What is the Anchoring Bias?
How Does the Anchoring Bias Apply to Marketing?
Also Known As: Focalism, Anchoring Effect, Anchoring Heuristic
Anchoring bias is a bias that relies on the first piece of information received when making decisions, called “the anchor.” Once an anchor is set, new information is based around the anchor. The first number you see changes your perception of any numbers that come after it.
Anchoring Bias Examples:
Multiple Unit Pricing. Which do you think performs better, a sale that says, “On sale, 4 rolls of bathroom tissue for $2,” or a sale that says, “On sale, $0.50 per roll of bathroom tissue”? Even though the price per roll of bathroom tissue is exactly the same, Psychologists Brian Wansink, Robert Kent, and Stephen Hoch found that the first option performs 40% better. That said, an alternative theory is that people think too quick and believe you need to buy all four rolls to get the discount.
In Negotiating. A fairly common use of the anchoring technique in negotiating happens when someone offers a “highball” or “lowball” offer (in other words, someone uses a ridiculously high, or ridiculously low offer).
Product Quantity Limits. Have you ever seen the sign which reads, “Limit 12 Items Per Customer”? If you think this sign is only to prevent over-eager bargain hunters, think again. In a study done by Wansink, Kent, and Hoch, when this sign was placed near a display of Campbell’s soup cans, sales rose by 112%, from an average of 3.3 cans per purchase to 7 cans. Why? Because the brain anchored to the number 12, and began adjusting from there. Another possible explanation is that this also creates a bandwagon effect, because people may assume other people buy higher amounts.
The Showroom Effect. When you visit a store online, you may see the owner highlighting some of their bestselling products. While this technique uses the salience effect to increase sales, if they show a price, this also anchors the visitor with how much they may spend. Car and boat show rooms often do this by showcasing one of their most expensive cars. In addition to using it as eye candy, this sets a higher price in the mind of the buyer (for example, $34,995), making a lower price car (such as $24,995) seem more reasonable.
See Also: Availability Heuristic, Representative Heuristic, Framing Effect, Primacy Effect, Focusing Effect