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Corporate Sep 28, 2012

Call of the mall: Tricks they use to make you spend more

By Vivek Kaul

On a recent visit to a refurbished supermarket I was surprised to see a bakery right at the entrance. What it clearly told me was that Indian retail was finally catching up with its global counterparts when it comes to marketing.

Now you might like to believe that having a bakery as part of a supermarket is a perfectly natural thing. But there is more to it than what meets the eye.

So why do most modern supermarkets have bakeries right near their entrances? GettyImages

So why do most modern supermarkets have bakeries right near their entrances? Martin Lindstrom has the answer in his book Buyology - How Everything We Believe About Why We Buy is Wrong.As he writes:

"Not only does the fragrance of just-baked bread signal freshness and evoke powerful feelings of comfort and domesticity, but store managers know that when the aroma of baking bread or doughnuts assails your nose you'll get hungry-to the point where you just may discard your shopping list and start picking up food you hadn't planned on buying.Install a bakery, and sales of bread, butter, and jam are mostly guaranteed to increase. In fact, the whiff of baking bread has proven a profitable exercise in increasing sales across most product lines."

In fact Lindstrom even points out that some Northern European supermarkets don't even bother with setting up bakeries: they just pump artificial fresh-baked bread smell straight into the store aisles from their ceiling vents. In some cases a florist shop or a cookie store comes into play. "Smell and sound are substantially more potent than anyone had even dreamed of...All of our other senses, you think before you respond, but with scent, your brain responds before you think," writes Lindstrom.

Music also has a role to play in this. Ever wondered why supermarkets generally tend to play soothing music? This is to slow down the consumer so that he takes time to look around the items in the supermarket.

And this is not the only trick that supermarkets, malls and companies use to get you to buy more than what you may need and even things you may not need.

Another favoured trick is to offer something extra free rather than pass on an equivalent decrease in price to the consumer. Now this sounds a little complicated, so let me explain this through an example that Akshay R Rao, a marketing professor at the Carlson School of Management, University of Minnesota, in the United States, discussed with me in a recent interview.

"Imagine that I am selling coffee beans, and I offer you 100 beans for Rs 100 on a normal day. Then, one day, I offer you a 33 percent discount, so you receive 100 beans for Rs 67. On another day, I offer you 50 percent extra (or free). You now get 150 beans for Rs 100. But, I impose no limit on how many or how few coffee beans you can buy on either day. So, on the day in which I offer 50 percent extra, you could quite easily have bought 100 beans for Rs 67! Yet, most people prefer 50 percent more to a 33 percent lower price, even though the two options are economically equivalent," said Rao. (You can read the complete interview here)

This inability of the consumers to distinguish between the options is exploited by businesses. Bookstores often resort to this trick. As Paul Ormerod writes in Positive Linking -How Networks Can Revolutionise the World:

"Marketers observed...that discount offers such as 'buy one, get one free' or 'three for the price of the two' - a concept I am very keen on because this is how bookstores often package up their offers-tend to be more effective in boosting sales than the exact equivalent price reduction on a single purchase. The amount of money which is paid for the bundle of products is identical in each case, but more will usually be bought if they are packaged under an offer than if there is a simple equivalent reduction in the individual prices."

Another trick used to great effect by retailers is contrast effect. It has been put to great use by retailers to increase the attractiveness of certain products. A 1992 research paper written by Itamar Simonson and Amos Tversky shows this through an example of a retailer who was selling a bread-making machine. The machine was priced at $275. In the days to come, the company also started selling a similar but larger bread-making machine. The sales of this new machine were very low. But a very interesting thing happened. The sales of the $275 machine more or less doubled.

As an article on the website of the Harvard Law School points out, "Apparently, the $275 model didn't seem like a bargain until it was sitting next to the $429 model." (You can read the complete articlehere)

This is a trick used by retailers all over the world to great effect. By displaying two largely similar but differently priced products, the sales of the product with the lower price can be increased significantly by making it look like a bargain.

Retailers often use this trick to promote their own brands by placing their own cheaper products against more expensively priced other brands. TimHarfordpoints this out in his bookThe Undercover Economist: "In Dalston, Sainsbury's(a big retailer) own brand of fresh chilled juice was sitting next to the Tropicana at about half the price, and the concentrated juice was almost six times cheaper than the Tropicana."

You would be surprised to know that malls and supermarkets are even built in a way so as to encourage people to shop more. In a multi-floor store, typically the women's apparel are on the first or the second floor. This is because women are likely to go the extra distance to shop for something than men. Also, a lot of things that can be bought instinctively and do not require much thought are placed near the payment counter so that people can almost pick them up mindlessly while waiting to make the payment.

In fact, the reason why most food courts are on the top floor of the mall is because the retailers want you to buy more and pick up things you hadn't planned to. This is done by ensuring that in order to reach the food court you have to go through the length and the breadth of the mall and in the process you might pick up something along the way. The smarter individuals might just take the lift to the food court. But then once a person reaches a mall the tendency is to loiter around for a while. This also explains why there are multiple escalators in a big retail store or a mall. This is done to ensure that once you are in the mall you go through a large part of it.

Supermarkets use the same logic and ensure that essential items like wheat, rice and vegetables are placed inwards in the store. This is to ensure you go through the entire store and thus increase your chances of picking up something you hadn't planned to. The next time you are at a big supermarket try buying an essential item like milk and see the sections that you pass through by the time you have found the carton you are looking to buy. Chances are you might find chocolates and other junk food along the way.

Supermarket shelves are also strategically planned. The more expensive items are typically around the middle shelves to ensure that they are at the eye height of the consumer. The cheaper products are usually right at the top or at the bottom. This ensures that a consumer might just be lazy and buy the expensive product.

There is also a psychological aspect at play. The supermarket, by placing the expensive products in the middle, is trying to project it as a quality product in comparison to the ones placed at the top or the bottom shelf.

So the next time you are at a supermarket or a mall be aware of these tricks and don't get caught in the trap of buying things you did not plan to in the first place.

Vivek Kaul is a writer. He can be reached at vivek.kaul@gmail.com

by Vivek Kaul

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