{"id":30959,"date":"2017-05-29T10:56:17","date_gmt":"2017-05-29T14:56:17","guid":{"rendered":"http:\/\/sciencebusiness.technewslit.com\/?p=30959"},"modified":"2017-05-29T10:56:17","modified_gmt":"2017-05-29T14:56:17","slug":"the-science-of-bargains-know-your-customer","status":"publish","type":"post","link":"https:\/\/technewslit.com\/sciencebusiness\/?p=30959","title":{"rendered":"The Science Of Bargains: Know Your Customer"},"content":{"rendered":"

– Contributed content –<\/em><\/p>\n

29 May 2017. When you are just beginning in business, it can be difficult to see why you would ever lower the price or run a sale event. After all, you have meticulously priced<\/a> these products; you know exactly what to charge to ensure you make a profit. The strategy is the same whether you have a small Etsy store online<\/a> that you run in your spare time or if you have huge retail premises: you do your costs, and you charge people what you need to.<\/p>\n

So given how laborious it can be to finally settle on a price point – why would you ever want to give a discount?<\/p>\n

There are, of course, multiple answers to that question – or are there? At the root of it, there\u2019s really only one reason you would run a sale.<\/p>\n

Sales and bargains attract customers<\/b><\/p>\n

\"Urban<\/a>
(Usplash, Pixabay)<\/figcaption><\/figure>\n

The idea of using sales and bargains to attract customers is not a new explanation, but do you really know why it works? Understanding the science behind this established business \u2018fact\u2019 can ensure you make the most of any price reductions that you do offer.<\/p>\n

There are several components to this, so we\u2019ll break it down into why customers swarm to the idea of saving money – even on products they didn\u2019t even know they wanted.<\/p>\n

Factor 1: Exclusivity<\/b><\/p>\n

\"Last<\/a>
(Judith E. Bell, Flickr)<\/figcaption><\/figure>\n

Despite the fact that most of us should know better, there is something in the mind of a customer that associates sales with exclusivity. If something is on sale, they reason, it might be being discontinued. This might be their last chance to get hold of an item.<\/p>\n

This taps into one of our most primary psychological components: the desire to hunt and gather. It\u2019s pure Id<\/a>; the desire overwhelms the superego (to use Freudian terminology). The constraints, the arguments, the \u201cbut do I really need this\u2026?\u201d thoughts are easily brushed to one side by the sheer desire to possess something.<\/p>\n

Factor 2: Cost <\/b><\/p>\n

Of course, some of the factors behind why people love bargains are simple: it\u2019s cost reduction. They want to pay less for items, so they immediately buzz with excitement at the idea of doing so.<\/p>\n

What is worth remembering is that people will buy things for the sake of buying them <\/i>if they are told they are on sale. There is a powerful sense of control that comes, psychologically, from getting an item on sale. The customer is no longer the target; they are the ones demanding the price they will actually pay, not you.<\/p>\n

This is nonsense, of course; you still set the price! But they will feel<\/i> as if they have got one up on you by beating your usual retailing price. Essentially: bargains are an appeal to the ego.<\/p>\n

Factor 3: Victory <\/b><\/p>\n

\"Winner<\/a>
(HypnoArt, Pixabay)<\/figcaption><\/figure>\n

Never underestimate the feeling of victory that drives those who bargain shop. Not only do they claim the aforementioned victory over you, the retailer, but also over all the other shoppers<\/i>. They got the deal. They won. They denied someone else a wanted product. And that is quite the potent feeling; the dopamine rush<\/a> when we feel victorious is addictive.<\/p>\n

So how do you make this work for you?<\/b><\/p>\n

Understanding why people want to bargain hunt should give you some hints as to how to use price reductions, discount codes, and sales to keep your business booming.<\/p>\n

1) Have a minimum spend <\/b><\/p>\n

If you issue a discount code, a minimum spend to use it is one of the most powerful ways to appeal to the ego. It gives the impression that you, the retailer, don\u2019t really<\/i> want to be offering this sale – that\u2019s why there\u2019s the threshold, to discourage people from buying!<\/p>\n

Thus, if a customer reaches that spend and uses their code, you will still make a bigger profit than you would without the threshold spend – and the customer gets that feeling of having \u2018won\u2019.<\/p>\n

2) Battle for bargains<\/b><\/p>\n

If you have a retail store, then you have probably seen some of the media coverage of \u2018Black Friday<\/a>\u2019 and other sales events. Did you know that the idea of battling other people for a product that\u2019s on sale is a great tactic for retailers? That\u2019s why those stories get leaked.<\/p>\n

What better way to show your products are desirable and<\/i> offer a tangible sense of \u2018victory\u2019 to those who manage to buy something? It\u2019s perfect.<\/p>\n

You can create the same kind of buzz – without the huge crowds – during your own sales.<\/p>\n

First, make the shop floor more cramped, so it seems like there are more people in the space than there actually are. To do this, it helps to install ball bearing casters<\/a> onto displays, so you can move them with ease as you switch between regular and seasonal sales.<\/p>\n

Couple this with another \u2018win\u2019; perhaps something along the lines of the first 20 customers get a 5% discount code for future purchases. This will bring out the competitive nature in your customers even if they don\u2019t know it – but it will be your store that is ultimately victorious.<\/p>\n

3) Make it limited – very limited <\/b><\/p>\n

You want to attract more customers, so you\u2019re going to run a sale. You might not make the profit margin you usually want, but you know you\u2019re still going to make decent with the prices you have chosen.<\/p>\n

When you have got to the above point, all that\u2019s left is to decide when your sale is going to be and – crucially – its duration. As a general rule, the shorter the duration of the sale, the better.<\/p>\n

You don\u2019t want to take the risk of a week-long sale that gives customers time to wait. You want them to be gripped by that feeling of exclusivity, the desire to grab something right now. However, you need to balance this with practicality. For example, some people won\u2019t have access to funds to make purchases immediately.<\/p>\n

A sale duration of two to four days is the perfect blend of enough time, but not so much you don\u2019t pinpoint that urgency.<\/p>\n

Finally, it is better to host many short sales than several long ones. Space them through the year and ideally at the end of each season. That way you can offload outdated stock and<\/i> capture the psychology of your shoppers\u2019 – it\u2019s perfect!<\/p>\n

\"Sale<\/a>
(Coffeebean Works, Pixabay)<\/figcaption><\/figure>\n

*\u00a0\u00a0\u00a0\u00a0 *\u00a0\u00a0\u00a0\u00a0 *<\/p>\n","protected":false},"excerpt":{"rendered":"

The idea of using sales and bargains to attract customers is not a new explanation, but do you really know why it works?<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[118,132,53],"class_list":["post-30959","post","type-post","status-publish","format-standard","hentry","category-business","tag-behavioral","tag-contributed","tag-economics"],"_links":{"self":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts\/30959","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=30959"}],"version-history":[{"count":2,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts\/30959\/revisions"}],"predecessor-version":[{"id":30964,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts\/30959\/revisions\/30964"}],"wp:attachment":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=30959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=30959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=30959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}