Staying Alert

How do you stay alert and prevent manipulators from attacking you? Levine describes in his book, The Power of Persuasion: How We're Bought and Sold his experience working as a car salesmen, and gives the following statement made by one of his old fellow colleagues, "All you need to know in this business is this: All customers are liars. And all salesmen are crooks".

Levine mentions that not all salesmen are out to con you. He says that we need to 'find a balance between openness and skepticism, to approach the world as a critical thinker but without always assuming the worst'.

There are 2 levels of awareness developed by mindfulness practitioners:

1. Practice attending directly to the details at hand
2. Learning to decide what information more warrants mindfulness

Ellen Langer quotes: 'The most important function task for any CEO, and for the rest of us is choosing what to be mindful about,' and that 'Rather than spending all day inspecting every expense account or widget in the factory, the mindfully mindful executive chooses where to pay attention'.

Levine tells us that we must 1) recognize which types of exploitation are most dangerous, and 2) to distinguish between persuasion and exploitation.

Levine also mentions that all persuasions are manipulative, but we must identify which is to exploit and which is to educate. Therefore, we must have in mind which persuasive message to resist, which to ignore, and which to accept.


Be aware of your situation

Train yourself to monitor how situations effect you. Keep track of how you react in different situations through out the day. By doing this you will discover at which places and times you are most vulnerable and is susceptible to impulse purchasing. You should be careful of situations that have you react, as Levine says, automatically and mindlessly; and especially in those situations which the 'intensity of your reaction exceeds the seeming importance of the situation'.


Ethical and Unethical Persuasion

The next time you are faced with an advertisement, or a friend trying to convince you of something, take note whether their agenda is to ethically persuade you or not. One way to identify this is whether they are trying to ask you to buy something, or perform an unethical, immoral, or even illegal act. Those that do not have a deceptive agenda will be trying to persuade you for your own best interest. They do not gain anything from you in any manner. And you after having logically analyzed the situation, are well aware of what you are getting yourself into, know what is expected of you; and what you are committed to do.

As Bronson Alcott describes a 'true teacher', or someone that has your best interest at heart, 'defends his pupils against his own personal influence'.

I would like to end this chapter by quoting directly from The Power of Persuasion: How We're Bought and Sold, 'The fact is that persuasion and psychology are essential human activities. They define our social being, never more so that today'. 'It's up to each of us to use the psychology wisely and ethically, to see that it illuminates rather than electrocutes'.

Beware of those who tell you what you need

In today's intense competitiveness, companies are no longer just making products and services to satisfy your needs. It has come to the point that most companies are telling you what you need, and are developing products to cater to that need that they have created for you.

It has now as Robert Levine puts it, 'the salesperson's task to convince you that you need his or her product'.

As salesman B. Earl Puckett explains, "It is our job to make women unhappy with what they have".

So be warned. Levine quoted in The Power of Persuasion: How We're Bought and Sold, 'be careful when the same people who want to fill your expectations are also in the business creating them'. And that, 'Perception is more important than reality'.

Michael Schudson says to watch out for people who says, "Buy me and you will overcome the anxieties I have just reminded you of".

Protect yourself against the power of persuasion

How to we defend against persuasion tactics? Firstly we must identify and understand what type of persuasion strategies these people are using; and we must also not deny the fact that we are vulnerable to influences. I know, it is easier said than done... true. Let's go through some ways to build up our defenses against attacks by deceitful manipulators.

Dr Levine has identified some specific techniques on how to combat manipulation:

Stinging; as in the kind of feeling you would get after being stunk by a bee. Yes - pain, but not physical pain. Levine describes this technique as 'rubbing it in their faces' after they have been exploited by manipulation. Those manipulated are, in Levine's words, 'forced to acknowledge their own personal susceptibility'. Tests have shown that after being told they were duped, subjects became more aware, and are able to recognize manipulativeness in the experimental advertisements shown to them.

The Stinging technique has 2 advantages:

1. It motivates us to take preventive measures after being forced to see our illusion of vulnerability
2. Stinging creates an inoculation effect in us

The Inoculation Method. The Inoculation technique states that if we expose people to weak versions of a persuasive message, they will be less vulnerable, and more resistant to stronger persuasive messages later.

Levine mentioned that people from the West, like the United States, and Europe are less susceptible to persuasive messages because of their innate tendency and ability to be critical to persuasion techniques. A reason for this is in the West, people are more individualistic than their Eastern counterparts.

Whereas in the East like those from Japan and China, people tend to scrutinize less and are more open to collaboration, even if they are confronted by an opposing sales message. Because of this characteristics, those from the East are more likely to be influenced by persuasive messages. Levine mentioned, for this reason they (those from the East) 'have little opportunity to build up their antibodies for persuasive messages'. Levine further quoted, 'without a history of inoculation, they're susceptible to even small doses'.


Scripts. Scripts, as it's name implies, is the usage of rehearse scripts to avoid falling into the persuasion trap. This technique is simple to adopt if you train your subconscious to respond a certain way. For example, the practice of saying 'No' whenever you are approached by a salesman to buy something. Or giving an excuse to leave in the middle of a sales pitch. It can be done using third party as well, such as 'my wife will not approve', or 'my wife will beat the s*#t out of me if she finds out' in order to break out of the influencing process and escape with all your money in your pockets intact.


Practice Critical Thinking. Basically, think with your head and not with your heart or emotions. Too get out of that sales message trance you just have to think logically. Just like a physicist who collects data, processes them and creates a hypothesis. Here's an easy way remember how to perform this technique. Known as the PROACT method, created by J. Hammond, R. Keeney, and H. Raiffa. PROACT is the acronym for: Problem, Objectives, Alternatives, Consequences, and Trade-offs.

Basically what you need to do is:

• Define the exact problem
• Think through where you are going with this decision
• Think of alternate course of actions you can take, and also whether you would have made the decision you made without having choices
• Evaluate the consequences of the decision who'd make
• What are the trade-offs of your actions?

2 additional steps is to:

• Ask, how will your decision effect you in the future, and
• to think of future consequences after you've made the decision

Take yourself out of the context - Reframe your problems

Look at the situation in a third party perspective. Look at yourself. Levine mentions that those who are vulnerable to manipulations are those in unfamiliar situations, and/or have no clear measure of value.

As humans we tend to justify uncertainty. When we are uncertain, we are more vulnerable and prone to manipulative suggestions. Levine further advices in his book, The Power of Persuasion: How We're Bought and Sold, 'learn to recognize when people try to trap you with faulty comparisons'.

How do you do this?

Anwswer: look at the situation in different perspective, and see how different perspective effects your decision


Ask yourself discomforting questions

Do not easily react to answer a question quickly, take the time to be a contrarian or a skeptic to analyze the flip side.

Levine tells us to postpone the situation when making important decisions, and

• Search for conflicting information. Be open minded and tackle the situation in all directions
• Find a person to play devil's advocate. Ask someone to tell you why you shouldn't make that decision
• When seeking advice from others, be careful not to lead them on. Seek advice from honest and neutral opinionated people. Not from those who will agree to everything you say

Problems with following the majority

A common notion is to agree with the majority's decision. Too often we fall prey to this type of peer pressure, or conformity pressures described as 'Groupthink' by psychologist, Irving Janis.
Janis, mentions that we go through a state of self-censorship where we are hesitant to challenge the majority because of the fear of being ridicule or to waste the group's time.

Groupthink often leads people to follow the decisions of the group leader, and if the leader's opinions are deceitful, or deceptive, those in the group are likely to fall prey to such manipulations because of their heighten illusion of vulnerability.

Therefore, Levine advices to:

1. Speak your mind in such situations
2. Choose a leader who accepts different opinions and is open to criticism
3. Appoint someone as the role of devil's advocate
4. Have a cooling off period after a decision has been reached and discuss the decision made at another time
   

From Overt Compliance to Private Acceptance

How do you persuade someone permanently? To do so requires you to slowly inject the person with persuasive tactics, on a long and incremental basis. Dr Levine pointed out 8 general principles people have used in order to permanently 'brainwashed' their subjects:

• Firstly is the strategy of orchestrating and influencing by being in the background, or being invisible. Levine describes this in his book The Power of Persuasion: How We're Bought and Sold on how an umpire in a baseball game is able to control the game without even being noticed. This is because the fans are so focused on the players themselves, and the performance of the players that no one takes notice that it is actually the umpire who really determines to an extent the outcome of the game.

• The second point to note is that to be able to permanently influence someone, less force is better than more force. In others words, 'don't give someone more food than they can chew'. To influence you must have the slow and steady approach of feeding your subjects small bits of information at a time.

• The third strategy is giving your subjects the 'Illusion of Choice'. After exercising the first two techniques you must offer your subject the freedom to choose. If all the 3 techniques are synchronized correctly, your subject may decide on his or her freewill to stay with you. In The Power of Persuasion: How We're Bought and Sold, Levine describes how the cult Moonies are able to get people to stay as members, by offering pre-converts $1000 to leave if they wanted too, or stay with the Moonie community as faithful, abiding members.

• The fourth rule is to reward less. This point shows that too much of anything is not good for you. As humans, after we have achieved something we tend to crawl back to our usual ways because of the fact that we have conquered or accomplished whatever the challenge was. The motivation to strive and work hard is no longer there. Say for example, you worked hard because you were promised a promotion. What happens after you've been given the promotion? You may continue to work hard for the next couple of months (rule of reciprocity), then will eventually slow down to your usual working pace, until you are informed of your next target to meet, and the reward(s) accompanied with achieving the new target.

• The Fifth strategy is the use guilt and shame, or our conscience as persuasion tools. As emotional beings we are greatly affected by the feeling of shame and humiliation. Modern society are so self conscious, and worry about how others see them that they often must go for psychological assistance, which may last for several years. And this sense of self awareness starts when we start school all the way to our working lives as adults. In school, children are called names such as 'fatso' that may stay with them for a very long time. What about a husband who accidentally kills his wife in the midst of a violent argument? He will regret his actions till the day his dies, and may even commit suicide if the feeling of guilt is strong enough. Not only that, he may be subjected to hostility by family members and friends.

• Sixth strategy is self-justification brought up by the feeling of cognitive dissonance. We all are guilty of always trying to justify our actions. For example, you are overweight and the doctor says you need to exercise, because you are susceptible to diabetes and heart disease. You being the typical couch potato after work and during the weekends will probably tell yourself that you are too busy too exercise, or will exercise once a major project is completed. You will most probably blame it on your job because the job stress makes you eat more. How effective the self-justification will be depends on how much the person believes it to be true.

• The seventh strategy is about beliefs, and how your beliefs control your actions and behavior. We all have experienced this when we buy a particular brand over another because we believe in its' quality over the latter. You have also seen people with extraordinary mind powers bending hard objects, or the abilities to withstand pain, like magicians David Blaine and Chris Angel. All these comes from the inner belief. The same goes for those who think positively who are rewarded through law of attraction.

• Finally, the eighth strategy is that failure may propel you to more success. This strategy can be used on our human egos. No one like to lose in anything competitive. And because of the feeling of disappointment, and the uneasiness we will try harder to show that we are better. People often go all out just to prove that they are right. Look at the past explorers, even political figures. Or soldiers of war who will fight for their countries no matter what, even if they know (or justified to themselves) that what they are fighting for may not be right. Levine has pointed out many examples of many cult members who became more dedicated to their cult's mission even in the midst of uncertainties in their cults ritual or practices. These members will convince each other and justify the outcome; just like the members of Jonestown (People's Temple), who was carefully manipulated to enthusiastically take their own lives by drinking poison. The suicide was described by cult leader Jim Jones as 'a revolutionary act'.
  

A survivor of the cult run by Jim Jones, Deborah Layton describes how this type of pathological occurrence can happen in everyday relationship within a family:

'A women thinks a guy is good-looking, he's so nice, you go out on a few dates, he buys you a few presents. Then, one time, he hits you. But then he apologizes. You think, he's usually so good to me, and he bought me that present. Then maybe you have a child together. Then he hits you and the child. It's often so far down the road that you realize, "Oh my God. There's something definitely wrong here." But by that time you're in so many ways entrapped.'

California state senator, Jackie Specier made the following statement after observing the mass suicide in Jonestown: "No one should ever be so arrogant as to think it can't happen to them. We're all susceptible on one level or another."

The psychological manipulation techniques used by cult members are no different than the well-intended ones used by our friends, teachers and family members. Psychologist Margaret Singer quoted the following after decades of observations done on cult groups: "that cultic groups were not using mysterious, esoteric methods, but had simply refined the folk art of human manipulation and influence".

As a result we will always justify our commitments, and it becomes self-perpetuating. As quoted from Levine: 'If I did it, I must believe it. And if I believe it, I'm more likely to do it again, and more so.'

'It's really rather simple: move gradually, apply the least necessary force, remain invisible, and create the illusion of choice. The mind of the subject will take over from there. As the sign over the rostrum in Jonestown warned, "Those who do not remember the past are condemned to repeat it".'

When are we susceptible to persuasion tactics?

Be aware of the following situations, or you may just be unknowingly persuaded to open up your wallet.

1. The first situation is what we consider the consequence of our actions unimportant. An example explained by Levine, is when you are about to check out and the salesman asks you whether you wanted the 3 or 5 years warranty, 'forgetting' to mention that you had an option of not buying the extended warranty.

2. The second situation is when were are forced to act quickly, because the need for urgency reduces our ability to rationalize. For example, limited time offers, or limited quantity/edition items. Urgency invokes the rule of scarcity. And the more limited the supply, the more desperate we are to get our hands on it.

3. The third situation is when we are bombarded with too much information. When we are overloaded with information, we tend to find shortcuts to make our decisions. This is why most reading materials and articles are not fully read. People will usually read the headlines and sub headlines to determine the full story.

4. The fourth situation is when the sales person has the influential traits of honesty, integrity and likability. We tend to buy from someone whom we believe is honest.

5. The fifth situation is a very common occurrence of following the Joneses or, acting like lemmings. We need proof that whatever we intend to buy is accepted by the majority, or as having social proof.

6. The sixth situation is when we are in a state of confusion, and therefore tend to fall prey to sales predators. In this state we again try to find shortcuts to make our decisions, and/or check if others are making the same decisions that we're about to make.

Approaching Customers

How do you approach a customer? The biggest mistake is to ask, 'May I help you?' Because the customer will most often than not answer back, 'NO', or 'I am just looking'.

So a more effective way of approaching a customer is to say: "Hi, my name is John Doe, and you are?". This is to avoid having the customer answering 'no'. For example, instead of saying, 'are you looking for an iPod?', instead say: 'Would you like an iPod Nano, or iPod Shuffle?'. Remember to create the reciprocity obligation on the customer. Show that you are spending much valuable time with him or her. Explain to the customer the features and benefits (more of the benefits) patiently. The idea is to keep the customer with you as long as possible, the longer the customer is there listening to you the more likely is it for him or her to make a purchase. If the customer is willing to stay longer also shows that the customer has the potential to purchase.

Levine showed the steps taken by an auto dealer named Michael Gasio in order to make the sale.

Firstly get the customer into the door by different techniques such as the 'Throwing the Lowball' technique where you convince the customer to come down to see you because you offered a price lower than any competitor (a 'highball' technique is the opposite when you offer something with a higher value for an exchange of a lower value item, such as a trade-in deal).

Another technique pointed out is the 'Bait and Switch' technique where you quote a low price for the same item as a competitor and when the customer comes to see you, he will realize that something important is missing from the item. This is when you find the customer an item with that feature and with that of course comes with a higher price tag. The 'Lowball' and 'Bait and Switch' technique as Gasio mentions is useful to have commitment from those customers who are supposedly 'just looking', or 'comparing prices'.

The first strategy is to get the customer to meet with you, even though you have over promised and can't deliver what you proposed. What most large sales dealership companies do is that when you asked the salesman who offered you that very attractive offer, the salesman will excuse himself and asked a colleague to handle you where the colleague will than inform you of the mistake the original salesman have made. The new sales person will than proceed with his sales pitch. If the sale is closed, the participating salesman will share the commission.

At the end of it all you must make sure that you are the one who is still in control if you are the sales person. Don't let the customer ask you for the cheapest price you can give, instead ask the customer how much he or she is willing to pay for the item after hearing all the features and benefits. Ask the customer to give an offer. Always ask, how can you get him to purchase the product today.

There are 2 methods that Levine mentioned called the 'A Door In The Face' and 'That's Not All' strategy to attract customers to commit.

To put it simply, 'A door in the face' technique is when when you shock the customers at the high price of the offer, then come in for the kill with your intended price.

In the 'That's not all' technique, instead of having the customer just reject your first item totally, you reduce the price of the same item or get addition bonus or gifts. This technique is widely used by many retail stores and companies selling timeshare. The 'that's not all' technique is also often seen on infomercials when they keep additional items to the package to make it so attractive that you can't resist not buying it.

Remember, we are all ingrained with the obedient trade. You can get anyone to buy from you if you make small, escalating advances one step at a time.

Taking it slowly

When trying to sell big ticket items, sell them slowly and incrementally from lower cost to higher cost. Build the momentum and fall your tree with one chop and the time.

In The Power of Persuasion: How We're Bought and Sold, Levine delivers an excellent scenario of the sales process by Peter Lowe International.

Briefly what happened is that after being entice to take action to buy a $255 seminar ticket at the limited of price of $49, of which Levine was later informed that the $49 ticket deal has expired, bought a $59 ticket and at the same time was persuaded to buy a useful Yearbook at half price; and eventually paid $84 for the ticket with fees and taxes included. This was only the first round of the sparring session with Peter Lowe International

During the seminar there was as usual a bunch of speakers attacking with every sales tactic to get participants to buy their products; using emotional tools such as an inspiring video to mentally psych up the audience.

One technique I believe is so affective is when the speaker tells the audience that they may leave the room if they are not interest, but invokes so much peer pressure that every participant stays in their sits. How this technique works is that you tell the participants that you will be promoting your product and informed that it is not a must to buy, but it is vital to have. Of course there will be certain people who will not be interested to hear a word more about the product would begin to leave the seminar room because the speaker has already mentioned that anyone not interest may leave. But this is what happens; the speaker will wait a few seconds for those who are not interest to leave their sits, or attempt to leave their sits. The silence not only put those uninterested participants in a spot because the whole room may be staring at them, but sometimes with the additional help of the speaker will portray the message that those who stood up to leave are not interested to, for example to be rich, to take charge of their lives, etc etc etc... you get what i mean. I have personally experienced such a subtle but forceful technique to get people to listen to your sales pitch from many top motivational speakers around the world.

Back to our Peter Lowe International seminar. A month later, Levine received a letter by PLI that says he is one of the few selected to attend a new personalized program. When Levine calls up to find out more, the sales consultant began to 'qualify' Levine with what is known as the 'four walls' cornering technique designed to ultimately make you say 'yes' and be obligated to attend the program. The sales consultant will make sure Levine is committed and believe that he is qualified for the program; and even asks to answers few questions then to call back later with the answers; telling Levine that based on the answers PLI will decide whether Levine has the right qualities, attitude, and aptitude to attend this exclusive program.

This is how professional sales people and marketing companies coerced you to buy their products and services.

Sales Framing Techniques

I will describe to you some of the techniques used by sales professionals to fool you into buying. Theses different rules are explained in detail in The Power of Persuasion: How We're Bought and Sold:

1) The first rule is based on receiving separate benefits when buying a product or service. For example, people will generally be attracted to buy a product that offers a distinctive free gift to be collected separately. This is known as the 'separate gains' principle.


2) Next is the 'silver lining' rule. The put it simply, this rule indicates that we can hide the fact that cost is high by separately offering some type of benefit to the consumer on a later date, a rebate coupon, a percentage refund etc.


3) This rule is similar to the above mentioned ones except that it is done my making a loss as painless as possible. For example, instead of informing the customer that they will have to pay additional for some mandatory types of products or services, you can basically bundle it together and ask them to pay just once.


4) The next rule, to explain simply is to package small loss (or deductions) together with the big gain or profit. For example, in certain types of investment there are no up front sales fee when you buy. But when the time comes when you decide to cash it in after making capital gains, 'exiting' fees may be charged.


5) This rule states states that we feel more bad in losing something than we find pleasure in gaining something. As humans we are programmed to avoid danger and pain.

This is how insurance companies get you to buy insurance, by showing to you the large amount of pain you will suffer if you do not spend a little to insure yourself. BUT, the 'risk principle' states that as humans we tend to gamble on losses, or risk the chance of suffering a loss (that is why there are still so many individuals who are still uninsured.

So instead of the 'scare tactic', we should phrase messages in such a way as to show how wonderful a benefit may be if we can continue to enjoy that benefit. For example, an auto insurance company may show a customer how wonderful it is to get endless miles on his/her car without having to worry about the costs of a break-down. Or even, how great it would be to spend your money accessorizing your car instead of using that money on repairs.


6) The next rule you will be familiar with. It is the technique of 'buy now, pay later'. You have received offers asking you to take or try a particular product first before you open your wallet.

You've seen those 'try for 30 days and if you don't like it just return it with no obligations' ads. Of course during the trial period the marketer will try their very best to show you that you have made the best decision to try the product because you are such an intelligent person. Most often than not, after you have tried the product for a month, the reciprocity rule kicks in and you'd feel obligated to just buy the darn thing.


7) This rule can be considered the 'credit card rule' simply because it is exactly what happens when someone uses a credit card to buy something he/she cannot afford. Simply this rules shows us that we will be more willing to accept future losses, or part with money we don't have instead of losing what we currently have, or pay cash.


8) This is the best rule to describe stock traders who 'sell their winners, and keep their losses', which happens quite regularly. This rule again shows how the human mind tend to avoid the notion of suffering a loss.

You can always see how people tend to get in the denial and avoidance state when they have lost a person they care for. The human brain is programmed to forget pain we have felt in the past. That is why sometimes drivers who have been injured in a car accident before continue to test the speeding limits again after some time. This problem is termed as the 'sunk-cost trap'.


9) Here's a technique used by retailers to make a product seem value for money. This is the rule of 'list high, sell low', meaning you state a high list price, or the recommended/suggested retail price; and show a low price to entice and make it very attractive to the potential buyer. This rule takes the contrast effect into account.

Care should be taken though not to make the list price seem too high or unrealistic, especially when customers are able to compare the price of the same product elsewhere. This rule also involves when we show products of different prices to consumers.

It is known that when we offer customers higher priced versions of a product first, the customers will be more willing to buy the cheaper version shown later; but if we were to show customers the cheaper version of a product first and than show more expensive versions, customers will be more inclined to purchase the more expensive versions.

Retailers use this technique in a 'top-down' approach of displaying products, where the more expensive products are displayed at eye level, and similar item with a sales discount just below it.


10) The last rule is about 'exceed reference price'. This rule basically tell us not to frighten the customer at the point of purchase with information like extra charges, or any additional or hidden fees. In The Power of Persuasion: How We're Bought and Sold, there are 2 hypothetical questions:

Which would you choose:

A. A petrol station that advertises $1.39 per gallon of gasoline, but says that you can get a discount of 10 cents if you pay by cash; or
B. A petrol station that advertises $1.29 per gallon of gasoline, but also says that there is a 10 cents surcharge if you use credit card.

Most people will chose Option A, because it creates an illusion of an opportunity for savings. Option B just makes the customer get agitated for no reason because of the notion of having to pay more.

So don't unnecessarily scare the customer after you have painstakingly convinced him/her to buy your products. I'll leave you with 2 advice from Dr. Levine when you have a dilemma in deciding to buy something:

Ask yourself,

1. Is it a good value NOW? Do not compare the price it was in the past, or compare how much your friend bought it for. Ask yourself whether the item you are buying is worth it's current price?
2. Is it worth the cost to YOU? Levine mentions 'too-small-a-bill' index. Basically what this is is how worthwhile it is for you to buy something at that price there and than, and whether it is viable to go elsewhere to find the same product at a cheaper price. But by going elsewhere you will lose something which you can't get back - time. What about transportation costs? The extra effort and energy? What other opportunity costs are involved?
   

Psychology Pricing

There's a term in psychophysics call the 'Just Noticeable Differences' (JND) to indicate how much of manipulation we can use, for example to increase prices, before customers take notice.

For instance, research have found that price variations of 5% will make customers take notice. For example, pricing a $99.95 will be noticeable instead of $99.94, or $99.96. Do take note, the higher the base price , the more absolute change required to make a difference, as pointed out by Levine.

Here are some facts developed by researchers:

• We are more price sensitive to price differences when shopping for necessities than for luxuries
• It takes a smaller price increase to deter poor shoppers than rich ones
• Price drops are weighted more heavily for name brands than for generic store brands. Branded products require smaller discount to be perceived as a bargain than a generic brand
• Women are more discriminating of price differences than are men

Researchers have also found the following to be true in psychology pricing:

• Odd number prices is perceived to look lower than even, round number prices. The same goes for lowering prices from an odd to even number. So the 99 cents strategy works better then the a 98 cents strategy.
• Two prices ending with odd number have an impression of greater difference than comparing two even numbers. For example, the range between $1.99 and $3.99 looks greater than $2.00 and $4.00
• Consumers do not usually look past the second digit in a price, so something selling for $1.51 may look the same as something that cost $1.59

Here are some psychological pricing tips from Dr Robert Levine to increase the spending of your customers:

1. If you have the information, sell to the customer (direct mailer) the highest price he/she has paid in the past
2. Now comes the JND and contrast challenge. State a higher odd number price to increase. Care should be taken in the JND process that the customer do not feel any pinching sensation when they look at the price. Another way to show customers price increase is to break it down into a minuscule amount such as how much it will cost them per day. For example, you have increased your monthly subscription from $4o to $48.99, a little over 15% increase in price (take note, you should have a fixed increase/decrease percentage if you allow your customers to choose) . Therefore you can sell your new subscription price at $1.61 a day ($48.99 x 12 = $587.88, and divide by 365 days)

Anchor point and anchor trap

Anchor manipulation is one of my favorite topics under the Contrast Principle to discuss. We shall see how easily it is to manipulation someone based on their anchor points.

In The Power of Persuasion: How We're Bought and Sold, Dr. Levine explains the different ways we are manipulated; they are:

The base rate fallacy. The base rate fallacy suggest that sometimes we use the wrong anchor point, or base rate. We may for example base our decisions on stereo type believes, or past conditioned influences and habits. And even due to plain ignorance and laziness to understand a product better than to just accept marketing messages and sales pitches as facts.

An example put forth by Levine is Bayer, the aspirin maker. Bayer's advertisement boast on how their product contain '100% pure aspirin'. The average consumer may be attracted to this point and feel that Bayer aspirin is superior than other brands. Little known to aspirin consumers is that ALL aspirin contains 100% of the drug.

Another example quoted by Levine is Anacin. Anacin added caffeine to their aspirin, and instead of promoting their brand of aspirin they made a statement that 'Anacin contains the pain reliever doctors recommend most'.

With a little clever twisting of words your contrast may have just gotten more intricate.


The decoy. The decoy ploy is initiated by showing customers a variety of optional similar products in the product range that he/she will not buy for a number of reasons like high price or an unattractive feature. As a result another product that the marketer ultimately intents to sell will look more attractive to the customer.

Another explanation will be:

The decoy item is placed together with other items. And by down selling that item (usually a higher price item), it makes the other item seem more value for your dough and reduces buyer's dissonance.

An interesting experiment done by Itamar Simonson and Amos Tversky illustrates an example with an oven:

One set of customers were given a choice between a $179 Panasonic oven, or a $109 Emerson oven; both with a 35% discount offer. Another set of customers were given a third choice of a $199 Panasonic oven with only a 10% discount.

The results of the experiment showed that when the second Panasonic oven was not offered, 57% of the customers chose the cheaper Emerson model, and 47% bought the Panasonic. But when the $199 Panasonic oven was 1 of the 3 options given, 60% of the customers chose to buy the cheaper $179 Panasonic oven, and only 27% bought the Emerson model. 13% of the of customers bought the more expensive Panasonic oven.

What this experiment reveal is that when a more expensive version of the same brand is offered, the cheaper model of that brand is likely to be more attractive and sold.

Another great example is masking a decoy with a decoy, described by Levine is that of a sweater store:

Customers lured by a sales promotion comes into the store and sees a messy table (on the right-hand side of course) with leftover cashmere sweaters at 40% off (this is the decoy of the decoy). Then walking further down in the same direction the customer sees another similar table selling cotton sweaters that were priced 20% to 30% higher than the cashmere the customer saw earlier (this is the decoy). Now further down the customer sees a neatly arranged colorful table with similar cashmere sweaters at prices lower than the 40% off cashmere and much lower than the decoy sweaters.

So you can guess what the result was - yes, customers rushed to grab what was laid out on the last table.


Anchor Trap

I would like to end this section by warning you of the anchor trap. An anchor trap is usually used to make a high priced appear lower. I will leave you with the following example by Dr. Robert Levine of a cable provider in Kentucky:

Storer Cable Communications wanted to raise subscriber rates, mailed out a notice saying:

"It's not often you get good news instead of a bill, but we've got some for you. If you've heard all those rumors about your basic cable rate going up $10 or more a month, you can relax: it's not going to happen! The great news is... the rate for basic cable is increasing only $2 a month."

What happened? Storer managed to secure an extra $2 per month from their customer's monthly cable bill by letting the customer think that they were saving on $8 per month. How? Because rates were expected to go up by $10 (or more) a month.

Adjust your contrast

This section we will discuss an advertising strategy that is not often talked about - Contrast Advertising.

What is Contrast Advertising? It is a strategy where you compare your products directly to a competitors product. Comparing 'Apples to Apples' you can say.

How do they use this? Well, let's say you have invented a MP3 player that does everything the iPod does, and yet your player was lighter, smaller, has more storage space, etc etc etc. So your advertisement will have a picture of a gadget similar to the iPod, and next to it you have your patented player with all the extra functions and benefits etc... get the picture?

Levine explains his his book, The Power of Persuasion: How We're Bought and Sold that there 2 reasons how contrast in used in persuasion:

1. To convince you that what a company is selling is a better deal than what the competition has to offer
2. To alter your expectations, or what's know as your "anchor point"

Levine illustrates this scenario to describe the above points: 'Perhaps you're shopping for a certain camera. Your friend tells you he just bought one for $200. You see the same one in a discount store at $175. Good deal, right? But say, instead, the friend had told you that he thought the camera should cost $150. That $175 price isn't so attractive anymore.'

To use contrast as persuasion, you either alter a person's anchor point, or the features of the product itself.

How do you alter a person's anchor point? Well, you do it incrementally so that the person adjusts to the changing situation.

For example, suppose you meet an insurance agent for the first time because you feel that you do not have the basic hospitalization coverage everyone requires. What often happens is that, after you've purchased your medical insurance, the agent will tell you that you don't have, lets say disability coverage. So perhaps your next meeting with the agent you buy that disability coverage. Then the agent request that you meet again because he/she has told you that heart disease is on the rise in your area and you do not have critical illness coverage. So what happens, you buy critical illness insurance. This will continue as the agent tries to sell you different types of insurance starting from health, life, to home and travel insurance and so forth.

The problem here is you feel that you have only paid for a single policy, whereas the reality of the situation is you've probably bought as many policies as the agent wanted you to buy.

The Rule of Reciprocity

The feeling of reciprocity. Have you ever been given something by someone that is of value to you? What about a deed done by someone you have never met? How do you feel? Is it fair to say that you feel a sense of obligation?

Levine mentioned in his book,The Power of Persuasion: How We're Bought and Sold that we may feel several feelings, such as gratitude, a sense of decency and social responsibility, or simple feeling of guilt.

This feeling of having to pay back is term the 'reciprocity rule'. Or the obligation, or Giri as its' termed in Japanese.

It is known that if you need someone to do something for you, or buy something from you for that matter, you must show that there's something in it for them. Why don't you quench this need before you ask a favor from someone? This is an excellent way of 'breaking the ice', and sets a great first impression.

What companies do to 'make friends' is to give free gifts. Not because it is a reward for buying something, but a reward simply for 'being there'. The higher the perceived value of the gift, the more gratitude is exchanged, and eventually these people will end up being customers, and also provide referrals.

Have you ever been told by a friend on where to get a free t-shirt, or movie ticket, or even a free holiday?

Take a look at timeshare companies who gives people free watches and holidays stays just for coming down and listening to their presentation.

Religious and non-profit organizations can easily bring in the buck through donations. For example people on the streets are given free, artistic crafts made by young orphans in a third world country. This type of offerings will most certainly get an obligatory respond through an exchange for money.

But the rule of reciprocity does not last long, as pointed out by Levine. For example, giving a raise to an employee to get them to be more loyal and work harder will only last for a short while before the employee rationalize that they deserved the raise to begin with. The term use for this rationalization as stated in The Power of Persuasion: How We're Bought and Sold is called "justification leak". The problem may result in the expectation that this raise (or any type of offering) will be a future norm.

That is why sometimes when something is offered for free is often considered dangerous. "Despise the free lunch", and "pay your own way to stay clear of gratitude, guilt, and deceit", is quoted by Robert Greene in his book, The 48 Laws of Power.


Exchange for time

An obligation to pay back someone for the time spent is also another form of the reciprocity rule. Imagine if a salesman spent an entire hour explaining to you about a product, how would you feel? Would you at least consider to buy from that person because of the time and effort that was put in to explain the benefits of his/her product to you?

Often than not, a sales professional like a real estate or insurance agent will use this reciprocity for time to their advantage by making you think that they are in demand and that their time is very precious. 'Time is money', have you heard of that saying? And have you had the experience where a sales professional (usually the commission based ones) phones you up to make an appointment to explain to you the latest investment product, but also explains to you how their time is fully booked for the next 6 month? Then they go on to say that they will slot some time for you in between appointments, because they think you will benefit from this product and that they think you are special and deserves this attention? Sound familiar?


An act of kindness may not be what it seems

At this time I want to point out how much people abuse kindness, and use the act of kindness as a fishing hook to bait so many vulnerable people to get them to hand over their money.

There are so many con man out there that exploits reciprocity on unaware or timid individuals. You often read news of the elderly being con of all their money from someone who come across as kind and generous. A few decades ago we can see countless so call religious cults asking people to donate all their money to the organization for an exchange of peace and a ticket to heaven. You have also seen on the news many years go where cult leaders were easily able to influence people to take their own lives. These cult leaders do not coerced individuals, but act as a father figure, a role model, a mentor. They are seen as a symbol of goodness, honesty and is considered to be 'the perfect' human being.

I'll finish this section by a quote written by Robert Levine, 'there's nothing inherently manipulative about giving or receiving. The challenge is to separate the manipulators from those with good intentions, the enemy tribes from your allies'.

3 Pillars of Persuasion: Perceived Authority, Honesty, and Likability

Let's go back to the question who would you most likely buy from? The aggressive sales dog, or the gentle 'product adviser'? The answer is simple - the likable of the 2.

Research have shown that people will likely be influenced by those with characteristics of honesty, likability, and perceived to be a figure of authority.


Perceived Authority

In the US, studies have found that the symbols of authority are: title, clothing, and luxury cars.

Levine states in his best selling book,The Power of Persuasion: How We're Bought and Sold that people with "Dr." before their names are usually seen as an expert. Advertisements and promotional campaigns that have their sales messages conveyed by someone who is perceived to be an expert will definitely increase sales. To show you how complexly bizarre our brains can be; actors who play a role of a medical doctor on screen when promoting a product for an advertisement will almost always increase sales, depending on how authoritative that actor is on screen.

Another way pointed out by Levine, is the importance of technical jargon used by experts, or perceived experts. Research have shown that the more jargon used by an expert, the more knowledgeable his/she is seen to be, and ultimately will be more persuasive.

From a mock jury trial conducted by researchers Joel Cooper, Elizebeth Bennet, and Holly Sukel as quoted from The Power of Persuasion: How We're Bought and Sold, 'The researchers concluded that when the witness spoke simply the jurors could evaluate his argument on its merits. But when he was unintelligible, they had to resort to the mental shortcut of accepting his title and reputation in liew of comprehensible facts.'

The point to note is, as long as a person have credentials, people will generally treat them with respect, and will likely acknowledge their argument fairly.

Now if you were to combine credentials with confidence, you will likely to always get your way. In The Power of Persuasion: How We're Bought and Sold, there was a experiment done. Phone calls were made to nurses to get them to administer a drug on a patient. 95% of the nurses eventually did as they were told by an unfamiliar voice over the phone who was perceived to be a doctor and who spoke in a authoritative manner to the nurses.


Honesty

Moral trustworthiness can be said as the virtue that makes or, more often than not, breaks a person. We all know how difficult it is to gain back trust.

The following are ways stated by Levine to earn trust from your customers, and to acquire new customers:

• Testimonials and Endorsements
• Presenting Propaganda as Education (disguising your sales process as education)
• Presenting Propaganda as News (eg Infomercials. Info=News + Commercial=Sales)
• Coloring the Choices (communicate both sides of the argument, for and against the agenda, the pros and cons of your product)
• The Norman Mailer Technique (Power of prepersuasion. Address objections before they occur. Tell people about your earlier mistakes before your competitors does)
• Presentation Style (Verbal skills, Body language etc)
  
• The Peer (Recommendations from peers, Word-Of-Mouth marketing)
  
• The Maven (Using Opinion leaders)

Likability

Often than not we buy products advertised on TV not because of how good the ad was, but because of the movie, sports, or rock star who appeared in the ad.

How much likability depends on how passionate your fans are. If you find your fans tattooing your company logo on the back of their head, and ready to defend you brand name at any cause, you've got it made.

I love to see how passionate Mac fans are. Never in the history of branding can you ever see such a cult-like following. You can say Apple will be around for a long while.

Companies are spending a lot of money improving their image, and always finding new ways for people to identify with them. They use celebrities and advertising aim at 'making friends' with you and I. It's all about being liked, and being trusted.

Positioning your products

Retailers have carefully been designing and laying out products to get customers to buy for years. Retail marketers uses terms such as 'capture rate' to detect how much of what is displayed is seen by the customers, and subsequently uses 'conversion rate' to identify how many walk-in customers turn out to become buyers.

Retail anthropology is a big topic in retail marketing. Paco Underhill, the author of Why We Buy: The Science Of Shopping tells us that shoppers usually take about 5 to 15 paces before getting ready to do the shopping after entering a store.

Underhill also describes important areas of the retail floor. For example, the area in front of the entrance is called the "decompression" or "transition" zone. A person in a rush will never take notice of anything in this zone.

Underhill also mentions that most people will naturally veer to the right when walking in a retail shop, therefore products that you eagerly intent to sell should be placed on the right-hand side.

The aim of most retailers is to get customers to browse every part of their store, especially right at the back. So a strategy that is used is to place necessity items right at the back of the store so that customers will ultimately be exposed to the whole store when they stroll past.

"Winkers" 'R' Us

Do you think that you are not affected by advertising messages?

Think again, because there's always a way of targeting even to the most stubborn of consumers. A 'Winker' is a term developed by Advertising Critic, Leslie Savan, and is talked about in her book, Sponsored Life Pb (Culture And The Moving Image)to those of you who think that they are under control and is not influenced by advertising.

You may think you are too smart for advertisers, but advertisers will catch you anyway, by disguising messages to be perceived by you as non-advertisement. How do advertisers achieve such a task? They do this by 'walking your walk' and 'talking your talk'. To be critical, skeptical and egotistical as you when confronted by advertising.

Subliminal Messaging

We all know that good advertising influences us subconsciously through many subliminal message. Many people deny that advertising has any impact them, but when you ask this people where to get a quick bite they will instantaneously reply, "Subway", or "McDonalds". Or, if you asked them to go for a cup of jojo, they will recommend you the Starbucks around the corner, or the Coffeebean in the next building.

The reason why we can spell 'McDonalds' when we are fully intoxicated on hard liquor and can barely remember our wife's last name is because we have been consumers and have been targeted by major fast food chains and toy makers since we first opened our eyes and developed our ability to hear.

Many major companies have marketing plans targeted a children. Some terms have been developed by marketers such as, "pester factor", and "nudge power" aimed at influencing children to bug and nag their parents to buy.

In his book, Kids as Customers: A Handbook of Marketing to Children, James McNeal explains that there are 7 main ways children nag at their parents:

1. Pleading
2. Persistent
3. Forceful
4. Demonstrative
5. Sugarcoated
6. Threatening, and
7. Pity

Marketers who are successful at applying these techniques have seen sales increase exponentially, which means more profits for the organization and empty pockets for mummy and daddy... besides the complementary headache.

Subliminal messaging has played a major part in movies. Consumer staple producers and consumer electronics manufacturers are often seen as sponsors in major blockbusters. For example, GMC, the SUV maker brought its' brand name to another level by having the characters in the 2007 movie, Transformers transform into GMC branded vehicles. One of the most successful companies in movie advertising is Apple Computers. If you notice, most major Hollywood films have their actors use an Apple Powerbook, or the Mac. Apple is so successful with their branding that the Apple logo is now synonymous to the Information Age lifestyle.

Psychology Disarmament

Why are most of the rich sales professionals an introvert? This is because they know how to slowly and gently bring down the guard and defenses of the people they are trying to sell to. They know that the time to go in for 'the kill' is when we feel non threaten, which puts us in a state of vulnerability. And ironically, when we are in this state of calmness, we feel that we are the ones in control of the situation, thereby making us easy victims, and being branded as 'easy' customers.

The subtle approach always wins

Have you experienced being sold to by an aggressive, pushy salesman? What about a soft spoken, gentle sales consultant? Who would you not mind staying longer, and perhaps having a cup of ice mocha with?

No one likes to be Sold to. Not you, and not me. But do we always buy? When I say 'buy' I don't just mean the tangible objects you have collecting dust in your home, but also to the intangible products and services, like holiday packages and insurance policies. Now you know why some Insurance Agents are more wealthy than the Chief Financial Officers of many companies.

Are you unknowingly being influenced?

The psychology behind persuasion and influence is as much an art as it is a branch of social psychology science.

Have you ever been in a situation where you told yourself that you would never in you lifetime by a particular useless widget? Then one day after a much needed spring cleaning you find that ugly looking, useless widget that you swore to yourself, your wife, all of your friends and the whole world that you would eat the dirt under your jogging shoes than to buy such a worthless garbage in the palm of your hands. But after spending the next 10 minutes analyzing how you end up with It, and instead of being dismayed or embarrass at yourself, you began to show admiration at the intelligence and subtleness of the angelic one that had enlighten you to the wonderful, untapped qualities of the 'gem' you currently hold delicately in your undeserving hands?

Of course you have... it's just that you don't know it... until now!

Congratulations and Welcome to the World of Persuasive Psychology!