Anchor High. Sell More Lower. — Weekly Retail Tidbits #208

“What we present first changes the way people experience what we present to them next.”

— Robert Cialdini

To say this has been a year of price changes would be an understatement. It’s been a roller coaster ride with tariffs changing the cost of doing business across the world.

How do you navigate communicating those changes with your customers?
What will give you the least possible negative change to your bottom line?

There are multiple factors, of course. For today’s tidbits, let’s explore what price anchoring is and how you can use it. 😊

Price anchoring is a psychological strategy.
The first price your customer learns acts as an anchor.
It influences all other prices after it.

As humans we intuitively compare information we learn to what we already know. First impressions matter. We remember them. So everything we learn after the first thing we learn – is compared to that “anchor” of knowledge.

In reality it simply skews our judgment.
It makes prices seem better or worse just because of what we learned first.

Apply it.

Now that you understand price anchoring, what is your best course of action in these scenarios?

• You are a manufacturer. Your catalogs have wholesale pricing in them. Your prices had to be raised. Do you use the catalogs with lower, out-dated pricing in them and just explain it to retailers – or not?
• You are a retailer with multiple items needing repricing. Do you casually mark the old price out with a marker and/or put a sticker on top of an old sticker? OR Do you reprice so that no one can tell it has been changed? (i.e. pull old sticker off and then put new sticker in its place, etc.)

Hopefully you can figure those answers out using the price anchoring concept.

Amos Tversky and Daniel Kahneman first introduced this idea as part of their cognitive bias research in the 1970’s. I learned about it from Robert Cialdini. Look him up – he’s got some great reads if you want to know more!

Read on for some examples of price anchoring you can use in your store – with these Tango lines – or any lines you carry.

Was this helpful?
Super appreciate hearing from you – always!
xoxo,
❤️ AmyFay

3 Price Anchoring Tips

LINNEA

“AmyFay, the large 2 wick candle is my best seller.”
I know.
“The grande triple wick does not sell as fast in my store.”
I know.

Now that you understand price anchoring:

• Is it a good idea to carry the grande triple wick?
• Where do you place the grande triple wick within your display to get the most out of your investment?
• How do you think the grande triple wick influences sales?

Yes, it’s a good idea even if it does not sell as fast.
It is INFLUENCING the sales of the entire line.

Be sure the customer EXPERIENCES the product before learning any price.
Prominently place your testers in your display.
Using the price anchoring strategy, put the grande triple wick in the front.

When your customer smells LINNEA, it’s an experience. A really good one.
Moving to the next step in the buying process – the customer looks for what is available and then price.
You want to ANCHOR the cost of the highest item in their mind so that everything else seems even less than it is in comparison.

For example:
Customer is thinking when seeing the grande triple wick first… “OMG I love LINNEA so much. I really want it. But omg the big candle is more than I want to spend. Maybe I could do a smaller one? Yes, I want that large 2 wick one… that is much less than the big one! I will buy that!”

ANCHOR high. Sell more lower. Understand what could be happening.

Drinks on Me

Have you tried: Buy 1 for x? or Buy 4 for y?

Coasters: $5 each

OR

4 for $18 (4.50 each)

ANCHOR high. Sell more lower. Understand what could be happening.

Advanced expert tip: Did you notice I removed the $ sign from 4.50?
How do you think that helps influence your customer?

Waxing Poetic

Twice a year Waxing Poetic offers a gift with purchase. (Retail partners are given the opportunity to buy the chosen gift item at a deep discount.)

Using the price anchoring strategy, how do you think the marketing of this special would be best phrased?

1. Spend $125 and get a free gift with purchase!
2. Free gift with any purchase $125 or more!
3. $175 worth of Waxing Poetic for just $125. (Spend $125 and get a free gift valued at $50!)

I hope the answer is obvious.
If not, reread this issue 😂

ANCHOR high. Sell more lower. Understand what could be happening.

Did this help you think in a different way? If so, what did you learn?
Thanks for sharing that with me!!

“There is no expedient to which a man will not resort to avoid the real labor of thinking.”

— Robert Cialdini

Thinking about you! 😊
Happy to help you think for your business, too.
Just ask!
❤️ AmyFay