Anchoring & Adjustments: Causes & Examples

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next:

You're on a roll. Keep up the good work!

Take Quiz
 Replay
Your next lesson will play in 10 seconds
  • 0:03 The Consumer Mindset
  • 0:40 Choices Have Consequences
  • 1:28 Anchoring
  • 2:56 Purchase Quantities &…
  • 4:05 Lesson Summary
Save Save Save

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Log in or Sign up

Timeline
Autoplay
Autoplay
Speed Speed

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Fred Hathaway

Fred has been a business consultant for over 20 years. His expertise includes marketing, human resources, and management.

One of the key fields of study within marketing is why purchases are made. Understanding what is purchased, when, why, and how much is critical to business success. In this lesson, you can learn how this information is used to spur sales.

The Consumer Mindset

When we are at a nice restaurant and looking at the menu for something yummy to eat, we often pause and consider which of two or three similar choices we'll order. Usually, a menu is set up to offer you a few more expensive items, some budget friendly options, and more choices in between. If you are like most diners, you will usually choose something in the middle.

Understanding what consumers are willing to pay and how much they are willing to buy and then using this information to encourage sales is critical to a business' success. In this lesson, we're going to review several pricing strategies used by businesses to affect consumer buying decisions.

Choices Have Consequences

Whether from a parent, coach, or other mentor figure in your life, you were probably told years ago that choices have consequences. From a marketing perspective, that is a very good thing, because marketing is about enticing the buyer to purchase. The expensive and cheap menu items at the restaurant are meant to help you choose something in between, a response to a marketing and pricing cue that leads to steady sales volume.

Helping a restaurant guest make a decision that you wanted them to make is good business for the restaurant. Being able to predict what someone might order helps the restaurant staff know what ingredients to buy. Having a good estimate of how many meals will be sold at what price determines how to staff the restaurant and set up the right number of tables for optimal financial performance.

Anchoring

Much research has been done on pricing decisions. The concept of setting one price to encourage consumers to look favorably at another priced alternative is called anchoring.

Let's say you are at a grocery store. If you are looking to buy some mayonnaise and mustard to make deli sandwiches for a group of people, you will see multiple options on the grocery shelf. There's usually a generic or store brand, a premium brand, and something in between; each has a corresponding price across a range from generic to premium. In some cases, you may only have two choices, but there are usually multiple ones with different price points.

Depending on what is important to you in the purchasing process, you are likely to consistently buy products or services in the same price range. Some consumers are motivated to buy premium brands, like designer jeans, others are value shoppers buying store brand canned vegetables, and many are a mixture of the two. You probably know someone who drives a dependable, non-flashy, inexpensive car so that he or she can afford nice clothes, vacations, or a home.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create an account
Support