Analysis: part of the appeal is how the adverts tap into the psychology of how we value and spend money
Nearly half of us plan to buy something during Black Friday this year, but nearly two-thirds of us don't trust the discounts we see advertised. What makes Black Friday sales so irresistible? Part of the appeal is how they are advertised to us and how that taps into the psychology of how we value money and here are four examples of this
'Was €100, now €50!'
Most sales are advertised using the old price and the new. There are now rules in Ireland that stop retailers from jacking up prices before a sale. That said, we can’t help but get 'anchored’ on the old price we see advertised. This means that we decide whether we’re getting a good deal or not based on the difference between the prices and not necessarily on the price we’ll pay. When we see "was €100, now €50", we’re not thinking about whether €50 is good value for the product in the first place. It can lead us to buying things that aren’t good value or that we don’t actually want.
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From RTÉ Radio 1's Ray D'Arcy Show, Irish Times consumer guru Conor Pope answers Black Friday questions from listeners
'For Black Friday Only!'
Black Friday sales are time-limited offers. Some people think we fall for time-limited offers because we think we’ll regret it if we don’t buy it, but recent research suggests that we prefer the certainty of the price on offer to the uncertainty of the price we might get later. In fact, the more time we have to consider a time-limited offer, the more likely we are to buy it. This might mean that Black Friday deals are even more appealing because they’re often advertised in advance.
'Get this, this AND this for only THIS!'
When a retailer offers a few products as part of one deal, it’s called bundling. For example, we might want a new phone and see a deal that offers us the phone, a discount on a monthly plan and a pair of ear buds for one price. These bundles are really attractive. It seems that we view the items as a complementary set, so even if we wouldn’t care about the ear buds if they were sold on their own, they seem much more attractive when paired with the phone that we do want.
The problem with bundling for us as consumers is that we can end up paying more for the bundle, including the item we don’t care about, than we would if we bought only the items we do care about separately. This is particularly true when we buy events as part of a bundle, such as a season ticket to matches. We’re less likely to go to all of the games in a season if we have one season ticket than if we bought individual tickets for all of the matches.
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From RTÉ Radio 1's The Business, Dr Deirdre Robertson from the ESRI on the psychology of spending
Part of this is because we don’t have the same sense of loss when we don’t go to one event in a bundle. This isn’t because the cost is less; experiments that have tested this found that people were still more relaxed about missing an event they bought as part of a bundle even when the bundle costs the same as the individual tickets added together.
'35% off!' vs. '0.03% off!'
You’re on the lookout for a new water bottle and see one for €17 in one shop. Your friend tells you that the same one is €11 in a shop down the road. Do you go and buy the cheaper one? Most of us probably would.
Now, imagine you are looking for a basic television. You see the one you want for €220. Your friend tells you they saw it for €214 in another shop down the road. Do you go and buy it? Most of us wouldn’t be bothered. The saving is €6 either way but the relative discount is what influences how much we value that €6. This is part of what is called mental accounting, which describes our tendency to see the subjective value of money rather than the objective value of it.
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From RTÉ Radio 1's Brendan O'Connor Show, cost of living expert at the Irish Examiner, Caitríona Redmond with Black Friday advice about discounts, delivery dates and returns policies
A 2021 UK survey found that a large percentage of people who bought something during Black Friday later regretted it. With people planning to spend an average of €350 on Black Friday in Ireland in 2023, we can at least try to avoid some of the regret by making sure we really are getting as good a deal as we think we are.
At the ESRI, we are trying to understand more about how people in Ireland make financial decisions so that we can help people get better deals. We are looking for volunteers to do two short, online, anonymous surveys. These are for anyone with a mortgage, loan, credit card or current account or for anyone who may get one of these in future. Everyone who takes part will get access to a new webpage that takes a user-friendly and fun way to show you how to get a better deal. Sign up here (offer open beyond Black Friday!).
Dr. Deirdre Robertson is a senior research officer in the Behavioural Research Unit of the Economic and Social Research Institute. She is an Adjunct Associate Professor in the School of Psychology at TCD and a former Irish Research Council awardee.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ
