Everyone loves hot deals, even monkeys!

July 15th, 2009

Ever wonder why people love to bargain hunt? Well, it’s not just because people like to save money. I just finished a great book called “Cheap: The High Cost of Discount Culture by Ellen Shell” and I wanted to share some of the ideas with you.

Monkeys – the original bargain hunters

Did you know the bargain hunting trait goes all the way back to our simian cousins, the capuchin monkeys? An interesting experiment was conducted at Emory University in which monkeys exchanged plastic tokens for a piece of cucumber. The monkeys were quite pleased with their cucumbers until they noticed a group of other monkeys getting tasty grapes in exchange for the same tokens. When the cucumber eating monkeys saw this, they threw a fit and tossed their cucumbers on the floor. A similar game called the Ultimatum Game was conducted with human participants and the results were no different. Does this sound familiar? As bargain hunters we play this game every day. How disappointed are we when we find out somebody purchased a better gadget, TV, house, etc for the same or lower price? Suddenly our deal is not as hot as we thought it was and we are “unhappy monkeys.”

Price is just a number

The actual value of a deal is not clear, and in fact can change with good marketing and suggestion. A study was conducted at Duke University where students were asked to pay $2 to hear a reading of Walt Whitman’s Leaves of Grass poem and the other half were told they would be paid $2 to listen to the same poem. Then the same students were asked if they would listen to the poem for free. Guess what? Of the students who were supposed to be paid for listening, only 8% wanted to attend. Conversely, 35% of students that had to pay $2 now wanted to attend the reading. What a deal huh? How many times have we seen this in bargain hunting? You just can’t go back on something that was free before. Meanwhile junk that was being sold for $$$ is a hot deal when sold for slightly less. All deals are relative to their historic prices or values. Keep that in mind next time you jump on that freebie or hot deal.

Beware of “Exploding Discounts”

There is a little trick bargain hunters should be aware of called “exploding discounts.” You’ve seen these before with ads like “quantities are limited” or “sale ends at midnight.” These ads are called exploding discounts and they are psychological tricks designed to trigger the impulse shopper inside. Because we humans are simple creatures that want things right now, the idea of missing out on a great deal today whether we need it or not is tough to overcome. So next time you are about to whip out your wallet and buy an exploding discount, ask yourself if this is a real need or you are being tricked into a trap.

Rebates are not scams, you are just lazy

Like exploding discounts, retailers love rebates! Not because they don’t intend to pay them back, but because consumers are too lazy to fill out the necessary paperwork to get their rebate money. It’s easy to jump on hot deals that look hot because of the rebate price reduction. It’s appealing and in our own minds we don’t consider the fact that we will never complete the forms. However the truth is rebate redemption rates are as low as 5 to 10 percent for certain categories. Remember, a smart bargain hunter always completes the rebate forms. Don’t become a statistic!

Are those freebies worth your time?

Gillette pioneered “the free business model” by giving away free razors. Sure you get the razor, but did you think about how much those refills cost? The same holds true for those $30 inkjet printers that look like such a bargain… Wait until they run out of ink and you go shopping for new cartridge. Think you are getting a good deal with that $99 iPhone? Well, guess again. Calculate the cost of the 2 year contract you are signing up to and you’ll see you are paying for every penny of that tech toy and more.

I always liked the motto “there is no free lunch” and I think it applies here. When you are committing time or money you have to consider the true cost of products and freebies you are thinking about purchasing.

Final bargain hunting secret… think, don’t feel!

As you can see our shopping habits are not logical and are often based on rash decisions. Whether you shop for toothpaste or an HDTV always ask yourself some questions. First, do you truly need what you are buying. Second, are you buying on impulse? Take your time to do comparison shopping to verify that it is really a deal. Third, be honest with yourself about completing those rebate forms. If you don’t plan to do it, avoid those types of deals altogether. We hope by following these tips and understanding marketing techniques we discussed, you will make better buying decisions and will be a “happier monkey.”

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