Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
Planning done, lists itemized, tasks assigned, routes all mapped out and the game plan is ready to go. I am not talking about a military operation; I am talking about one of the most popular retail holidays in the US – Black Friday, a day when seemingly rational people go mad in the pursuit of deals.
Last year, 247 million shoppers visited stores and websites on Black Friday weekend. What makes people camp out of a store in the freezing cold at 2:00 in the morning? Are the deals that incredible? What makes people lose compassion for fellow shoppers and shove, push or even hurt them? Why do we do it?
What drives the need to shop on Black Friday?
Black Friday is not all about bargains and deals. The motivation to shop on Black Friday has deep roots in consumer psychology. The stores know it and take full advantage of the gullible human mind.
Time pressure: Have you ever seen a sale that was not for a “limited time only”? There is a reason for that. Decision-making itself is a complicated process. If I want a smart phone, there are hundreds of choices in the market right now. I usually do a lot of research before making a big purchase, but add an expiry date to a deal and I will most certainly be tempted to make a decision before the sale’s end date, just in case I end up choosing the phone that is on sale — even if that means I will compromise my usual due-diligence process. Time pressure also drives us into buying something we don’t need. What if we need that item in the future? We can’t get it for this good of a price at that time, right?
Scarcity: Scarcity goes hand in hand with time pressure. The “Limited time only” phrase drives us to the store and the “While supplies last” phrase seals the deal. The scarcity principle adds a rare element to a product. If something is rare, we want to get one before it runs out. And to top it off, we don’t like to lose. So if the product does sell out, most likely we will return home with another similar product just so we don’t have to feel like we have lost.
Social proof: I have fallen for this myself. A couple of Thanksgivings ago, I saw a huge line in front of BestBuy. Even though I had no plans to buy anything, I couldn’t stop myself from reaching out for the BestBuy flyer to see what the deal is and make sure I am not missing out. If everyone wants it, it must be good, right?
Competition and ego boost: Everyone likes a good deal. To know that we have purchased the same merchandise for a lot less than what someone else paid boosts our ego. We get a rush when we beat the system to save money.
Ritual: For some people camping out on Black Friday has become a family ritual. I know a family that spends all of Thanksgiving Day planning and scheming what stores to hit. They take great pleasure in doing this as a family and finish their entire Christmas shopping in one day. Each family member gets a certain portion of the list. Even if there are not that many deals, they still do this, well, because it is not Thanksgiving without Black Friday shopping for them.
What is the point in figuring out the motivation?
Black Friday has been engineered to prey on our weaknesses. The marketers know what makes us open our wallets; it would be wise for us to know what makes us tick to avoid overspending and irrational behavior.
If your motivation is time pressure, make a list of items you really want/need well ahead of time. Research the options for each of your items well before you see the sale flyer and note down the non-sale price for each of your options. This will give you a sanity check on whether you are getting a deal. Check out the leaked ads (you can find those in many deal forums) so that you will have some time to think about it. Most of the time you will find out that you can get the product for a good price throughout the year and not just on Black Friday.
If your motivation is scarcity, prepare your mind to go home empty-handed if the product you want is sold out.
If your motivation is social proof, remember that you didn’t save any money if you wouldn’t have bought the item at full price.
If your motivation is competition, you might want to evaluate who you are trying to please. This motivation could very well push you into keeping up with the Joneses and losing a lot more money. No one cares about your money more than you do and you do not have to prove to anyone how well you did. Be honest with yourself. Your future will thank you.
If your motivation is making a ritual out of Black Friday shopping, make a list prior to Thanksgiving Day; enjoy the shopping, make memories, but stick to the list.
Every avid Black Friday shopper should ask themselves what their motivation to shop is. Having a list, a budget to go along with it and sticking to the list will help curb unnecessary spending and regret.
Do you shop on Black Friday? Do you think the deals you get during that time are better than what you can get throughout the year?
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (693)
- Dish Network Customer Service SUCKS (536)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (329)
- How Much Should You Pay a Babysitter? (288)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (237)
- Will Mac OS X Lion Kill Quicken 2007? (191)