Budgeting | Personal Finance | Article

5 Times Your Brain Fails Your Wallet via Marketing Tactics

by Miao Xin Cheng | 6 Mar 2019 | 7 mins read

The mind is man’s strongest weapon – but nothing’s ever perfect. Sometimes, your brain might make questionable decisions. Especially money-related ones.

Haven’t you ever wondered to yourself, “Where did all my money go this month?” as you check your bank balance?

It’s not entirely your fault. There are some marketing and sales tactics out there that exist to trick you into spending all your cash before the month is up. Here are five big ones.

Marketing Tactics 1 of 5: Social Proof

Do you ever get the urge of wanting to get in on the latest product trends only to realize that it’s actually just been over-hyped?

Touch your heart, then dig out that fidget spinner.

Not so long ago, it was all over social media – everybody who was an internet who’s who was spinning one.

Then almost immediately, it spun its way back into obscurity.

Companies often engage influencers and celebrities to advocate for their products/services because they have the strongest social pull in terms of advertising. Most of us tend to succumb because we put our trust in those individuals who “seem to have it all on social media.”

Tip: Instead of falling into the hype trap right away, give yourself some time to let the initial uproar subside. Avoid being swayed by someone else’s excitement, and take all the time you need to decide for yourself if it’s something you really need or just want for superficial reasons. It’s gonna cost you, so make sure it’s worth it.

Marketing Tactics 2 of 5: Fear of Missing Out (FOMO)

It was the year 2000, the turn of the millennium. Groundbreaking technologies were poised to be unleashed. Diseases were to be cured and the Internet would forever change the way information was shared.

The human race was moving forward into a brave new era.

Then, McDonald’s released its Hello Kitty limited edition Happy Meal, and 6 grown men were arrested for rioting over the toys.

In total, 250,000 to 300,000 or 7.5% of the total Singapore population queued up for hours for the dolls.

How did this happen?

In typical Singaporean fashion, many joined the queue, because there was a queue. Literal, human hype-trains sprouted up at Mcdonald’s outlets island-wide.

Some people equated the crazy demand, coupled with limited supply, to the idea that there would be serious money to be made in the resale market.

The flames were further fanned when The Singing Bone Hello Kitty was supposedly sold for $126,000 on Ebay (though they were likely just troll bids).

So how did the resale market fare 19 years later?

Bye-bye kitty, you now just exist as a free gift on Carousell.

So what does this mean? It means the crazy kitty-demand was purely driven by the mania of the moment, or well, FOMO.

Tip: Think about the things you’ve bought that are limited-edition, or from flash sale deals. Have they really been put to good use? Or are you still waiting for the ‘right time’ to use them? It might be time to reflect – and evaluate your next potential purchase.


Marketing Tactics 3 of 5: Foot in the Door AKA Induced Compliance

I can’t believe it. All 10 seasons of Friends.

Ever find yourself in a situation where you sign up for a free trial subscription and end up adding more to your plethora of subscriptions to pay per month? It happens even to the best of us, and here’s why.

Do you remember the first free month of Netflix? Those were the golden days, binge-watching EVERY. SINGLE. MOVIE and TV show until someone drops dead from exhaustion. But every good thing will come to an end, right? Well… not always.

You could pay for the subscription to keep it, or find yourself in the “Where has all my money gone to?” cycle.

Netflix is great, but surprisingly, a survey of US subscribers found that 14% to 28% of respondents only used the service a few times year, to not even using it at all.

If you find yourself frequently not all caught up with the shows you wanted to watch, you might want to reconsider that subscription.

Tip: Monitor your usage for subscription services like Netflix or Spotify during trial periods and after. Figure out whether your usage justifies a regular, paid subscription – like watching Netflix every night or using Spotify while traveling to and fro. If you don’t use it enough, you’re going to be bleeding money.

Marketing Tactics 4 of 5: Decoy Effect

Apple deploys this form of entrapment with almost all their products when setting their prices. This can be seen when the price points of iPhone XS Max variants are compared.

64GB – S$1799

256GB – S$2039

512GB – S$2349

Which seems the best value for money? Most would say the 256GB model, well that’s because the 64GB and 512GB models are decoys to push more consumers towards the 256GB model.

How this works:

64GB vs 256GB: 4X more memory for $240 more.

In comparison to,

256GB vs 512GB:  2X more memory for $310 more.

4X the memory space for $240 dollars more? Compared to paying $310 for only 2X the memory space? The 256GB model looks to be the best bang for your buck!

And you won’t be the only one thinking that way. Apple’s best seller this season? The XS Max 256GB.

Tip: This psychological pricing strategy is tough to combat. After all, it is logical to compare specifications per dollar to find the best value for money!

But consider: do you really need such a huge memory space on a phone? It varies from user to user, but if you know you could live with only 64GB, you can save $240 dollars.

Marketing Tactics 5 of 5: Priming

Have you ever had a friend that came up to you, convinced their smartphones were listening in to their conversations? “I was recently telling bae that we needed to get some cat food, I SWEAR I did not search online for it, but look!” They brandish their phone, showing you a pet food ad in their social media feed…which is filled with cat photos.

I just can’t understand how they knew

That’s actually online profiling at work; online algorithms predict what you actually might purchase before you even search for it.

It has become common for companies to track and stalk your digital footprint so that they can predict and map out your interest, hoping that you would give into their advertisements after multiple exposures to it.

Most popular scenes for this crime? Facebook and Instagram.

Tip: Use social media and scroll through timelines consciously. Don’t blindly consume whatever’s thrown your way – and be sure of what you really lack and need at all times.

It might be tempting and convenient to purchase that sweet leather jacket because Facebook showed it to you, but don’t fall prey to targeted advertising. Self-control is key!

Now you know what’s up – are you prepared to put your endurance and mindfulness to the test?

Ignorance might be bliss, but that’s not always the case. As you venture out into a consumerist world, always be wary of what the price tag might do to you.

What other sales and marketing tactics deplete your wallet? Let us know and warn a friend!