Want to sell more? … Then, limit purchase quantities.

The effect is called “anchoring” … and it’s a well known cognitive bias.

When somebody is “primed” with a number, they will tend to internalize it and sub-consciously anchor their minds on the number.

Any estimates they then make are more often than not fine tuning adjustments around the anchor point.

“Any number that you are asked to consider as a possible solution to an estimation problem will induce an anchoring effect.”

For example, researchers consistently find that home appraisals and offer bids are invariably influenced by listing prices … even if objective, professional agents are involved … and even if they’re explicitly told to ignore the listing price.

Anchoring effects explain why, for example, arbitrary rationing is an effective marketing ploy.

A few years ago, supermarket shoppers in Sioux City, Iowa, encountered a sales promotion for Campbell’s soup at about 10% off the regular price.

On some days, a sign on the shelf said limit of 12 per person.

On other days, the sign said no limit per person. Shoppers purchased an average of 7 cans when the limit was in force, twice as many as they bought when the limit was removed.

Anchoring is not the sole explanation.

Rationing also implies that the goods are flying off the shelves, and shoppers should feel some urgency about stocking up.

But we also know that the mention of 12 cans as a possible purchase

So, to boost sales, tell customers that there’s a limit on the number of items they can buy.

They’ll get anchored on the limiting number … and often buy up to the limit.

The same effect occurs when products are priced as multiples … say, 3 for $6.

Shoppers will tend to buy 3, even if the retailer is only charging $2 each regrdless of how many are sold.

Excerpted from Kahneman, Thinking, Fast and Slow

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