Provided By the Financial Aid Office
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The world of money can be rewarding, complicated, scary and FUN, all at the same time. YES I did just say FUN. The Financial Aid Office has a series of Money Management Seminars that are engaging and riddled with fun-filled activities! Here's just a taste of how we can help empower you to spend your money the way that you want to!
Here are the top 10 tricks that marketers will use to get you to buy their products:
1. THE STORE LAYOUT
This is a VERY powerful tool that affects shoppers at a subconscious level. The store layout has an impact on the decisions we make BELOW our level of consciousness; meaning we don’t consciously recognize the external factors that are impacting the decisions that we make. In this case, shopping malls, grocery stores, department stores, pretty much anywhere you go to shop, are designed with a very confusing layout.
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This layout causes us to lose our original intentional focus. Reported reactions to this effect include a slacked jaw, slowed cognition, and a slower walking pace. We forget why we originally came to the mall in the first place, or what we originally intended on buying, and become more susceptible to marketing techniques and unplanned spending. The effect of store layouts turning us into a Neanderthal (without us even realizing it…) is also know as the Gruen Transfer, named after a famous architect, Victor Gruen, who denied any link between the manipulative techniques used when designing shopping malls. The layout of the store is not the only thing that impacts how we feel as we scan items while walking the isles. The air conditioning, the scents being pumped into the air, the music that is playing, the colors of the displays, EVERYTHING is controlled to get you to be both very relaxed, and confused, without even realizing it.
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I’m sure we’ve all seen ads that tout “LIMITED QUANTITY, BUY NOW OR FOREVER MISS OUT ON THIS SUPER AWESOME DEAL”. Maybe you didn’t originally want that $400 pair of boots, but now they’re on sale for $150. How could you possibly resist? That’s exactly what they want you to think. That fear of missing out coupled with other consumers in the market (your competitors) who also don’t want to miss out on this deal make us feel like we need to take advantage of every deal we see, especially if there is a limited quantity.
Say you see a product in a flyer for what seems like a really really good price. We’ll say the item is a Wii. You see this deal, and go wow, that’s a great price; I should go get that. So you rush to the store to buy it. The Wii comes with one controller and one game and you think “Well this won’t be any fun if I have to play the game by myself…and I’m going to get sick of this game pretty quick.” So you decide to buy another 3 controllers, so you can play with all of your friends, and a few extra games. These add-ons, or extra items that you are buying, this is where retailers make their money. They advertise a product at a really great price, just to get you in the door, and then encourage you to buy some of their higher profit margin products to make money.
4. FOCUS ON “SAVING” INSTEAD OF SPENDING
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You know how Safeway tallies up how much you saved on your receipt, and then puts the total at the bottom in bold, and sometimes the cashier will circle it? How many of you then take that amount of money you “saved”, and actually put it into your savings account? My guess is that the majority of you reading this said no. Retailers have this tendency to focus on how much you are saving instead of how much you are spending, when in reality, you are not saving a penny. You may have spent less than you originally intended to, but you are not saving any money unless you physically put that money into a saving account.
5. DECOYSThis one is really hard to detect. Retailers will use different pricing schemes to distract us from our original intentions and encourage us to spend more money on their products. Take apple for example…out of these three ipads, which is the best deal?
You might look at this and say, well I have about $500 to spend and 16GB is all I need, but for only $100 more I can get DOUBLE the amount of data…perhaps I should splurge and get the 32GB ipad? Well now that I’m looking at the 32GB ipad, I might as well spend just another $100 to get the 64GB ipad. It is very easy to escalate yourself to the most expensive product because the 64GB ipad may appear to the best bang for your gigabyte buck, and that’s what they want you to think. Are those 64GB REALLY the best bang for your gigabyte buck? The difference between the cost of manufacturing a 16GB ipad and a 64GB ipad is less than $10. Maybe you need the space for your ever expanding music collection and the 64GB ipad is what you’re looking for, but remember to draw your attention back to what you originally came to get, and question if the extra expense is actually worth it and within your budget.
6. PERSONALIZED MARKETING
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This one gives me the heeby jeebies in an “I need to wear an aluminum hat so retailers can’t read my thoughts” sort of way. You can find personalized marketing along side your e-mail, in social networks that you frequent, on random websites or search engines that you use; pretty much anywhere on the Internet. Personalized marketing tailors types of advertisements displayed based on your activity on the Internet and your demographic information.
Different ads pop up on a website based on your age, your gender, your martial status…on any information they can gather from you. Your activity also dictates what ads pop up. If you have gmail, have you ever noticed the ads change to reflect the information within your emails? I sure have. I’ll write an e-mail to a friend about how I want to do a triathlon and all of a sudden the ads on the side of the screen change to triathlon gear. Facebook bases what you see in your Newsfeed on the type of posts that you click on the most. It will show you the posts that you want to see and weed out the ones you don’t based on what you frequently click on. This TED talk can help to explain more about filter bubbles:
There are many apps out there now like groupon, living social, or teambuy that give you the ability to quickly find daily deals. They’ll even send you e-mails everyday to keep you in the loop. I was once victim to the daily e-mail deals through Groupon. I was enticed by every coupon I saw. How about a massage, or pedicure, maybe a day at the spa…how about 15 fitness classes for $20, or unlimited yoga for 3 months for $50? How could I possibly resist all these really great deals! Coupons encourage you to buy things that you hadn’t originally planned on buying or that you didn’t budget for.
8. FREE ADD-ONS
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Retailers will often offer free bonuses or add-ons if you purchase their products or sign-up for a contract to receive a service. Telus or Rogers have some great add-on examples. Sign-up for a 3-year contract for our cable, Internet, and phone services and you will get a TV for FREE! Seems like a great deal right? What happens if you need to break your contract early? How much are their services going to cost you per month? Is signing on for 3 years really the best choice for you?
9. THE BARNUM EFFECT
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The Barnum effect is named after P.T. Barnum, a showman who found many ways to separate “suckers”, or people he claimed to be gullible, from their money. P.T. Barnum’s circus acts claimed “we have something for everybody” and that was “how a sucker was born every minute”. This effect takes place when you read a statement that you think applies to you personally, when it in fact could apply to many people.
Horoscopes and fortune telling often use this type of wording. How does this relate to retailer tactics?
When retailers create advertisements, they look for different ways to “sucker” you into buying their products. Advertisements may make generalized statements to get you to think, “hey that situation applies to me, maybe I should buy that.”
Advertisements also have a tendency to promise unrealistic results and make false claims. Take, for example, Red Bull; Red bull promises to “give you wings”. Or this Coke or Dove commercial.
After watching these videos, what did you find to be really ironic?
Both of these commercials aim to associate their products with something bigger, something greater, and something morally right and just. They associate their brand name to an organization that is contributing to something that is going to better society, when in actuality, these organizations and products are contributing to the problem.
This rebuttal explains the irony behind Coke’s “coming together” commercial:
And as for the dove ad; what does Dove sell? Beauty products. They are basically saying, you’re beautiful just the way you are, now here’s some anti-aging cream to get rid of those wrinkles. These types of commercials often aim to invoke a powerful emotional response to associate their products with a feeling so that you are more likely to remember the product as you are glancing through the isles at the store. And that is “how a sucker is born every minute.”
10. THE DIDEROT EFFECT
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Have you ever bought a pair of Lu Lu Lemons pants that made the rest of your workout clothes look drab and dreary? Did said pants make you get rid of all of your seemingly old ratty workout clothes and buy more fancy new Lu Lus? That is the Diderot Effect in action. Denis Diderot, a French philosopher, wrote about this effect in an essay after he received a beautiful dressing gown as a gift. Diderot becomes dissatisfied with his old possessions and he proceeds to rid himself of them and replace them with pieces that match his new dressing gown. Beware brand name or luxury items as they may pull you into a possession-loathing, money-spending spiral that you can’t control.
So…all of these factors are external to us and largely out of our control. How do you regain control? By focusing on what is most important to you. Now that you have created awareness about how easily distracted we are while shopping, find mechanisms to re-focus your intention to the reason you walked into that store in the first place. Bring a list with you. Check it 50 times as you shop. Start using your money for the things you care about most.
The Financial Aid Office has 5 Money Management Sessions currently available to prospective students and current students as well as staff and alumni, where you can learn the ins-and-outs of credits cards, how to build and stick to a spending plan, how to set a goal to start using your money for the things you care about most, and so much more!
We start the discussion of managing your money by assisting you in discovering exactly what it is you want your money to do for you. This thought provoking session touches on decision-making, and strives to assist you in discovering what is most important to you, your values, and prioritizing them. Once you have completed Session 1 and have a better idea of what those internal self-motivating factors are, Session 2 explores external factors that impact our financial decisions. These external factors usually impact the financial decisions we make without us even realizing it!
If you are interested in attending one of our money management sessions, click here for more information.