In this episode of Motley Fool Answers, Alison Southwick and Robert Brokamp bring you a December warning at least as important as the one given by Jacob Marley: Beware! Advertising gurus and marketing maestros have peered into your psyche and they know how to make you buy. And buy. And buy more. And every year, when shopping season arrives, they pull out every tool in their arsenal.
But knowing how you're being manipulated at least gives you a fighting chance. First up, they discuss how companies play on a phenomenon so common that it has its own acronym: FOMO, a.k.a. "fear of missing out."
A full transcript follows the video.
This video was recorded on Dec. 5, 2017.
Alison Southwick: The first one is scarcity and urgency.
Robert Brokamp: These sound like a couple of Robert Cialdini things.
Southwick: Yes, there is some Cialdini, here. You're going to get some Cialdini. You're going to get some Kahneman. You're going to get some Ariely. Just start naming behavioral finance experts, because it's all here.
So, the thought of missing out on something. The scarcity of something really triggers something primal in us, and Black Friday and Cyber Monday are just a perfect storm of marketers preying on our fears of missing out. The rarer the item, the more valuable it must be. When we're talking about scarcity, we're talking about supply and demand, so let me tell you about some science around scarcity.
The classic cookie jar study. In 1975 some researchers asked -- I don't know why they did this -- 200 female undergrads to rate the value of some cookies that were in some jars. I'm probably going to mess up the finer points of this, but one jar had 10 cookies in it, and one jar had two cookies in it, and then the women were told some stories around why there was scarcity or abundance of cookies -- two versus 10.
The cookies were exactly the same, but the cookies that were presented as scarce were rated twice as attractive, and the cookies that went from abundant to scarce -- because they also changed the number -- were rated as more desirable.
So, scarcity also can create urgency and marketers love to use that against us. For example, limited time only offers. Limited numbers of TVs available. A countdown clock on websites. Just the other day Adrian, a co-worker, turns to me frantically on Cyber Monday. She goes, "Alison! When does Cyber Monday end?"
And I was like, "What are you talking about?"
Brokamp: It's going to end on Tuesday.
Southwick: What are you talking about? And she said, "Well, does it end at 5:00?" She said, "I don't know. My husband is Slacking me and he's telling me I've got to go buy a TV or I'm going to miss out." She was seriously frantic and upset about it.
Some other examples that I've seen this holiday season is I went to Etsy, where I like to shop to get my mother-in-law a present. And it said, "There's only one left of this item." And I'm like, "Of course there's only one left of this item. It's Etsy. They hand make stuff."
But then the next line said, "And two people have it in their shopping cart."
I was like, "I've got to get on this!" That's another example that I've at least noticed this time of year. Other ways that marketers use this is not necessarily around the holidays. It's when you see signs that say, "Maximum." You go to the grocery store, and the soup's on sale, and it might say, "Maximum! Eight cans per customer." That's another attempt for you to be like, "Oh, man! I've got to get all the soup cans."
Brokamp: I've often thought, "What if I got 10? Is the checkout person going to say anything to me?"
Southwick: Right. Sorry, sir. Amazon is so good at this. They'll tell you how many of an item are left in stock. They'll say, "Only 12 left in stock." They'll also create urgency by telling you that if you order an item within the next X amount of hours, you'll get it tomorrow or you'll get it in a certain amount of time. That one has gotten me before, as well.
A lot of these ideas around Cyber Monday and Black Friday are trying to build up this sense of there's only so many TVs. You've got to race in there and get yours before someone else does. And then we end up literally trampling people to death. That's how crazy we get when we think something is scarce.