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Caution: Consumer Biases May Be Preventing Retail Sales

Woman looks at LCD televisionss in store

As a retailer, you may think that if you have a solid and convincing Marketing campaign, your products will sell. However, this is not always the case. Consumers are messy, confused, and often times have many confounding variables subconsciously influencing their decision processes. When consumers make purchasing decisions, there are many biases and other factors that may compromise the quality of the consumers’ decision and affect their judgement in a variety of ways. Their judgements are not always objective – and for that reason, we have included seven biases to look out for as a retailer and how to offset them to ensure your consumers are making the best purchasing decisions. Whether you’re a retailer or a consumer, this list of biases will help you understand the thought process behind purchase decisions.

Confirmation Bias

Consumers experience the confirmation bias when they focus on information that confirms their existing beliefs. When consumers believe something to be true, they will hold this judgement with more confidence and favor information that confirms the belief. Additionally, it affects how they interpret and recall information.

For example, if a consumer suspects your store to be overpriced, they will likely only pay attention to the information that confirms that belief. Let’s consider Macy’s – a department store with the latest brands. The consumer may believe that this retailer is overpriced and when they look online, they will only look at the most expensive items to confirm their belief, rather than seeking good deals – which do exist.

Tip for the retailer: Create and maintain a solidified brand image that won’t get diluted by word of mouth.

Self-Positivity Bias

Consumers experiencing this bias tend to believe that bad things are more likely to happen to other people than themselves.

For example, a consumer may believe that they are less likely to have their home start on fire. Let’s consider a retailer for home insurance. If this retailer is trying to sell home insurance to consumers who experience the self-positivity bias – the sale may become a challenge.

Tip for the retailer: Provide statistics – consumers can’t argue with facts.

Negativity Bias

Consumers give negative information more weight than positive information when they are forming judgements and processing information. Any unpleasant event with a product or even receiving negative information can stimulate this bias.

For example, let’s say a consumer is evaluating whether they should purchase a new coffee maker online. They look at a highly rated machine and read some reviews. Out of 350 reviews, only 30 were rated at 1 star with the majority being rated 4 or 5. If the consumer experiences the negativity bias, they are not likely to purchase the coffee maker as they focus on the few bad reviews more so than the good – even though the positive reviews far outweigh the negative.

Tip for the retailer: Establish a loyalty program, as consumers do not engage in a negativity bias when they are already committed to the brand. If a negative event does occur such as a defective product, then there should be a contingency plan in place to ensure that loyal customers stay loyal to the brand.

Mood and Bias

The consumer’s mood can serve as the initial anchor for a judgement. Moods bias consumers’ judgement by reducing their search for attention to negative information. Mood can also bias judgements by making consumers overconfident about the judgements they are making.

Let’s say a consumer is in a very good mood on a day that they are shopping – the sun is shining and things are going their way. If they walk into a Target to get a few things, they are more likely to purchase a larger amount of items because they are more confident in their purchasing decisions and largely seek positive information rather than negative. Conversely, if a consumer is in a bad mood, it’s a rainy day and are sad about personal affairs, they are less likely to purchase a larger amount of items because they lack confidence in their purchasing decisions and seek out negative product information.

Tip for the retailer: Ensure the lighting in your store is at a comfortable level as this can be stimulating and energizing and brighten the mood of consumers. You can also have your customer service representatives ask consumers to imagine the attributes or benefits of a product or service. This will make the experience more personalized and allow them time to consider the positive attributes of a product, rather than jumping right to the negatives.

Prior brand evaluation

When consumers judge a brand to be good based on their past exposure to it, they may subsequently fail to learn (and view as important) information about the brand’s attributes that affect its actual quality. This can also be true in the opposite manner – consumers can judge a brand to be bad based on their past exposure to it and may fail to learn positive information about the brand’s attributes.

For example, let’s say a consumer borrowed her sister’s two year old Camelbak water bottle while she went for a bike ride. She placed the water bottle in her bag and it leaked all over (because it was old). This resulted in a very unhappy consumer. Even though the consumer is in need of a water bottle for herself, she now views the Camelbak brand as low quality, even though that brand may be one of the best on the market.

Tip for the retailer: When releasing your marketing campaigns, it’s important to always highlight product changes and improvements as new models are released. This can change the consumer’s mindset of quality and can offset their prior opinion of the brand.

Prior experience

Customers learn from their previous experiences, which can be helpful but may also bias judgements during future decisions. This is why each and every interaction a consumer has with your brand is important.

For example, let’s say a consumer went for a bike ride on a Schwinn. They wiped out, got mildly injured, and hasn’t ridden a Schwinn since. Even though it wasn’t the bike’s fault that he fell, his judgement of the brand is influenced by his prior experience with it.

Tip for the retailer: Create new experiences with your brand by providing in-store product trials.

Difficulty of mental calculations

When consumers have little difficulty mentally calculating the difference between two or more prices or discounts, they may think the numerical differences are larger than in reality, which will bias their judgement of the choices.

For example, let’s say a consumer is looking at a shirt priced at $69.95 and is 30% off. In the store next door, there is a shirt priced the same at $69.95 but $20 off. Even though the first store with the 30% discount is actually a better deal (about $21 off) versus the second store, the consumer is likely to choose the shirt at the second store because the discount is easier to mentally calculate.

Tip for the retailer: Provide the calculated amounts of the discount on the rack.

Whether you’re a retailer or consumer, it’s important to watch out for these biases as it can not only hurt your bottom line, but can burn a hole in your pocket if you aren’t careful with your purchasing decisions.

To read more related to this topic, check out The Anchoring Effect: How Retailers Can Take Advantage of a Powerful Pricing Strategy.