Retailer Tricks

Taken from: http://www.fool.com/personal-finance/saving/retail-tricks-that-make-you-overspend.aspx

Written by Dayana Yochim

1. You owe me one

When marketers tap into our natural propensity to return a favor, the money flows. That's how Tupperware-party participants get swept up in a buying frenzy.

Bob Cialdini, professor of psychology and author of Influence: Science and Practice, calls this strategy "reciprocity," and he illustrates how powerful it can be in practice. When the American Disabled Veterans organization sent out its standard solicitation, it got an 18% donation-response rate. When customized address labels were added to the packet, the contribution rate jumped to 35%. "They become benefactors before they make a request," he says. "I've gotten this gift with my name on it. As soon as I begin to use it, I feel obligated to say 'yes' to their request in return."

2. Buy now or regret later
Flea-market shoppers must make split-second buying decisions. Savvy mass marketers also play on shoppers' limited-time-only emotions to encourage unplanned purchases.

Costco CEO Jim Sinegal revealed how the warehouse chain takes advantage of that mindset. "We refer to it as a treasure hunt. We carry about 4,000 stock-keeping units, and about 1,000 of them are constantly in that changing mode. In the past, you may see that we have some Coach handbags. The next time you come in, the Coach handbags aren't there, but perhaps there are some Fila jackets. The attitude is that if you see it, you have got to buy it, because it may not be there next time."

3. Tears cloud your cash decisions
Jennifer Lerner, Ph.D., assistant professor of social and decision sciences and co-author of the study, explained that when people are disgusted, they want to get rid of things and avoid acquiring new things. Sadness, however, drives us to change our circumstances. "It's out with the old, in with the new," she says. But in pursuit of "the new," our unhappiness dulls our ability to assign an accurate value, and we are more likely to pay a premium for replacement items. In other words, don't shop on an empty stomach, or after watching Terms of Endearment.

4. More is better, and cheaper ... right?
Ah yes, the 24-pack of tuna and 280-ounce bag of gummy bears -- tempting, indeed. We haul home so much industrial-sized stuff that we should be charging it rent. Just remember, too much of a good thing can actually be a bad thing. The next time you see a supposed "deal" on something that is not an immediate need, ask yourself:

• Is it really a deal? Meaning, do you know the prices on similar products elsewhere, and recognize when the price you're seeing on the item really is a rare bargain? Pay particular attention to higher-dollar items like cleaning products, Brita water-pitcher filters, dog food, or whatever it is that tends to comprise the bulk of your grocery bill. You'll drive yourself crazy trying to sweat all the small stuff, so concentrate instead on big-ticket savings.

• Do I really need it -- now or later? It's easy to convince yourself that you absolutely cannot get by without the shredded Swiffer thingie that looks like an old-fashioned duster. (Somehow I've managed to make do without it for this long.) However, particularly while warehouse shopping, you're likely to run across items you know will come in handy a month or two down the road. In that case, stockpiling is fine, so long as you don't forget about those three tubs of peanut butter already in your pantry the next time you're at the grocery store.

Now you know how to spot retailers' mind games. And the next time feelings start invading black-and-white money matters, you'll be better prepared to decide what's ultimately best for you and your bottom line.