Manipulated to the middle

By Gail Vaz-Oxlade on April 1, 2011
Estimated reading time: 2 minutes

Marketers know that consumers shrink from buying either the highest- or lowest-priced stuff. They default to the price in the middle. This is called the “compromise effect."

Compromise effect is a major predictor of how we buy. Companies rely on it to increase sales of their most profitable items and it’s why the salesperson at the TV store, car store or shoe store steers you toward the most expensive options first. They know you’re not going to buy them, but they want to establish what “high” is so you feel comfortable with their next offering which is more “in the middle.” Hotels, airlines, and department stores use a similar ploy by posting “full” prices, deep discount prices, and the prices they’re banking on you choosing. Williams-Sonoma Inc. increased sales of its $275 bread machine by adding a second, slightly larger model to its catalogue at a price of just over $400. It works in Corporate Land too: Xerox Corp. saw its sales on its high-volume copier jump after it brought out a higher-priced model with extra bells and whistles that purchasing managers could feel good about rejecting. So is there any way to avoid compromise effect and being manipulated to buy what the salesman wants you to buy? Sure there is. It’s called knowledge. According to one study, people with a high level of knowledge are more influenced by that knowledge than by the context they are placed in. So when you know the score, the high-low game won’t work on you. It would also behoove you to spend some time shopping around. It seems the more familiar you are with the product, the less likely you will be to choose the compromise option. So go hang out with the product you’re thinking about buying. Get to know it before you make the commitment to bring it home. Think of all the fun you’ll have shopping and all the satisfaction you’ll derive from having beat the marketing masters at their own game.