The annual bombardment of emails and adverts has started. Let the annual Cyber Monday and Black Friday money mayhem begin!
This American phenomenon, which made its way over to the UK a few years ago, has become an annual frenzy. For some, it’s a chance to grab genuine bargains. For others, it triggers a perfect storm of behavioural biases. It can leave household budgets straining with Christmas related debt.
Black Friday for 2022 is 25th November, with Cyber Monday on 28th November. The latter is the biggest day of the year for online sales and across the whole weekend, Brits are predicted to spend around £3.95 billion. That’s around 18% down on last year, although the proportion of the population taking part in bargain hunting is expected to rise from 33% to 39%. No surprise there, as the cost-of-living crisis takes hold.
It’s worth taking a few moments to consider how all of this affects your decision making. Advertisers and marketeers are experts in behavioural psychology and they know what makes you part with your cash. Let’s look at three behavioural biases that they are only too aware of.
Black Friday Behavioural Biases
- Anchoring: This is the psychological effect of viewing a bargain based on the price reduction, rather than the price itself. You become ‘anchored’ to the original price, so your buying decision is based on a ‘saving’, rather than true value for money.
- Loss Aversion: As humans, we don’t like the idea of losing out. Whether that’s losing money on an investment, or paying over the odds for a purchase. The ‘urgency’ of a Black Friday or Cyber Monday ‘flash sale’ can stir up fear of losing out on a bargain. This behavioural bias can be very strong and cause you to react quickly to the perception of a great deal. Even if you don’t need or want what’s on offer.
- Hyberbolic Discounting: This is the heightened feeling of immediate gratification when comparing short term gain against long term benefits. Basically, having something now feels much more attractive than waiting until some point in the future. The more immediate the offer, the more dramatic the effect. So, with limited time offers, your brain can be tricked into making short term decisions without considering the long-term impact.
Beware of your ‘happiness chemicals’
In addition to these behavioural biases, you also need to contend with your own biochemistry. At times, the brain will release natural ‘drugs’ that make you feel different. Here are some shopping-related chemicals that can give a boost of happiness and potentially influence your decision to buy.
Studies have shown that online purchases can create a sense of anticipation, more so than using physical shops. This can cause your brain to release dopamine, which gives a temporary feeling of happiness. Psychology Today has an article that explains this in more detail, but it’s not hard to understand how spending can sometimes be irrational.
Another biological influence on how you feel is the neurotransmitter, serotonin. This is also known as the ‘happiness drug’. It can be produced by exercise, sunshine, thinking of happy experiences, giving to others and winning. It can also be a great antidote to boredom. You can see why quick and easy online shopping can be dangerous if you’re feeling down. Buying Christmas gifts for others, ‘winning’ a time-limited bargain and relieving boredom can all be rolled into one, big shopping spree.
This chemical is well known for the feelings of euphoria you might enjoy after exercise. It can also be associated with addictions. ‘Retail Therapy’ is a familiar phrase and it stems from the idea that shopping can help overcome feelings of sadness, boredom, stress or depression. At least temporarily.
Treating yourself or others can give you a dose of the ‘love hormone’. Think special offers on pampering sessions or weekend breaks with a loved one. If you’re feeling a bit “meh” it’s not hard to imagine a boost if you buy an experience to enjoy time with others.
Maybe you could find other ways to enjoy the effects of these happiness chemicals? The image below has some ideas:
Savour your spending this Black Friday
Try to be aware of your own feelings and biases when you’re bombarded with special offers this week. Before clicking the ‘buy’ button, just check-in with yourself. Do you really need to spend that money, or are your subconscious biases driving your actions?
Try to savour your spending and plan ahead for purchases that you need, rather than reacting to tempting offers.
The long-term effects of over-spending can far outweigh the short-term positives. For many households, it happens around this time every year. But it is possible to behave more rationally, with a bit of planning and self-awareness.