Thursday, December 17, 2009

Restaurant mind games

The Independent newspaper in London, UK has published an interesting article on how restaurants try to con their customers into spending more than they'd intended. Here's an extract:

... according to William Poundstone, the American author of Priceless: The Myth of Fair Value (and How to Take Advantage of It), [to be] published next January, one of the main factors leading us to purchase certain food items is the way they are presented to us – on the menu, for example.

Menus, he says, employ a litany of psychological tricks to ensnare the unwary diner. With a combination of pictures, bold fonts and careful positioning of items, the savvy restaurant owner will have you parting with your cash quicker than you can say: "Hey! It's still 10 days until pay-day!"

In his analysis, he reveals various terms used in such dupe-ology, including "puzzles, anchors, stars and plowhorses".

"A star is a popular, high-profit item; in other words, an item for which customers are willing to pay a good deal more than it costs to make," he explains. "A puzzle is high-profit, but unpopular. A plowhorse is the opposite – popular yet unprofitable. Marketing consultants employed to assemble many of the most high-profile restaurants' menus try to turn puzzles into stars, nudge customers away from plowhorses, and convince everyone that the prices on the menu are more reasonable than they look."

Poundstone says it's not just restaurants committing such consumer crimes: supermarkets use loyalty cards to work out how often people like buying different things, so that they know which items they can raise the price of without anyone noticing. "If you buy hamburger all week they know that, so they don't raise the price of it because you would notice," he explains. "They only raise the price on things you might buy every so often. So they advertise all the discounts, but really that is how they make their money."

There is also the classic '99p' rule. "That can be a big motivator," he continues. "Psychological studies have suggested that people are more likely to buy something that is £29 than something that is £25. One of the theories is that with £29 we think it was originally £30 but it has been discounted." Then, there are classic principles regarding eye-level of the shop display. "If it has a photograph and is at eye-level, then we're more likely to buy it," he continues. "It's the same with restaurants and pictures of food."

He goes on to explain why Starbucks gives its coffees mystifying names like tall, grande and venti. "Psychological studies have shown that when consumers are given a choice like this, and when they don't have a compelling reason to pick one over the other, they pick the middle option," he says. "Starbucks has considerable power to nudge customers into ordering however big a coffee they'd like to sell, just by making it the middle size of three options. You'll see a lot of three-way choices like this elsewhere, with pizzas, fast-food and soft drinks."

Poundstone's book refers to a swathe of academic research. The definitive study was published in 1983 by Joel Huber and Christopher Puto, of Duke University in North Carolina. "They had people choose between a bargain beer that cost $1.80 and a premium beer that cost $2.60," he explains. "Everyone was informed that quality rose with price. About two-thirds of the people were willing to spring for the better beer. Then Huber and Puto repeated the experiment, except that this time there was third choice, a rock-bottom cheap beer costing $1.60. This time nearly half the people chose the original bargain beer – the $1.80 one, which was now the "middle" option. The super-cheap beer 'legitimised' the moderately cheap one, and more were willing to buy it."

Poundstone goes on to outline seven 'tricks of the trade' that restaurants use to get you to spend more money. Highly recommended reading if you eat out more than occasionally - this article might save you a lot of money!



Old NFO said...

Very Interesting article, I've seen the same 'type' of study on stores and the impact on buying. And if I remember correctly, MOST people will walk into a store and automatically turn right...

Anonymous said...

I've noticed that in the local supermarket they've more or less randomized the order of the cereal on the shelves, so that no matter what mom is looking at, there is a box of sugar-coated sugar puffs well within sight for little Johnny to beg for.