How You’re Being Tricked Into Spending Money

Retailers and marketing companies know exactly how you think, what you desire, what you're afraid of - and they will use this against you until they've bled your pockets dry.
Jason Snyman
2019-01-09

First you have Black Friday and Cyber Monday and then, of course, the big one – Christmas. Then there’s Valentine’s Day. And Mother’s Day and Father’s Day and St Patrick’s Day (which South Africans have really taken to for some reason) and Halloween and Easter, of course, and all the birthdays throughout the year.

The rampant spending of money never ends. It’s not allowed to. We need to keep on feeding the machine. You may be thinking that you’re good with your money, and you’ll never be swindled into parting with your hard-earned cash, but retailers and marketing companies in particular have grown more than adept at tricking you into spending everything you have on things that you really don’t need.

Maybe you really are good with money – better than most – but the sad truth is that they’ll get you in the end. They always do. Because you need this. This is new. This will make people like you. It will up your status, people will respect you. You want this. You miss this. You crave this. This is better than the last one. Improved. Limited. Going once, going twice, you have to have this. You’re only half a person if you don’t. You’re incomplete.

Now, people think that Black Friday, for instance, is this new thing where retailers offer these ridiculous specials in order to get hundreds of people into their stores – and this is relatively true – you do get some pretty good deals. The problem is that people tend to overspend and buy things they don’t really need, instead of taking advantage of these deals to enhance their lives and save money. This isn’t your fault.

Black Friday, for example, has been around since the 1930s – it isn’t new. It wasn’t until 2014 that it officially arrived in South Africa – through retail giant Checkers – but for years before that, retailers were still employing strategic, sneaky and secret tactics in order to get you to spend more money.

With Christmas coming round the bend, approaching like a screaming freight train of expectation, it’s important to keep a level head when spending.

Here are a couple of tricks that retailers and marketers use which you should be aware of.
 

The On Sale Frame

Retailers have done this clever thing where they have convinced everybody that Black Friday only happens once a year. By doing so, they have generated a level of hype around it that is capable of making human beings actually trample one another half to death for a 15% marked-down waffle maker.
 

In truth, Black Friday is just another seasonal sale and there’s nothing truly exceptional about it. There will be other sales throughout the year, offering more or less the same deals.

You need to ask yourself, have I done my homework? Have I kept a pricing record of those items I really want? Retailers aren’t going to do that for you – there is no legislation in South Africa that forces retailers to provide consumers with the price history of any specific item. This allows them to mark something as ‘on sale’ – but when compared to historic or even current prices, it probably isn’t a bargain at all.
 

Loss Leaders – The Bait

A loss leader pricing strategy involves luring customers into the store to buy specific items that have been marked down. Now, the trick is to get those same customers to buy a bunch of other stuff as well.

One of the ways in which retailers will do this is by creating a false sense of scarcity around other goods – highlighting certain items as available for a limited time only, for instance. This creates the perception that those items are more valuable due to their rarity.

Buyer beware. Absolute lunacy and panic prevails when shoppers begin to fear that they might just miss out on some of the best deals. When you panic, you don’t think clearly, and the truth is that most of the time there is absolutely nothing rare or scarce or valuable about these items at all, and you’ve been tricked into not only buying it but paying the same price that it was offered at a week ago.

Don’t allow that false sense of scarcity to trigger your need to act.
 

The Halo Effect

When we begin to look at sales through the lens of scepticism, particularly at the very obvious loss leader strategy, then it’s easy to see what they’re doing. When you’re there in the moment, however, being spurred on by the overflowing trolleys of your fellow human; we tend not to notice things.

In fact, we may even look at a very good deal on an item and find ourselves thinking – this deal is so genuinely great that all the other deals in here are probably just as great.
 

This phenomenon is called the Halo Effect, and it creates the perception that one exceptionally good deal makes all of the other retailer’s deals good by association – even when they’re very obviously not.

To avoid this, you need to weigh up each and every individual purchasing decision with careful and rational consideration.
 

Shrinkflation

There’s not too much that we as consumers can do about shrinkflation, as the true deceit occurs at a manufacturing level.

Shrinkflation is when, instead of hiking the price of an existing product, manufacturers re-package that product in a slightly smaller pack. Then they keep quiet and hope that nobody will notice.

Here’s the problem – they’re not exactly lying to us. Most of them make sure to state the new volume on the packaging.

But manufacturers know that the average consumer doesn’t look at this. We look at the price tag. We notice that the price hasn’t gone up, and so we don’t kick up any fuss. 

This is exactly what happened with Coca Cola a while ago, when the company tried to pull a sneaky one and drop the 500ml volume bottled drink to 440ml and keep it at the exact same price. Except, they fumbled their packaging and consumers immediately noticed a difference.

Shrinkflation is nothing new. They’ve been doing it with our peanut butter for years by adding dimples into the bottom of the jars. Kellogg’s has been making our cereal boxes thinner, but keeping the width and height the same so that we wouldn’t notice. Chocolate bars, such as the very noticeable Toblerone, have also been shrunk. So has baby formula, soap, toilet paper and ice cream.

We trust our eyes, and then our eyes betray us. 
 

Their Patience Pays Off

As consumers currently trying to survive the impacts of an ailing economy, most of us are hesitant to spend big on any one item. Retailers know this. It takes a smooth salesman indeed to get people to open up their wallets or write a massive cheque these days.

So, instead, what retailers will do is constantly add new deals throughout the year, bombarding you with sales and specials and deals on offer for a very limited time. Get it now, or lose it forever.

Now, this all comes across as pretty exciting, right? Maybe, but consider this: if everything you bought on special throughout the year was put together in one bundle and charged in one large lump sum – would you still buy it? You’d think twice, wouldn’t you? It’s a lot of money all of a sudden, to spend on something you didn’t really need.

And yet, when that one big purchase was split into many small ones over a longer period of time, it didn’t seem that bad.

But hey, nobody said the devil wasn’t clever.

There are many more ways in which you’re being tricked into spending more than you can afford. Look out for part two of this article, and we wish you safe and smart shopping this Christmas.