It is assumed that the buying behavior is based on a specific anchor, which is usually the initial price of a product.
And purchase decisions can be influenced by using Mental Anchors.
For example, by a discount, which refers to the initial price. The consequence is a distortion of the rational way of thinking, which influences customers to buy a product.
Every way of marketing aims to influence the buying behavior and preferences of potential customers to motivate them to purchase a product or service.
For this reason, marketing is assigned to a specific part of behavioral economics.
In the area of Online Marketing & E-commerce, various marketing insights can be used to optimize the conversion rate and thus increase sales, turnover, and demand for services and products.
Through the smart implementation of so-called psychological anchors or anchor effects, a lot can already be achieved.
Price Psychology
In general, price is an indicator of the quality of a product. The higher the price, the more value is attributed to a product or service.
If the price of a product is lower, the expected value and perceived quality decreases.
Also, it can be said that free products always have a positive effect on the customer’s perception.
Also, various studies on relative price perception have been carried out in the past. These studies illustrate the principle well.
For example, blind tests show that expensive wines are more valuable and tastier than cheap wines.
Free chocolate is preferred to one that costs something, but if both cost money, the more expensive chocolate perceives a higher value.
Conclusion
Price differences of products are not rationally evaluated by people. The expected value and quality of a product or service is influenced by the product price.
This applies to e-commerce, software, consulting services, and digital information products.
However, the price must correspond to the expectations of a product or service.
Accordingly, consulting services can be offered at a higher price than a digital info product.
It is interesting to note that customer satisfaction is indeed influenced by the price of a product or service.
Finally, we can state that high-priced products perceive more value by people than cheap products.
Use anchor effects in Online Marketing to increase Conversion-Rate
A Mental Anchor is a cognitive-psychological term that describes the fact that people are influenced by consciously selected numerical values of currently available environmental information, without these becoming aware of this influence.
The environmental information has an influence on people, even if it is irrelevant for the buying decision.
Mental Anchors are mainly created by the initial price setting of a product.
Concrete application examples to increase the Conversion-Rate
Multiple Unit Pricing
Bundling of products with the same price/product ratio increases the perceived value of a product or service.
If, for example, a digital information product is offered, then individual lessons should be divided into many different “mini-products.”
For example, you could create a complete package on a video series + E-Books.
The same applies to consulting services and other software. Providers should offer their products as a real “whole product.”
For example, a consulting service should not only focus on the core service of consulting, but also on all additional services, such as personal customer care or a free initial consultation.
Example:
On Amazon, merchants sometimes offer their products in a bundle or make offers according to the motto 2 for 1.
Sellers do this because they want to boost their sales.
By the way, Amazon FBA is an excellent possibility to sell products online and to grow its own online business.
If you also want to know how you can sell products on Amazon, I recommend the article about Amazon FBA and how to find products to Sell on Amazon.
Initial pricing
As mentioned above, the perceived value and quality of a product increases with a higher price.
Red “price tags,” which refer to the original price, increase not only the perceived value of a product but also the accuracy of the purchase decision.
A potential customer is thereby given a positive feeling, which at the same time also has an effect on customer satisfaction. Everyone would like to save something and land a lucky hit.
Exactly this feeling is caused by this mental anchor. Therefore, a sale is always profitable.
Scarcity
Scarcity is usually an indicator of the quality of a product or service.
Products that are only available in a limited number perceive much more value than products that are not limited.
Artificially created, scarcity can boost demand and thus, sales.
However, the “artificial production” of scarcity should not implemented too obviously.
Instant rewarding
Instant rewarding is clearly preferred by us humans to delayed rewarding.
Therefore, when selling products and services, you should always point out that the buyer immediately receives a benefit.
Free Extra Product
A Free Extra Product, also known as a free gift, also gives the customer a positive feeling.
The customer receives something as a gift, feels safe, and goes home with a good feeling.
This principle extends the principle of “multiple unit pricing” to include a free gift.
This method can also be observed as an example when it comes to Amazon Product Launches.
Usually, sellers give away a free poison when you launch your new product.
This means that more people will buy the product, and Amazon Algotihmus will become aware of the product in the early stages.
Here you will learn something about Amazon Listing Optimization.
Conclusion
The conscious use and placement of anchor effects can lead to a significant increase in demand.
However, attention should be paid to the frequency of use of mental anchors and their design.
Also, mental anchors should not necessarily try to manipulate a customer, but rather be an integral part of a strategy, such as selling a certain amount of notably reduced products as part of a new product launch.
If all these things are considered, mental anchors should be used to maximize a company’s turnover and profit.
About the Author
Moritz Bauer is a passionate writer about topics around Amazon FBA, E-commerce and Online Marketing and studied industrial engineering at the University of applied sciences in Constance. His blog is Smart-Minded.com.
