Gareth Harvey — DECIDE
Gareth shares some of the research he does into product pricing in supermarkets and restaurants, and explains why bigger discounts aren’t always the best way to get more purchases.
By loading the video, you agree to YouTube’s privacy policy.
Learn more
Full Transcript:
Jo Evershed 0:00
But first of all, we’re going to talk to Gareth about how supermarkets are accidentally giving away millions to our benefit, of course. Over to you Gareth!
Gareth Harvey 0:12
Hello. So, as I said, I’m Gareth Harvey. And I used to be a professor of consumer psychology at ASHRAE in Geneva. But now I am a director of behavioural sci- try that, again, I’m the director of behavioural science at Decide which is a marketing and creative agency. And unlike most of you guys, my world is not likely doing through we say the academic research, but it’s taking all the great findings that we have out there in the world. So things that you guys are working on now. And to put it really crudely finding a way to make money from it. So there’s so much great research out there, but it just stays in the academic silos. So my remit is to try and read about that, and work out how it can be used for brands.
So my particular interest is in supermarket design. So I do a lot of work designing supermarket layout. So if you can’t find the baked beans or the bread, it’s probably my fault, or someone like me. Or on the other hand, I do a lot of work, which is eye tracking and looking at product design. So making sure that products stand out on the shelf.
Now today, I was going to talk a little bit about actually how supermarkets end up giving away a silly amount of money. Now, if you go around any supermarket, you’ll see all sorts of special offers. Lots of them that look something like this, some will be two for five pounds, sometimes you’ll be see things buy one, get one free, sometimes 50% extra free. And if you look at these, some of them will be, shall we say? Not so great offers. So for example, some of them is it said at one and the bottom, one pound each, or two for two pounds. People often think that this is a case of supermarkets being, shall we say deliberately trying to manipulate you. And the simple truth is most of the time, it’s not that. It’s a simple case of human incompetence.
Human incompetence explains a lot. But when we look at it, actually though, there’s such a variety of different offers, and in effect, they’re giving away more money than they actually need to. If we think about it, it’s a simple case. So what’s more effective, buy one, get one free, 50%, extra free, half price, what grabs attention. And actually, a lot of the time when we actually analyse data in the store, we realise it’s, the offer itself is kind of irrelevant to a certain extent. Consumers are so busy, are so busy trying to look and work out what stands out what’s on special offer.
And just to show how big an effect this is, I’ll talk about an example I did instal a number of years ago, we’re working in the alcohol section, looking at beers, we collected our baseline data. So we recorded something in the region of about nearly 10,000 shoppers, going down the alcohol section. And then we made an intervention, we made some changes. And we wanted to see, could we increase the sales of a particular type of beer. And suddenly, after our intervention, a beer we did nothing to we did no work to, it’s sales increased by something like 50%. And we thought, what the heck has happened here. And actually it was a simple case of people noticed the one product that was by a sign on the shop shelf. That sign it simply said shoplifters will be prosecuted. Nothing to do with actual anything to sales. But it grabbed people’s attention. People looked at it, and they ended up seeing it. And then they looked at the beer that was next to it. They saw the beer that was next to it, or just above that sign. Oh, I might as well get that one. So they ended up buying it. And actually this kind of goes to show such a key point when we work in the supermarket. Visual saliency is key. Visual saliency is probably one of the biggest factors that predicts whether someone’s going to buy something or not. So we need to design products that stand out and shelf. And it’s the same for special offers. So although supermarkets are great, all of these different offers, actually making sure the product stands out onshelf, and that special offer stands out on shelf, is probably the most key factor.
Now, as I said, we’ve got all these different offers. But we can still find ways to optimise it. So basically find ways that they can actually get you to buy a product without giving away more margin than they need to. Because if you think about this, and we take it from a very, shall we say cognitive approach, we’re coming back to just noticeable difference. What the supermarket is trying to do is trying to actually work out what’s the biggest difference or biggest change they can make to the price that you’ll notice. They just want to go over just over that threshold and then stop.
4:55
Now we do all sorts of conjoint analysis for brands trying to work out how much we can do that, how big a change do we need to make. But actually what we found out a lot of the time, we can actually make different changes to the way that we’re presenting these things, we can change the way these offers are presented. And actually, we can get sometimes the same effect without actually having to give any margin away. So just the obvious one, we start off with charm pricing, the idea of reducing the digit by one, everyone knows that cognitively, it’s the same thing. But making that a slight change makes a difference. If you look at some of the stats here, if a product is placed, or priced at 99 pence, conversion rate online is about 3%. For some of the brands we’ve worked with, if it’s a pound it’s about 1.88. So you’re getting virtually a 1% increase in sales. Now doesn’t sound very much, but it’s a huge effect when we start to look at these, the samples we collect in the commercial world, we’re looking at sort of hun‑, or 10s of 1000s. So you start to see these big differences. So these little changes we’re going to talk about today have some profound effects.
So here’s some little tips that we use, when we actually try and design something, something we saw in the academic literature, and we’ve tested it in stores or supermarkets, the brain gets confused between size, numerical size and visual size. So these two special offers exactly the same thing, by changing how we present them makes one actually sell a couple of percent better than the other. So the one on the top is actually the one that sells better. By putting the price in a smaller font than the reference point, it actually the brain feels like it’s a smaller price. On the one on the bottom, actually, what you’ve got going on there is you’re making the font, the price feel like it’s more expensive, you’re making it feel like it’s more expensive, because it’s bigger than the reference price, oh the reference font, the new low price. So just changing how you present that makes a difference about 2 or 3% in terms of how many people are going to buy a product, all with just changing the graphic design, the sort of little things that we can do.
Sometimes where you can use exactly the same technique, and what actually what we’re trying to do here, we’re trying to make, not necessarily the price, but we’re trying to make a number field bigger. So on the first one on the left, is it saying we’re making the prices, the big thing that grabs your attention $19 a month, $49 a month, or 99, it’s bigger than all the reference fonts. So we’ve changed it in terms of we’ve just reframed in terms of the bronze package, the silver package and the gold one. So that’s the big thing that catches your attention, the prices slightly smaller.
We’ve changed it here, this is trying to make the, there we go, if you try to make it the size of how much data you get with an online internet package, we want the numbers to feel as big as possible. So this times we’ve made it bigger than the reference of the thing. And it doesn’t necessarily need to be a font, you can do exactly the same thing in terms of a visual or graphical element, although the effect is slightly smaller. So by making the number bigger than ref reference point, it feels like it’s either bigger or more expensive, depending on what you’re trying to do.
Likewise, when we’re designing price tickets, really simple tricks you can end up doing to make the special offer or the discount feel like it’s better. So in the top one, if a product was 100 pounds, and you now reducing it down to 50, you can make that field bigger by simply increasing the space between those two numbers on the ticket and actually changing it graphically. So if we put the new price in a different colour font, or a different colour font, and a different actual font, it actually changes that and people feel like the price is going to be an even greater one. Somewhere in the region, again, about one, one and a half percent when we’ve done this in brands. But again, that one and a half percent change actually starts to add up considerably, especially when we’re looking at this at a supermarket level.
Sometimes you can even tell people, and if you tell what that difference is, say something like say 50%, it works really well. The challenge for this is if you change it and it’s saved, save 23%, or should we say a non round figure. At that point, people start to feel like the difference is smaller. So if you’re actually going to tell them on the ticket, what the difference they’re saving is in terms of a percentage. We only want to do that when we actually have a nice round figure. Typically, there’s not done though, because it just makes up that messes up the look and feel of a special offer sign. And it makes it look more cluttered. And actually the bigger thing we’re using normally to drive sales is visual attention. visual attention is the key thing that we’re looking for.
9:43
Other things that you can see here, we’ve got one offer on the top, but it’s simply changed and we change the order of where those that information is presented. So in this one, all I’ve done is change it instead of it being in horizontal, we’ll put the change in prices vertically. A really, really small thing, but it makes it so much such a big difference of three to 4% in this case. Why? Well, it’s actually easier for us to do the maths, it makes it more obvious what the difference we’ve made it.
Another thing we’ve done here is we’ve actually made sure that the change is different for all the digits. So both the right hand column and the left hand column, each one is smaller. If they’re not both smaller, sometimes people get a little bit maybe not confused, but they’re slower to process. And eye tracking research in store typically shows that people are going to be looking for about half a second maximum at a product. So it’s all about trying to maximise the time people are spending looking at the product, and making it easier and quicker for them to make it to make a decision.
The other thing that their bottom ticket does, it gives them a reason of what that why the products on discount rather than just saying it’s on discount. So this one just use the classic example of a January sale. And the reason that’s important is it stops or at least reduces the likelihood that anchoring is going to occur. So anchoring is the idea that the digit you see is it anchors or sets your expectation of how much you’re going to pay. And this is always the risk, when you put a product on special offer that people start to think that, oh, it’s not really valued at 79 pounds, it’s really only cost 63. So by so by giving them a reason, it just reduces the likelihood that anchoring occurs, and that they still value the product at what its full price should be. So it’s just one of those little tricks we can play around with to try and try and stop that happening. So it’s a really simple thing that we start to do.
Another thing that you’ll often see sometimes done, is actually starting to starting to change the presentation of the price itself. This is something that typically is more likely to occur, I suppose on a restaurant menu. And again, I do a lot of work designing restaurant menus. But it’s a simple case of we drop the currency symbol. Now on restaurant menus, when you drop the currency symbol, you can start to see about a somewhere between 12 to 15% increase in the amount of money people spend on on an item. And likewise, we’ve also dropped the decimal point. So rather than just say 89 pounds, point 00. This time, we’re actually saying 89. And the reason this works is it helps to make the price less salient. Basically, we don’t want people to be concentrating on the price, we want to be concentrating, especially in a restaurant setting where it’s a really hedonistic experience, we want them to be concentrating on what they’re going to be enjoying. We want them to concentrate on the food they’re about to be eating. So it’s all about trying to focus on that, we really want to downplay the idea of price.
In an ideal world, we’d love for people to pay for the food first and then eat it, it’s been shown that’s a much better way of doing it. The problem is, we’ve kind of been trained, you pay for food first in cheap restaurants, in posh restaurants, you do it afterwards. But probably the worst example of actually where we get pricing saliency wrong is if you think of a London black cab, you get in a London black cab. And as you drive, there’s not a lot to do. So you sit and watch that metre slowly ticking up, you watch it ticking up, it makes it really really salient. You finally get to your destination, you get out. But the last thing you have to do is you pay. So you’ve made the pain of payment, even greater. Contrast that with Uber, but you take your phone, you pay virtually so it feels less. So we know paying by card is less painful than paying by cash. So you can pay on your phone, you pay upfront. So you’ve actually paid before the Uber arrives, and there’s no metre that’s ticking over so you can slowly watch it.
Now, the techniques we’ve got on the slide here, like removing the pound symbol, or the currency symbol, yeah, I wouldn’t recommend that for my clients in the supermarket for the simple reason. Well, typically, I just find it reduces clarity. We want everything to be as easy as possible to process in the store, we’re really trying to increase the concept of processing or perceptual fluency. We want to make the purchase decision as easy as possible for the consumer, and possibly not having a currency symbol, it makes it a little ambiguous in store. But on restaurant menus, and especially in the more classy ones. This is something that typically gets done quite a bit.
14:28
But we test all of these, these are not just things so that we’ve said and read in the literature and we think works. But all of these have come from peer reviewed experiments. And we’ve tested them. And actually, the reason we test them is I’ve tested lots of ideas that have been shown to work in lab based studies, but I’ve never been able to recreate them. Sometimes things don’t quite work out. Now it’s not a case of power, because generally when we test something in a supermarket, we’re not talking about a sample size of a couple of 100 we’re talking 1000s to 10s of 1000s. So our datasets are far more powerful than anything I ever had in my PhD. But this is a classic example it was taught at Nudgestock. And they were talking about which website design is going to be more effective. Option A or Option B. Chose the snowboards because trying to drop a hint to someone. But does it make more sense to put the picture of a snowboard on the left of the text or the right of the text?
Now there’s academic papers out there that say we evaluate things differently depending where you’re presenting them. So if the stimulus we put it on the left hand side, then we’re going to process it slightly differently. However, some would argue, or some neuroscientists would say, well, the right hemisphere is slightly better for processing the pictorial information, it makes more sense of presented on the one side. Now I’ve tested this in 10 different concepts on different online stores. And yeah, I’ve never been able to show it. We’ve tested it with product packaging design. And again, we’ve never been able to show it. Now probably it doesn’t work in product packaging, because sure, you might have the image on the right, and the text on the left, got the wrong way around. But actually, there are lots of other stimuli that are competing with and grabbing your attention. So that possibly explains why the supermarket side, but presenting it when I can control what image appears on the screen for an online shop. As I said across 10 different online stores, the effect has never worked for me, maybe I’ve got my experimental design wrong. But just because it’s in academic papers, it’s been talked about in Nudgestock, this year, a number of years, we’ve still never been able to get it right.
So all of these ideas, all of these concepts have talked about, they’ve come from the recent research and papers, probably lab based studies. But we always made sure they work first, normally starting off by piloting it in small steps, small scale experiment, sometimes it just one supermarket, we test it in that one individual store, before we roll it out, after we know it works. So hopefully that’s given you a few ideas about how supermarkets are accidentally giving away millions, and how they can actually sometimes get the same effect by making things visually salient, making sure it catches your attention and actually putting it on on the shelf. And by careful design. So there are other ways of doing it. If you’ve got any questions, let me know my email address is on the screen there if I probably actually hide myself so you can actually see it. Yeah, I will make sure my dress this I’ll disappear in a second. But yeah, thank you, Jo. And any questions, I will happily answer them.
Jo Evershed 17:35
Gareth, that was fascinating. Thank you so much. I feel a bit like with the last session, which was all about gamification. Never see a game the same way now that Nick has shown how all these effects are created, I think it’s going to be the same now with walking around supermarkets. I’m going to see all of these price labels, and be just noticing all the tricks that they’re putting on my eyes and also noticing all the things they’re not putting on my eyes going ha you could have done better there.
Gareth Harvey 18:02
Yes, sometimes they get it right. Sometimes it’s a simple case of ah, we need to make a leaflet or something very quickly and it goes out the window.
Jo Evershed 18:10
Yes, I think oftentimes when we’re working, we all know that feeling of having to just get something out of the door. Now, does anybody in the audience have any questions for Gareth, please put them in the q&a. That was fascinating. I’m trying to think of a good question for you. Gareth. Is there a question you particularly like me to ask you,
Gareth Harvey 18:34
if you’re going rather than looking at supermarkets, the one area I think it’s the most fun is going to look at restaurant menus is one of my favourite commercial jobs is designing restaurant menus. So it’s a case of it’s not just trying to work out to get people to spend the most. But it’s often thinking about well, which dishes have the highest profit margin. So it’s trying to work how we encourage them. So you’ll always thought hopefully, you’ll see anchoring is a common thing. But you’ll really see we dropped the currency symbol, we dropped the decimal point. There’s things where you play around with the fonts. Yeah, there may be the more complicated of fonts more calligraphy based, the harder it is to process and from a perceptual fluency, the more expensive it feels. Now, that may be a good thing if it’s a luxury restaurant, if it’s a cheaper one. Actually, it’s not really so great.
Jo Evershed 19:19
That is so tricksy, I am actually a massive fan of the new thing they’re doing in the UK where they show you the calories as well as the price and it has completely changed my behaviour. I know some people aren’t a fan. They know it’s a complicated discussion point. But I feel like I am spending both money and calories on a day by day basis. And it’s amazing because some of the dishes that I thought were healthy turns out they’re not.
Gareth Harvey 19:40
Yeah, the other one is something they’ve struggled with with the menu design because in the past, they often put healthy sections have a healthy section or a low calorie section. And they found that when they did that it generally decreased the likelihood that someone would order it partly because if it’s a low calorific, or low fat, we assume it’s less tasty. So they actually they had that was one negative. So when they actually put it in as part of the main menu and put the calorie information in had a slightly better influence.
Jo Evershed 20:06
Ah, very interesting. There was one question from the audience, which actually is a question I had as well. What’s this amazing tech you’re using where you get to sit in front of your slides, it’s so much more engaging.
Gareth Harvey 20:15
I’m using OBS. OBS. So it’s completely free. And it was a simple case of it’s normally much better than this, but I’m working at a friend’s house today and I didn’t have time to set it up properly, but um, OBS Open Broadcast System.
Jo Evershed 20:31
I will put the link into the chat for everybody else who might be interesting.
