Biases That Influence Your Purchasing Habits 2
Learn about how price and familiarity with a product secretly shape our buying decisions.
In part one of this series, we explored how biases such as the decoy and bandwagon effect influence how we make our purchasing decisions. In this article, we are going to have a look at a few more biases, that marketers use.
Shortcuts For The Busy Reader
a. The Anchoring Bias
Anchoring bias refers to our tendency to rely on the first information we receive about a particular subject. This information is also known as an anchor and acts as the point of reference for all future information we receive regarding the particular topic.
For example, you are in search of a new dining table and go online to do some research. You come across one table that you like and it is priced at $200. From then on, this table will serve as your anchor, enabling you to compare all subsequent tables to the $200 price point.
We have often come across anchoring and this bias used by businesses particularly when it comes to pricing. We can better understand this effect with the help of a few examples.
When you visit an online retailer or e-commerce website, you are likely to notice that the prices for most goods have been stricken out with a lower or discounted price mentioned right next to it. This is known as strike-through pricing, a commonly used anchoring strategy.
When we as consumers view these products, we tend to an In addition to this, we can also see the use of anchoring in the form of charm pricing.
If you pay close attention to how most consumer goods are priced, you will notice a pattern. Whether it is a bag of chips or the latest iPhone, they all are priced in such a manner that they are not whole numbers, for instance, $5.99, $199 or $999. This strategy also known as charm pricing, uses odd numbers, such as those ending with 9 to assign a value to a product. But why is that so?
According to psychology research, when we are presented with a price, the number on the left acts as an anchor and greatly impacts how we perceive the price of the object. For instance, if we were presented with two identical objects, with one priced at $1.99 and the other at $2, we tend to view the two prices very differently albeit there not being much difference in the options with regard to price.
The former option psychologically feels like a better option in comparison to the latter. This is because, when we view the prices, we tend to anchor to the number 1, and not the numbers that succeed it(0.99). After doing so, we try to compare the prices of $1 and $2, out of which the former is of a lower price, thereby appearing to provide us with a better deal.
What the above two examples indicate that is the way the price is presented to us, has a significant effect on our purchase decisions. With that being said, let us understand why we succumb to the anchoring bias.
Why Does the Anchoring Bias Occur?
The anchoring bias has one of the most salient effects on our behaviours. We have the tendency to be anchored by any information, at times even those that are unrelated to the task at our hand as well.
When we examine why we demonstrate the anchoring bias, research does not reach a consensus. However, there are several theories that propose mechanisms underlying the anchoring effect. One of them, known as the “selective accessibility hypothesis,” stands out in particular.
This theory is based on priming, a phenomenon that states that the primary information/stimulus influences how one responds to subsequent information without their knowledge.
According to the accessibility hypothesis, when the first information is presented to us, whether it is a price, quantity, etc., it activates specific brain areas. This ensures that when we are presented with subsequent information, the primed information is easily accessible to us, influencing our decision-making without our awareness.
How Do You Avoid the Anchoring Bias?
Having explored the anchoring bias and its effects, let us now understand some steps we could take to navigate around it.
The first is to prolong the decision-making process and consider several factors before making a decision. Carry out individual research, ask people you know about the product, and visit other shops or retailers to find more information than what is presented to you.
The second alternative is a practice known as red teaming. This involves presenting your thoughts about purchasing a product to another person or a group and asking them to provide alternatives or challenge your ideas. This process can help weaken the effect of the anchor and is a step towards a more rational decision-making process.
b. The Mere Exposure Effect
The last bias we will consider is the mere exposure effect. This bias, also known as the familiarity effect, describes our tendency to prefer certain things solely because they are familiar to us.
For instance, given two alternatives, we are more likely to choose the one we have seen more frequently, i.e., the one we are familiar with, rather than the one we are unfamiliar with. An example of this would be when we choose cereals. While stores sell a variety of cereal brands, we tend to select the one with which we are familiar or have previously consumed.
We don't need prior experience with the product or service to demonstrate the mere exposure effect. Our awareness of them can influence our purchasing behaviour. Companies go above and beyond with this information to create appealing advertising campaigns that capture our attention and instil a sense of familiarity with a brand. This recognition of the brand's logo or slogan may eventually lead to a preference for their products.
We also experience the mere exposure effect in the form of targeted ads that appear in our social media feeds. Because social media companies are aware of our preferences and interests, they display ads that correspond to them. While we may ignore some of them once or twice, the more we see an advertisement for a product, the more familiar it becomes to us, increasing our likelihood of purchasing it.
The problem with relying on this bias is that evaluating options based on familiarity will keep us from trying new things and limiting our personal growth. Furthermore, it can lead to suboptimal decision-making over time. When we encounter a new or old product or service, we should be able to form our own opinions, ultimately selecting the option best suited to our needs rather than a product we are familiar with.
Why Does the Mere Exposure Effect Occur?
Two factors explain why we succumb to mere exposure. The first is to avoid feeling uncertain about our choices, resulting in us opting for choices that we are familiar with. Furthermore, when we evaluate it from an evolutionary perspective, we can see that we perceive novel objects to be dangerous. Only through repeated sightings and encounters with the object will we be able to reduce the uncertainty surrounding it. This, therefore, suggests that we choose familiar options to reduce uncertainty and avoid threats.
The second reason we use the mere exposure effect is that it’s easier for us to process information regarding familiar things. Whenever we come across new products, we undergo complex information processing to reach a conclusion regarding them. But that is not the case for familiar objects. Since our brain is working towards reducing the mental load caused by the new objects, we tend to prefer those that we are familiar with.
How Do You Avoid the Mere Exposure Effect?
In order to navigate through the effects, we can proactively adopt one strategy. This involves seeking newer experiences and exploring the diversity of options. This helps us discover options that we never have come across thereby limiting the influence of this effect.
Throughout our deep dive into bias, we were curious to learn how errors in our decision-making can eventually affect our purchasing behaviour. We recognise and appreciate the value of using heuristics in our daily lives; without them, we would have to go through the time-consuming and taxing process of deliberating and reaching a decision on every decision we make.
However, relying solely on heuristics as the primary decision-making mechanism is not ideal either as it can lead to us making uninformed decisions. Since this ultimately has a financial impact on us, it is critical that we learn about these biases and their pitfalls before embarking on our next online or retail shopping adventure.
References Hekkert, P., Thurgood, C., & Whitfield, T. W. A. (2013). The mere exposure effect for consumer products as a consequence of existing familiarity and controlled exposure. Acta Psychologica, 144(2), 411–417. https://doi.org/10.1016/j.actpsy.2013.07.015 |