Paying by plastic delays payment pain
According to an article in McKinsey Quarterly, behavioral economics can be factored into how a consumer spends money by using a credit card. Most people don't realize that marketers have been using this technique for years.
Most retailers know this simple fact, but marketers don't use science. Rather, they analyze the methods used to part a buyer with their cash.
For some reason, a lower price may not part a consumer from his or her cash, but a three-for-the-price-of-two offer might. By testing various methods, marketers know that offering incentives for free products will lessen the pain of buying an item. When we consider buying an item, we think that three items for the price of two is a better deal than paying full price for one or two, even though the three items may be costlier in the beginning.
Despite proven marketing techniques, many shops and businesses fail to utilize them adequately.
In the research, four practical techniques were highlighted to enable marketers to strategize consumer spending.
One of these is harnessing the power of a default option. During the Winter 2010 Olympic Games, only Visa credit cards were allowed to be used to purchase tickets and official Olympic gear at the venues. Visa was an official sponsor and no other credit cards were allowed to be used. One option to purchase Olympic items makes them seem more special
Consumers also use different mental accounts for money. It's harder to part with savings, and a paycheque needs to be used to pay for mortgage and utilities, but paying with a credit card is given barely a thought.
Making a product's cost less painful eases the pain of parting with hard-earned dollars. A credit card could be used to buy now and pay later.
By not overwhelming consumers with too many big-ticket item choices at a department store, a consumer will be more likely to make a purchase with his or her credit card. Consumers often won't buy the cheapest item, as they think it is inferior, but they don't want the most expensive, either, after taking their budget into account. The second to lowest item usually has the most takers, as they feel it is more special, and marketers know this. More of these items will be stocked in the stores so buyers can buy them up with their credit cards.
It should be considered that many department and electronic stores now offer their own store-branded credit cards. They are fully aware that offering a card with perks and points may ease the burden of payment for a consumer.
By using a few basic marketing techniques, a business can position products in a more attractive manner to consumers so they are more likely to be purchased with credit cards.Written by Melanie Dixon.
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