Next time you see a big red "SALE" sign plastered on a storefront, you might want to think twice about dropping your hard-earned cash.
According to Mark Ellwood, author of Bargain Fever: How to Shop in a Discounted World, those advertisements are what really cause you to spend, not the actual reduced prices.
As Ellwood explains, those hard-to-ignore signs are referred to as "information cues" intended to appeal to our frugal dimensions. Once we see the "discount" tags, we feel much more inclined to purchase the items, regardless if the sale is actually saving us money. Sound farfetched? Well, there’s research to prove it.
In a study conducted at MIT, customers were given one of three catalogs that advertised the same dress at different prices: $54, $49, and $44. In the first round of testing, the cheapest option was the bestseller. However, in the second test, a large “FOR SALE” sign was placed next to the dress in each catalog, resulting in an equal amount of dresses sold (even with the price difference).
Ellwood also cites a second unpublished MIT study in which 200 different products from 18 convenience store locations were put into three groups. Items in the first group retained their original prices. In the second group, the products were marked down by 12 percent without an indication of the discount. In the third group, items also retained their original prices but were accompanied by a red and yellow "LOW PRICE" sticker. “The quietly discounted group sold just over 17% more units than the control. But the group with the 'LOW PRICE' sticker also had increased sales, in this case by 3.4%,” Ellwood wrote. “That profit uptick cost the store nothing more than the price of printing a few flimsy sheets of paper."
So remember, just because it's advertised as a sale, you should always double check the actual costs before swiping that credit card. The store might be playing mind games on you.
[via Slate]
