, we spend a lot of money. “