Swing Low, Sweet Anchor Points

A perennial bugaboo for consumer behavior researchers is that people act differently in the laboratory than in the marketplace. Some of it has to do with the nature of the study participants. Most laboratory experiments are conducted with college students, but store customers and potential donors range more widely in age. And in the lab, the participants are often asked to pretend they’re spending their money or contributing to a charity, not actually doing it.
     Researchers at New York University and University of California-Berkeley decided to face down the bugaboo in their exploration of a consumer behavior phenomenon considered to be as stable as an anchor—the anchor effect: To decide if a price is high or low, shoppers set in their mind an anchor for what they consider to be a proper price. To have the customer purchase a higher-priced item, move the anchor point higher, it’s said.
     But the researchers found how the anchor effect can, in reality, be as moveable as a chariot. In four laboratory experiments where participants were asked to spend hypothetical money, the anchor effect worked robustly across price points. Yet in a total of sixteen experiments where the participants were asked to spend their own money for real, the anchor effect operated well only at what people considered to be low price points. In addition, the researchers verified that the anchor effect is strongest when consumers aren’t clear about how much to pay or donate and are looking for cues.
     So keep the anchors relatively low. Still, do provide them. In a pricing study conducted by researchers at University of California-San Diego, University of California-Berkeley, University of Amsterdam, and Friedrich Schiller University, people who were photographed riding a rollercoaster were invited to purchase the photo. All the people were told the regular price was $15. Then the prospects got one of three offers. Some were offered the photo at the regular price of $15. A second group was offered the photo for $5. A third group was invited to set their own price.
     People offered the $5 price were most likely to purchase the photo. We do love a bargain. Surprisingly, the group invited to set their own price were the least likely to buy. Why? They feared appearing stingy, so without the anchor of $5 as okay to pay, the “quote your own” group often chose not to buy at all.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Anchor Browsers onto Higher Prices
Encourage Customers to Pay What’s Right