Imply Discounts When Possible

Discounts should look like discounts.

Try adding:

• Signs
• Banners
• Colorful text
• Exclamation points

The mere existence of this visual flair can boost sales even if you're not running a promotion:

Occasionally we attach signs marked “Everyday Low Price” in front of two randomly selected brands in several product categories throughout our store, leaving their prices unchanged. Even though consumers should be accustomed to these signs and realize that the prices are unchanged, sales typically double for those brands that have the signs attached to their displays (interview with Jeff Thomas, a manager at H.E.B.; Inman et al., 1990).

That interview was 30+ years ago, but this strategy is still widely used.

Like these stickers in aisles at Home Depot:

Why It Works

• Visual Flair = Discount. Some customers want a big discount. Others simply want any discount. These customers gravitate toward products with signs or banners because they are searching for discount cues (Inman et al., 1990).
• Discounts Feel Energizing. In one study, some participants saw a discount before viewing an optional video task. Unbeknownst to them, the video didn't exist; they just stared at an infinite loading spinner with a "skip" button. Participants who saw a discount were faster to skip because they felt energized (Shaddy & Lee, 2020). Visual cues can intensify this burst of energy.

How to Apply

Embrace cues that are typical in discounts (e.g., stickers, colors, bold fonts) to imply the presence of a discount and energize customers.

Like this price tag at Target:

It has multiple factors that are known to boost energy:

• Exclamation point (Yao & Scheepers, 2015)
• Large font size (Bayer et al., 2012)
• Red background (Crowley, 1993)

Why do those matter?

Customers will evaluate the discount by imagining a downward motion in price while judging the intensity of this reduction. Any slight burst of energy during this cognitive task could intensify the perceived strength of this downward adjustment, enlarging the size of the discount.

Caveat: Use Just-Below Prices in Luxury

Luxury brands might reduce prestige by giving actual discounts and visual flair. So what can you do?

Try just-below prices (e.g., $1595) to imply a discount without explicitly stating a discount. Among multiple prices for a luxury handbag — €1560, €1595, €1600, €1640 — customers preferred €1595 because this price felt like a discount, helping them rationalize their guilt of buying (Fraccaro et al., 2021).

In another study, people evaluated laptops that were either $599 or $600. They preferred an emotional laptop when both were $599 because this price helped them rationalize it (Choi et al., 2014).

Most advice warns that luxury brands should avoid 9-ending prices to maintain their prestige — though a meta-analysis found that perceived quality isn't degraded from these prices like we originally believed (Troll et al., 2023). If you're still worried about losing prestige, simply reduce your price another notch (e.g., $1580; Parguel et al., 2022).

• Bayer, M., Sommer, W., & Schacht, A. (2012). Font size matters—emotion and attention in cortical responses to written words. PloS one, 7(5), e36042.
• Crowley, A. E. (1993). The two-dimensional impact of color on shopping. Marketing letters, 4, 59-69.
• Gillespie, B., Manning, K. C., Ferrell, O. C., & Ferrell, L. (2023). Clearance vs. sale: promotion keywords and their implications for retailers and public policy. Journal of Marketing Theory and Practice, 31(4), 403-415.
• Inman, J. J., McAlister, L., & Hoyer, W. D. (1990). Promotion signal: proxy for a price cut?. Journal of consumer research, 17(1), 74-81.
• Kan, C., Liu, Y., Lichtenstein, D. R., & Janiszewski, C. (2023). The Negative and Positive Consequences of Placing Nonpromoted Products Next to Promoted Products. Journal of Marketing, 87(6), 928-948.
• Parguel, B., Delécolle, T., & Valette-Florence, P. (2016). How price display influences consumer luxury perceptions. Journal of Business Research, 69(1), 341-348.
• Shaddy, F., & Lee, L. (2020). Price promotions cause impatience. Journal of Marketing Research, 57(1), 118-133.
• Troll, E. S., Frankenbach, J., Friese, M., & Loschelder, D. D (2023). A meta‐analysis on the effects of just‐below versus round prices. Journal of Consumer Psychology.