Don Don Donki, a large Japanese retail chain, is set to expand to 24 outlets alone in Hong Kong by mid-2024 despite the plummeting economy amid COVID-19. First opened in 2019 in the bustling Tsim Tsa Tsui district, it has now spread to Tsuen Wan, Causeway Bay, Central, Tseung Kwan O and Siu Sai Wan.
What is it that makes Don Don Donki or other retail chains so popular and profitable? Marketing psychology can answer this for us. Hidden forces shape our buying decisions – right from the layout of the store, to the language used to market a product, to accurately tailored advertisements that pop up on our smartphones. The discounted price of an item is just the tip of the iceberg in sales.
Below are 5 techniques Don Don Donki and other marketers use to drive our purchases:
1. Gruen effect
You are hosting a dinner party and have to pick sushi rolls from Don Don Donki. It is 6 PM already and you are on the clock. You enter the store—long before you know it—you are trapped in the store’s maze-like layout, forced to pass by sections far from the ones you want to go to, coupled with their blaring signature soundtrack and colourful products wherever your eyes land. You find yourself in a zone of sensory overload, or a slight hypnotic trance, as some may call it. This is what the marketers want; this is the Gruen effect.
The confusing layout is the store’s deliberate effort to make you go through all of its popular sections by engaging you in a personal, like none other experience with the huge sign-boards. The zig-zag aisles compel you to look at different products and make impulses buys. You suddenly find yourself exploring the attractive deals at the flashy jelly counter with no remembrance about what you came to buy.
Don Don Donki is not the only successful venture to effectively lure us in with these tactics. IKEA has mastered this trick too by the clever arrangement of products along the puzzling—to say the least—path. Now you know why you go in intending to buy one set of hangers but come home with those cute pen holders and snacks.
2. False sense of urgency and scarcity
“Limited time offer,” “ends today,” “do not miss your chance!”
We are all too familiar with these phrases on online stores such as Zalora and HKTV Mall, and when we set foot in physical stores. Adding on to this is the fear of missing out (FOMO)—rampant in today’s millennials—such marketing communication instills a false sense of urgency in our minds making us feel internally pressurized to buy the products lest they go out of stock, or we miss out on the offer.
Online shopping applications frequently show “only a few left” alongside popular items. This may result in consumers engaging in impulsive buying triggered by our scarcity mindset, or the belief that there is not enough for everyone and you need to make a purchase before they are all sold out.
Effective marketing is all about using the right words in the most powerful way and creating a need among consumers to buy a certain product. Setting deadlines, displaying the number of items left in the stock, offering incentives—it is all a well-rounded marketing approach in the grand scheme of things. Next time you see such phrases, be wary and ask yourself if you can justify that purchase without the clever marketing in context.
3. Manipulative pricing tactics
Ever noticed why a vast majority of stores price their products at $99 or $79? The reason behind is simple—we read the price of a product from left to right.
The main figure that gets stored in our brain is the one in the hundreds or thousands place (the first digit starting from the left). If the price is $475, we will most likely remember that it is in the $400 range even though the price is closer to $500 than it is to $400.
Consequence? Marketers target this cognitive bias and price items in a way that makes us feel like we are spending less. Long before you know it, you have picked up a few too many products in the $400 range and are in for a shocker at the check-out counter!
Another common pricing technique is the Goldilocks principle. Marketers utilize the ‘power of three’ to push forward the one product they intend to sell. The idea is to introduce a product cheaper than the main one, and one that is more expensive. If confronted with only two items, consumers will choose the one that is cheaper. By expanding the choice pool, the consumers will be more inclined towards the mid-priced item.
“What happens here is that customers are bombarded with multiple choices, but are primed by the salesperson to buy the ideal middle option which is neither too expensive nor too cheap. This is the product that they actually want to sell and make a greater profit off,” said Pratika Mehra, a final year Psychology major writing her thesis on consumer behaviour.
4. Anchoring effect
Our judgment is heavily dependent on the first piece of information that is served to us. That information is the anchor or the reference point for subsequent information.
Let us take the example illustrated below. Say you are in a store to buy an overcoat. Situation A shows the price as $299. Situation B shows the price as $299 as well, but alongside its former price. In both situations, you are paying the same amount for the overcoat—so does it really matter how the price is presented?
Absolutely. Chances are that you are more likely to make the purchase when confronted with the sign that also shows the strikethrough price. This is because your brain has subconsciously anchored itself to the $499 price—that is why it perceives the $299 deal to be a steal.
You can also see the anchoring effect in play while shopping in the bustling streets of Mong Kok—places famous for cheap bargains.
You eye a beautiful pendant and ask the shopkeeper for the price. They say $80. You know it well (and they do, too) that this price is a bit far-fetched and expensive, but they have successfully set the anchor for the bargain that will follow, and the ball is in their court. Your brain has unconsciously registered the acceptable bargaining range. Chances are, your asking price will now hover around $45-$70, instead of the $20-$30 you had planned to spend. You both settle for $55 and you grin at the deal you struck. Bagged a bargain or simply got anchored? Think again!
Everything in pricing and decision-making is taken at a relative value. Wondering what the best way is to increase the sales of a $2999 pair of sunglasses? Place it right next to the $6999 ones and set the right anchor.
5. Impulsive buying at check-out counters
Is it a mere coincidence that you frequently end up with chapsticks and mini chocolate bars while waiting in the queue for billing? No—it is intentional and strategic. Placing inexpensive products at the checkout area is a highly effective tactic as shoppers will not mind shelling out a few more dollars while waiting for their turn.
Food happens to be the most common impulse buy. Candy or chocolate bars, if placed correctly, drastically increase sales owing to their price, colourful and attractive packaging, and because they make for a good quick snack!
“Consumers could be hitting decision fatigue [reduced quality of decisions post a long decision-making process] by the end of the shopping spree. Marketers leverage on this by deliberately keeping small or popular items at the point-of-sale as the customers’ decision to say no takes a halt,” said Katherine Lui, a marketing professional at a leading agency in Hong Kong.
Famous fast-fashion brands such as H&M and make-up chain Sephora are known to place travel-sized products, small samples and personal care items at their check-out aisles to induce last-minute buys.
Being aware of these tactics can definitely help you recognize the hidden forces and cognitive biases that go behind the scenes in marketing. Setting a budget, making a to-buy list prior to shopping, and researching well before purchasing high-priced items could help you save more and spend less.