Discounts are often enticing for many shoppers. The idea of getting something for less than other alternatives – or, the particular item itself at a “sale” price – can bring about the feeling that one is getting a good deal. Sometimes it might be the case, but other times it could be anchoring influencing your perception of the situation.
Anchoring, as you might know, doesn’t always refer to boating:) Rather, it sometimes refers to the notion of excessively focusing on a particular attribute, or set of information, when making a particular decision. This latter aspect of anchoring can come into play for many of us in terms of our finances. Anchoring can factor into pricing decisions, as well as how consumers handle different choices.
Here are three examples of anchoring:
- Shopping. Let’s say you are shopping for a new pair of jeans, and you see a nicely branded pair of jeans at $100 a pair. Pricey, right? For many people it would be. However, what if you saw a sticker noting that the jeans are 50% off! Hey, then you can get the $100 jeans for “just” $50! These jeans that seemed so expensive now seem like a bargain – an opportunity to get an expensive item for $50 less and half price. However, are they really even worth $50 or anything close to it? Would you normally pay that much anyway? A shopper could be impacted by anchoring here.
- Dining. Suppose you’re at a nice restaurant, and you see a number of entrees priced at $25 each. Then, you see a hamburger priced at $12. Wow, just order the hamburger and you can enjoy the nice atmosphere and get a bargain. After all, it’s so much cheaper than everything else on the menu! Well, in this case the diner might be impacted by anchoring. While the burger might seem like a good deal, why does anybody need to spend $12 on a hamburger in the first place? It’s probably not a deal, and might seem so due to anchoring.
- Hiring. Imagine that you’re interviewing someone for a job, and you see on her resume that she attended an Ivy League school for their undergrad studies. Also, she’s very presentable, warm and friendly when you first greet her. Based on these factors, you might assume that she’s really bright, talented, and has a lot of potential. What if she ended up giving mediocre answers in the interview, and didn’t seem to understand the job for which she was interviewing? Would you look past these red flags, and still think that she’s highly capable? If so, you might be falling into a situation of anchoring on to initial impression.
There are many other situations that can be impacted by anchoring. Some of these involve money, and some might even be relationship-centric. Either way, it’s important to recognize when we might be anchoring, and then apply critical thinking to make a more informed, logical decision.
My Questions for You
Can you think of any times where you have noticed attempts by businesses to incorporate anchoring into their pricing strategies?
Have you ever fallen into the trap of getting anchored to a certain price or attribute when making a decision?
How do you avoid letting the concept of anchoring impact you when you make decisions?