“I mean, is saving $10 such a landmark event? The last time you bought a house, a car or even a night at a hotel, did you haggle for another $10 off? You probably could have gotten it. But you didn’t. Somehow, though, in the Groupon context, it feels like a steal. There’s something about the simple phrase, ‘$10 for $20 worth of stuff’ that gets you.”
Thank the NY Times’ David Pogue for the insight.
Consumers who can’t get enough of the short-term deals offered by Groupon, LivingSocial, BuyWithMe, and any other group-buying sites probably love the idea that these promotions are fantastic values. But, as Pogue writes, the success of this business model has more to do with psychology than with straightforward value:
The scarcity of deals — one each day — plays on your feelings. It adds to that sense of exclusivity and of serendipity.
The idea of a sale offered “for a limited time only” is known to make shoppers spend like crazy. No one wants to miss out. Consumers want to be in on deals so badly that they’re prone to skipping over the essential step of actually evaluating whether a “deal” is, in fact, a deal. Or, even when consumers pause to consider the value of the product or service offered, they might be so excited that they fail to ask a more basic question: Do I need, or even want, this thing at any price? These steps are especially likely to be skipped when the pressure is on and the deal will be disappearing within hours. If you’ve seen any of these sites, you know that right next to the deal’s price, there’s always a clock that’s ticking—showing consumers just how little time they have to pull the trigger or risk missing out forever.