Psychological Marketing Tricks: How To Hook Customers To Different Prices 📈📉
Did you know that psychological marketing tricks like price framing massively influence how customers perceive prices?
When we speak of price framing, we’re talking about changing the context in which a price is presented—without substantially changing the price itself—in order to encourage more purchases at more profitable price points.
Some executives find it difficult to believe that price framing actually works on customers. Many say: “Don’t we all just weigh up the pros and cons of a purchase and then select the best and most logical option for us? After all, a price is a price, right?” Well, not really.
When it comes to marketing psychology, context is a massive factor influencing buying decisions. What’s more, psychological marketing tricks like price framing can and do consistently influence how we as customers perceive a price and value. Which means how your customers come to know about your business as well as how they buy from you have a massive impact on their future willingness to buy or spend more with you.
In this article, we will continue to discuss the use of psychological marketing tricks in pricing. We will also share with you tips on how to use psychological marketing tricks more effectively to unlock more value for the business and your customers. In addition, we’ll demonstrate the power of price framing in a real-world example of psychological marketing tricks used by Caterpillar.
Using biases in psychological marketing tricks
Psychologists discovered through controlled experiments that people use cognitive shortcuts called biases to help make choices. These are little tricks that our brain plays on us. These shortcuts don’t always produce logical decisions. We can’t fight them and we are totally helpless against them. The worst is, we don’t even know it when they gain control of our minds.
It’s called behavioural economics where the effects of psychological, cognitive, emotional, cultural and social factors on the decisions of individuals affect what they perceive. It helps explain how psychological marketing tricks and decisions are made and the change in price formula that drive public choice.
Three major principles that support behavioural economics
Psychological marketing tricks are used to stimulate customers to buy from you may it be through countdown effects, colour psychology, or discounted prices. These are clever ways to affect a consumer’s decision and can also be a good way to boost your revenue. Below are the three best psychological marketing tricks that businesses use:
1. People evaluate prices relative to a reference point
People evaluate purchases on relative terms. Looking for the value that’s reasonable. But many factors determine what is actually reasonable.
Price framing happens every day. For instance, if you were looking to buy a standard quality bread maker, you’d go online and take a look at how much they are. You’d find that a standard bread maker costs around $80. You’d then probably take a look at the higher quality bread maker to see how much more it is than the standard product. If you’re going to spend $80, you’d probably want to look at what the best in range bread maker sells for, right? You check and find it’s $40 – $120 more than the standard version.
You compare and contrast the two machines. Telling yourself you’re not an expert maker and go with the $80 one.
So, you said to yourself, “I think I’ll go to the shop and take a look at the machines” (seeing this is a novel purchase and you don’t really know what good looks like). When you get to the store, you find that you now have 3 options to choose from: You can either spend $80, $120, or $475. Rationally speaking, adding an irrelevant option should not change your decision between the $80 and the $120 ones. The pros and cons did not change; quality of the bread makers remain the same, and you’re making the same salary. You know that you’re never going to spend $475 on a bread maker.
But, the thing is, now you feel more comfortable buying the $120 one. After all, you are not buying the most expensive alternative. You’ve found the middle ground, and you’re probably happier, compared to someone who buys the cheaper version with only two options.
This is the most prominent part of the framing principle: i.e., that the attractiveness of a price will change depending on what’s presented with it. But, this is only one example of the effect one can have by introducing or removing other prices.
2. People evaluate price differences relative to the level of the initial price
The stronger a stimulus is, the more of a chance you have to make to it before we can perceive the change. The scientific name for this is the Weber-Fechner Law, is about two related hypotheses in the field of psychophysics. Both laws relate to human perception, more specifically the relationship between the actual change in a physical stimulus and the perceived change. This includes stimuli to all senses: vision, hearing, taste, touch, and smell. This is especially important when studying price elasticity. The variation in the dollar amount that people are willing to pay for the same item.
This is why you have a hard time paying $5.00 for a Starbucks Sugar-coma Mocha, but you have an easier time coming down $5,000 on the asking price for the house you’re selling.
3. Losses hurt more than gains give pleasure
Also called the Endowment Effect. People tend to ascribe more value to that which they own. Therefore, people try to avoid losses more than achieve gains. People want to avoid late fees more than they care to take advantage of early-bird discounts, even if the value is the same.
Also called the Loss Aversion Theory, people feel loss twice as much as the pleasure as to gain. Customers love discounts and hate add-on charges and fees. Even though the offering price may be the same, the route through which the price is offered affects the willingness of prospects to give payment. Discounts are perceived as a win for customers, while add-on charges are perceived as a loss.
When companies lower prices as a way of providing their customers with greater value, people think this is acceptable. However, when a company raises its prices to make an increase in their profits at the expense of their customers, people don’t like this very much – and rightly so. It’s a big and unpleasant loss.
This type of loss is the stick-slip dimension of price framing. In other words, it is when the movement of price changes influence customers’ price choices.
Are Some Price Increases Psychological Marketing Tricks?
Increasing prices is usually blamed on external factors, such as supplier costs, maintenance costs, and inflation. In an alternative approach, price rises can be positioned as being proportional, or even a relative discount, to an improvement in the underlying offering.
An example of this is the pricing in the marketing mix of Caterpillar on the basis of the technology used, product range and competition. Despite pricing much higher than other manufacturers, pricing has never been a problem for the company. Customers satisfied with the CAT (Caterpillar) products are even priced higher. That is because the company is successful in delivering much higher quality for the price tagged. The positive perception created that the company adds 20% extra value to the products it prices premium. So, though the products priced higher, the price is lesser for the high-tech quality that Caterpillar delivers and the risk the customer avoids from buying from them.
They explain to the customers how their prices take away risk – i.e., risk of product failure, risk of downtime. They explain how their higher prices will help their customer make more money by avoiding risk.
If a customer wants to explore a Cat retail store completely on their own, Cat wants them to be able to do just that.
A manufacturer makes sure that they are giving these customers options of how they want to view the machines. Be it on the website or showroom, you can find all the specs (and pricing) you need to know about those machines.
Tips to help your customers in the buying process using psychological marketing tricks
Psychological marketing tricks are a good technique to provide you with some new compelling ideas to improve your business’ sales or visibility. Below are some psychological marketing tricks that would help trigger positive emotional responses from buyers and help them in the buying process.
The Colour Psychology
Colour psychology is about influencing the purchase decisions of customers. Colour can have a strong effect on a consumer’s behaviour and buying decisions. Believe it or not, the colour could even be the one reason why a customer will buy from you. Thus, you should consider it when working on your website design.
For example, the purple colour. Brands like Cadbury or Hallmark use this colour. A colour believed to represent luxury, creativity, and problem-solving.
The Anchoring Effect
The anchoring effect is a strategy to get consumers to decide based on comparative values instead of intrinsic values.
Like for example, if you’re running a sale, you should put the old higher price next to the new lower price. Though the price is still fairly high, the previous price was anchored and customers think that they found a good deal.
The Scarcity effect
Simply, the supply and demand formula. The less availability or supply of a product there is, the more that the value increases, thus, leading to an increase in the demand for that particular product.
Do you remember when you were trying to book a plane ticket online and it said, ‘Only 3 seats left’? That’s scarcity. A psychological marketing trick used to put pressure on customers to buy.
The fear of missing out feeling
For example, a customer is thinking whether or not to buy a product on your website, and you should do something to force a bit closer to purchasing the item. One good technique is to put a countdown clock on your page so it will push customers to buy from you. Like, showing how many hours/minutes left that a customer can take advantage of next-day delivery. By using this technique, it puts this fear of missing out to the buyers if they don’t purchase in time.
Give customers reasons to buy from you
Provide your customers with reasons why they should buy your products. One strategy could be providing context such as positive customer feedback. Positive customer reviews provide potential customers with the assurance that others are satisfied with your products/services. And that they had a good experience with your business. Reassurance is key in influencing prospective customers to buy from you. They want to know that you’re reliable and offer a good service.
Customers seek value but also like to shed costs. In psychological marketing tricks, customers perceive an offer as providing value, their frame of reference skewed towards maximising that value.
If the offer perceived as a cost of doing business; they will seek to lower the cost and accept the minimum solution that performs its function. The specific message and approach made in marketing psychology to influence the frame of reference. For prospects towards a more positive attitude that is likely to encourage the buyer to purchase it.
The value-focused framing enables the customer to perceive the price as a small cost to pay receives the value offered.
By leading with a description of the value on offer then following through with the price, marketing psychology can focus on uncovering the challenges facing different prospects. Including a value-based description of their offerings and a clear explanation from sales on how each product can help customers overcome specific challenges.
Communicating the price first then following through with a description of the value encourages customers to focus on the price. Additionally, it also makes customers seek discounts throughout the discussion.
Value focused negotiation requires all price variances associated with value variances in any price concession. It must be accompanied by the removal of value from the offering. Value negotiation improves customer profitability, as challenges shifted to the party that can better manage them.
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