Ever heard of the Anchoring Psychology Effect?
Chances are you haven’t, but rest assured you have come into contact with it at one time or another.
The Anchoring Psychology Effect describes our tendency to latch on to an idea or a fact, and then use that piece of information as a reference point when we make future decisions. Savvy marketers have worked out how to use anchors to great advantage as a sales technique – when you know what to look for, you’ll see them everywhere!
Here’s an example…
You’re looking for a new pair of running shoes and head to your local sporting goods retailer. The sales assistant asks you what you need, and starts to present options…
First, there’s a top-of-the-line sneaker – it’s highly engineered to deliver the ultimate in comfort and performance, at a cost of $300.
Then, there’s the middle of the road sneaker. At $150, it will do a fine job of supporting you as you run, and has a few bells and whistles to boot (no pun intended).
Finally there’s a $50 option that looks like it would do the job, but has very few added extras.
When faced with a choice like this, most of us will choose the middle option as it seems like the best value for money – not outrageously expensive, but not cheap and nasty either.
Bear in mind that, by showing you the $300 pair first, the sales assistant anchored you to a high price. Of course that meant the $150 sneakers looked like a bargain in comparison (regardless of whether or not you would usually think $150 is a reasonable price for a pair of runners!)
So, how do you avoid being sucked in by the Anchoring Psychology?
- When making a major purchase, commit to what you think is a reasonable price before you hit the shops – that way you’re less likely to be influenced by sales patter about the various options available.
- Know what you want in a product. We are often anchored to features that retailers convince us we must have… even if we don’t really need them. Before you make a major purchase, make a list of your requirements so you don’t get talked into unnecessary features.
- Make the purchase decision a democratic one. If you’re making a major purchase, take a trusted companion and get their opinion on which option is best suited to your needs.
Keep your eyes peeled! Once you’re aware of its existence, you’ll start to see the Anchoring Psychology everywhere. By looking out for it, you’ll be more aware of how you’re making your purchase decisions and less easy to influence.