Shopping for appliances isn’t always easy. Some people get nervous when they have to make a major purchase. Other individuals may feel overwhelmed when they think about the many options that are available to them. If you have to shop for new appliances for your kitchen, here are a few psychological principles that will help you get a bigger bang for your buck.
Psychological Principles To Remember
The 5 psychological principles discussed in this post include anchoring, cognitive dissonance, loss aversion, sunk cost fallacy, and moral licensing. These principles go hand-in-hand with being a smart shopper. When you understand how these cognitive biases work, you can account for them whenever you need to spend your money. Of course, using verified Lowes coupons, promo codes, and other shopping aids also helps to reduce cost and keep your spending under control.
Anchoring is the human tendency to place too much importance on the first piece of information you receive. For example, let’s say you need a new refrigerator but you have no idea how much a new one costs. Rather than do some research online, you decide to jump into your car and drive to the nearest appliance store. As soon as you walk through the door you see a great looking fridge for $5999 and immediately assume that the item is well worth the price. This is “anchoring” at work. You then decide to walk around a bit more and quickly find another great looking fridge for $4999. You buy it right away because you are confident you are getting a great deal. However, when you get back home and check online, you soon realize that you could have purchased the same refrigerator at another store for only $1,999.
You can reduce the anchoring effect by doing research before you shop. The more information you have available to you, the less likely you will be swayed by the first thing you see.
#2: Cognitive Dissonance
Cognitive dissonance occurs when you have two opposing thoughts in your head at the same time. These conflicting thoughts make you feel very uncomfortable. As a result, you are likely to change your thinking or behavior in order to relieve the tension you feel.
To get a better idea of what cognitive dissonance is and how store owners may use it against you, let’s pretend that you are a chef and you need a new stove. You believe that you are an excellent chef and you also know that STOVE A is exactly what you need. When you arrive at the appliance store, the manager shows you STOVE A, but he also takes you to see STOVE B which is twice the cost of STOVE A. The manager explains that STOVE B has a “special oven” that only top class chefs can truly appreciate. Unfortunately, you believe every word he says. Remember, you already think of yourself as an excellent chef, but now you also think that buying STOVE A may indicate that you are not a top class chef after all. These are opposing thoughts that make you feel uneasy. To relieve the tension, you buy STOVE B to prove to yourself and the manager that you really are a top class chef. By doing so, you also make the manager very happy by spending much more than you intended.
You can reduce cognitive dissonance by changing your beliefs, adding new beliefs, or reducing the importance of the belief. In the example above, you could reduce cognitive dissonance by recognizing that the store manager will say almost anything to make a sale. That means his opinion on what makes a chef great is not important at all. If you view the sales pitch as unimportant then you are more likely to save money when shopping.
#3: Loss Aversion
Loss aversion refers to the fact that humans generally prefer to avoid a loss than acquire an equivalent gain. In other words, we tend not to like risky situations and it’s easy to understand why. Losses are linked with negative emotions such as sadness, pain, fear, and regret. However, shop owners often use the principle of loss aversion to get you to spend more money. How?
One tactic shop owners use is putting a time limit on a special sale in the store. For example, they may tell you that you can get 30% of a blender you like, but only if you buy it before the end of the week. It’s human nature to avoid pain so you may feel compelled to buy the blender now rather than risk it being sold out or out of your price range next week. What many people fail to realize in this situation, however, is that the item on sale may not actually be something they need.
One way to avoid bring tricked by loss aversion is to ask yourself if you really need the item that is on sale. If you need it, then it’s a great time to buy it at a discounted price. However, if you recognize that the item is not a necessity then it will be much easier for you to save your money or switch your focus to another item that is of higher priority.
#4: Sunk Cost Fallacy
It’s hard to let go of something you’ve already invested in. The sunk cost fallacy describes a situation where you continue with an investment because of the money or time you’ve put in, regardless of whether or not it’s a good decision. How can this psychological bias influence your appliance shopping? Consider this scenario:
Imagine that you’re looking to buy a toaster. You know the brand you want and how much money you are willing to spend. You even do a bit of research and find out that eight appliance stores in your city have the toaster you need at a price you like. So you set out to make a quick purchase. However, things do not go as planned. You spend six hours travelling in traffic across the city because the seven stores you already visited did not have your toaster in stock. When you arrive at the final store, the manager tells you that his store is also out of stock. However, he does have another toaster that costs 80% more than the toaster you had in mind. Would you buy the more expensive toaster or would you leave empty-handed?
The sunk cost fallacy suggests that some people may choose to buy the more expensive toaster because of all the time and effort they spent travelling around the city. They may reason that they would have wasted the entire day if they went home without a toaster at all.
You can avoid the sunk cost fallacy by evaluating your circumstances and taking the time to think rationally. For example, is it imperative that you purchase a new toaster today? Are there other toasters in the store that are more affordable? Can you wait until the stores in your city restock the toaster you actually want? People often make bad financial decisions when they feel rushed, tired, and emotional. By taking a few minutes to think things through you can save yourself a ton of money when you go shopping.
#5: Moral Licensing
Moral licensing is a cognitive bias where if you did something “good” in the past, you believe this gives you an excuse to do something “bad” in the future. But how does this apply to shopping? Let’s say you spent the last three months working overtime for your unforgiving boss but managed to finish your assigned tasks on time. After you pick up your paycheck, you realize that you received a bonus for the great work you did. Would you feel like celebrating?
People who succumb to moral licensing often end up spending money on things they don’t need. They may even purchase expensive items like a new flat screen TV just because they feel they deserve it. After you reach a goal, it is normal to want to celebrate. However, you can celebrate and stick to your budget by rewarding yourself with something small or inexpensive.