Everyone knows and uses some kind of discounts in the process of shopping nowadays. For consumers, companies use a wide variety of strategies and one of them is to offer products and services on sale at certain periods of time. But concealing behind relatively simple promotions are dishonest, and influence -peddling of psychology of discount.
The power of Perceived Value
However, the concepts that are critical to understanding the psychology of discounts are perceived value. Managers and commerce realize that customers do not decide about the product on the basis of its value. Thus, a shopper themselves evaluates the goods subjectively with the help of parameters such as a brand, its rarity and perceived bargain.
Hence, instead mere discounting will help the businesses to also instill a sense of specificity or specialization. The “only for a limited time” or “what stock last”, appeals to our FOMO and gets us to buy without second thought because the offer is almost about to run out. This psychological trick works as our brain has been wired in such a way that it always looks forward to an immediate grain rather than a distant one.
Anchoring and Adjustment
Adjustment technique is another well known technique in discount psychology. The necessity of frequently using the promotions is explained by the fact that businesses deliberately set a high original price for their goods and services and then simply give a discount that makes the lower prices seem like an exclusive offer. This is known as the anchoring effect, which distorts everyone’s perception of value, since people don’t look at the actual price they are paying, but at what they originally set on face value.
For example: a retailer may price a sweater worth rupees 900 and then provide an offer of 20% discount and then selling for worth 720 as the “discounted price”. The experience of getting the offer is 720 rupees which is still a high amount for that sweater. It may cause us to make decisions on purchasing goods which we never desired to own in the first place or those which we do not financially have the capacity to afford.
The Illusion of Control
Discount can also provide a feeling of control to consumers, additional to playing a role and being an impact factor in consumer’s behavior. It tricks people because of the decision to buy certain goods or the normal price product. The ability to choose what one wants, or the hue and cry of everyone gives hope of being responsible.
However, the choices offered are sometimes rather limited to lead us to the so-called “discounted” product, which might still be less costly than possible. Thanks to the option of “choosing” the discounts, one is put into a psychological contract to make the purchase.
Emotional Manipulation
That is not to say businesses do not take advantage of the fact that we even have emotional reactions to discounts. The increased heart rate, and consequent release of adrenaline, and the pleasurable and rewarding effect produced by dopamine all derive from the idea, grand or pretty one forms out of seeing something as that “deal”. This neurological response can bring about a feeling of high, which disregards just how expensive the acquisition in fact is.
Furthermore, the product can always stimulate our pride and egoism by proposing discounts. Thus the possibility of boasting about having a ‘great deal’ or ‘steal of a price’ speaks out of a need for belonging and self-esteem thereby enhancing the perceived value of the discounted product.
Loyalty and Reciprocity
It is also important to give discounts that help in building a long term relationship with consumers. Customers could be forced to keep coming back to the business premises because every time they are offered a one-of-kind offer or the company is offering an extra incentive that they cannot turn down.
This strategy is not merely a contractual relationship but there is love that the buyer has for the brand and this is not easy to change. These customers have dedicated their time and resources to become loyal so they hardly switch to another store even if they have better offers.
Psychology of Discount in India
Bargain appeal thus turned into a potent weapon in the hands of most Indian sellers who pull customers to their shops, mostly in a bid to increase their earnings. Through influencing the heuristic of the consumers, the Indian businesses have been able to guarantee sales through the marketing strategies that give the impression of urgency and value that persuade consumers to make impulsive decisions.
The two examples of the presence psychology of discount win the market area: The Flipkart Big Billion Day sale and The Diwali discount sale of any retailers.
flipkart ‘s big billion day sales”: many times managers think it is enough to start planning for change and to start working on change without making it clear to others that change is urgent.
Flipkart: India’s no1 tailor is probably one of the best examples we have seen pull off the psychology of discount particularly during its Big Billion Day sale. The organization makes sure that there is limited availability of their product and that they briefly appeal to the customers to buy products since time is of the essence.
Flipkart over emphasizes this psychological trigger by constantly sending promotional messages, countdown etc. Time bound offers are about timers and low inventory which creates awareness of scarcity and thus, customers cannot easily avoid the lure of impulse buying.
Diwali Discounts: Psychology of Discount
Diwali is celebrated as an Indian festival which has always been considered as an important cultural event and is intelligently adopted as a customer appealing discount by physical selling organizations. Customers from all the sectors including electronics garments etc get good discounts during Diwali seasons.
The success of all these Diwali discount campaigns can therefore be attributed by the fact they incorporate the cultural aspects of the festivals. In this case, consumers feel that they are getting privileges in the form of discounts as part of Diwali celebrations and this is where retailers build the “emotional association” and “perceived value”. Secondly Diwali discount is valid only for the duration of the festival and hence buyers feel that they need to quickly grab the opportunity.
The Concept of Psychology of Discount
The case of Big Billion Day sale of Flipkart and Diwali sales campaigns by conventional stores provides a good example of how the psychology of discount helps in creating demands in India. These businesses are therefore able to appeal to the embedded cognitive biases and emotion in consumers with a view of making them purchase items on an impulse.
Hence, employing time limited offers, limited stock availability and cultural meanings helps Indian retailers increase the customer’s perceived utility while using the strategies associated with discount psychology to increase sales.
Conclusion
To the world of retail, and e-commerce the concept of discounts is not only something that is used to clear the shelves or get more people into the store. When one understands what happens in the background they are a better place to be wise consumers and not fall for a mere attractive piece.
For consumers, thus, it is necessary to learn to be skeptical and wonder whether these discounts are genuine. Thus, when the general public is aware of how their minds are being manipulated by businesses, they have to ensure that they don’t fall back in the same trap and be rigid on their financial decisions.
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