Hey, I just met you, and this is Lazy... get these fast finance fixes and mail me, maybe?

Top 5 Ways Companies use Psychology to Trick You

Written by

Over the last month or so, I've taken note whenever a company used a psychology trick to get consumer's attention. Here are the top 5:

1. The Rebate - This allows a company to advertise a low price which consumers see as a great deal. It can be a great deal if you are one of the consumers to see their money back from a rebate. Getting your money back on rebates is intentionally made difficult. The hope is that consumers will make a mistake in the process and disqualify themselves from the rebate. The retailers have a name for this: breakage. They know in advance that on average X% of people will fail all the steps or simply be too lazy to cash in the rebate. One company even holds a patent on encourage breakage. Yes the whole business model is based on how the psychologically trick people.

2. The Contest - Every year or so McDonald's brings out this popular Monopoly game. Millions of people will go out of their way to collect pieces with the hopes of winning. I've witnessed this over and over again. The odds are winning are really low - you should see them. Also these already small chances are likely cut in half as the winning piece (say Marvin Gardens) is likely to be thrown out by someone not collecting all the pieces. Food Facts says that the odds of winning more than $50,000 is 1 in 41,497,391,309 or more than 6 times the population of the entire world. Your odds of winning the $50,000 are an also incredibly unlikely 1 in 3.5 Billion.

3. The Surprise - I actually like this psychology trick and I'm surprised it's not used more often. It'd be great if some online psychology degree program offered a class about these tricks. A great example of this is the mystery beer that my local Trader Joe's sells. They put 6 different (and random) beers in brown paper bag for a low price. I love opening that bag and seeing which ones I get. Often times on Ebay "winning" an auction (another psychology trick), will come with a "free gift" (which is always better than the gifts you pay for).

4. The Charity - I've been seeing a lot of commercials for a red Motorola RAZR cell phone from Sprint. They've been advertising that a portion of the sales will go to charity (Product Red). At no point in the advertisement do they say how much is going to charity. I'm sure that they are donating a fair portion, but just because they don't tell us, it makes me suspicious.

5. The Game Show Contest - The best example of this is the 1 vs. 100 text message lottery that I've mentioned previously. They allow viewers to "play at home" by giving them a ridiculously easy question often via a text message for a fee. People think that by knowing the multiple choice question, they are getting themselves a good chance at the grand prize.

Update: I just saw a commercial for the Sprint Motorola RAZR that says that $17 from every sale goes to charity. So sometimes they do tell you how much goes to charity. Maybe other people have been critical of the commercial and they changed their tune.

Last updated on November 23, 2010.

This post deals with: ... and focuses on:

Consumer Battles

Don't forget to these five minute financial fixes to save thousands!

11 Responses to “Top 5 Ways Companies use Psychology to Trick You”

  1. I don’t know about sprint. But My wife and I have matching (RED) IPod nanos. The (Red) Ipod costs the same as a normal IPod, but $10 goes to Children’s AIDs in Africa. The charity more than the color are why we own (Red) IPods instead of another color.

  2. Sarah says:

    The RAZR ad clearly states that it will donate $17.

  3. Lazy Man says:

    The ad that I saw today did indeed say $17, but I’ve been seeing ads for weeks with no mention of the number, just “a portion of the proceeds will go to charity.” Perhaps they didn’t know how much at first, which could be why they didn’t mention it in their press release – http://www2.sprint.com/mr/news_dtl.do?page=show&id=13840

  4. Dennis says:

    are these tricks bad?

  5. […] Lazy Man and Money » Top 5 Ways Companies use Psychology to Trick You […]

  6. […] Top 5 Ways Companies Use Psychology to Trick You – A lot of companies use dirty little tricks to make you want to purchase their product. Lazy Man points out some of these tricks. […]

  7. Shadox says:

    On the game show contest issue this is actually a money maker for the organizers. The amounts they pay in prizes cannot possibly come close to the revenue that they generate from the call-in fees.

  8. […] Top 5 Ways Companies use Psychology to Trick You by Lazy Man @ Lazy Man and Money. Lazy Man points out to some commonly used advertisement strategies that companies employ to attract attention from customers. May be, it’s more like companies use psychology to advertise, and we trick ourselves into buying that stuff. […]

  9. Tim says:

    I hate rebates unless they are instant at the time of purchase. I sent one rebate in with return verification, because I didn’t trust the company, only for the letter to be rejected and not returned. I called the company and was informed that no one at the address could sign for anything certified, fedex, ups, etc that requires a signature. i said that was idiotic since the company couldn’t function if they couldn’t receive signature required mail. she proceeded to inform me that the only person that could sign for signature required mail was the president of the company. i said that was ridiculous that a president of a large company would have to sign for every piece of signature required mail that arrived. i continued to argue with her, and kept going around in circles of illogic. i then asked the BIG question of what happens if the rebate gets lost in the mail, the company doesn’t want to pay the rebate check, they could simply ignore it because there was no way of knowing if the letter actually arrived since they do not accept signature verified mail. towit, she stated they would “never” do that. I said, well now that my rebate is lost b/c they rejected it, how was I supposed to reclaim the rebate? she said, well the instructions state original UPC, and i said, well that makes no sense since they did not accept my signature required letter that had the original UPC. she admitted that it was fine, in the lost mail circumstances to mail a copy. i resent the rebate (always make copies of what you submit), and to my utter surprise….NOT…this rebate claim was never received. There was a reason I had sent it signature verified mail, because I just didn’t trust the company (DIRECTV) to honor their rebate. Of course it was a self fulfilling prophecy that my rebate claim was lost. Well, I mailed 5 more copies of the rebate to ensure that the Clifford or Neuman the mailman didn’t eat my rebate letters. After over 4 months time, I finally received word that they had received the rebate claim. Now of course it took another 2 weeks of “processing” for the check to arrive.

    It makes no sense that a company which gives a rebate by check cannot give a rebate instantly. i understand the 30 “processing” time for rebate checks, because that is normally the return time limit of a store and they don’t want to be issuing checks if a person returns the item. now companies could just save everyone the headache and just give instant rebates instead. how long does it really take to “process” a damn rebate check anyways?

    another use of psychology is the buy one get 2nd half off. well that simply equates to 25%, which of course you can’t get by just buying one. they use to have normal sales of 25% off.

  10. […] Psychologically, I think this line of thinking of is very dangerous to your personal finances. If you equate Ebay purchases with “winning” you may be more likely to buy things you don’t need. I may need to add this to my list of ways companies use psychology to trick you. […]

  11. BTGNow.net says:

    Caveat Emptor: let the buyer beware. Ya gotta think critically all the time.

    Also, Know Thyself: if you know you’re prone to these kinds of things, you need to recognize this and be aware of such things when you go shopping.

Leave a Reply

Your email address will not be published. Required fields are marked *

Previous: Save On Razors? Let’s Find Out…
Next: Maximize Your Prosper Lending with RateLadder.com
Also from Lazy Man and Money
Lazy Man and Health | MLM Myth | Health MLM Scam | MonaVie Scam | Protandim Scams | How To Fix | How To Car | How To Computer