Neuromarketing Services

The Relativity Bias – How the Brain Compares Numbers

Why does an 11% discount convert more people than a 10% discount? How can a higher priced product help you sell more of a lower priced one? When is $15 an effective discount, and when is it useless? The fast-thinking emotional brain can’t perform difficult calculations. Instead, it does rough comparisons and estimates and reacts. It sees numbers in relationship to other numbers. That’s why the relativity bias is important to understand in neuromarketing.

Relativity Bias Neuromarketing Techniques

When Williams Sonoma first introduced its breakthrough bread-making machine, it started by offering just one model. It was priced at $275. Sales for this new product were slow. Why? Because consumers had no idea how much it was worth to them. Was that a good price? Was a machine that made bread a good value? It was a new concept, and people were confused. In a brilliant move, the company introduced a larger model of bread-maker and priced it at $429. They showed both products together. The more expensive model sold poorly, but the lower-priced unit flew off the shelves. Why? Because consumers could compare two products and believed that the smaller unit was a great buy.

It’s All Relative – Values, Discounts and Prices

Try this thought experiment. You want a new set of computer speakers. Looking through your Sunday newspaper ads, you see a set advertised for $25 at a nearby retailer. Then, you see another ad for identical speakers, but for only $10, a $15 discount. The store with the lower price is 12 miles away. Would you drive 12 miles to save $15? Researchers found that 80% of consumers would make the drive. Now, think about shopping for a laptop computer. The nearby store has one you like for $1,100. The store that is 12 miles away offers the same model for $1085. Would you make the drive to save $15? Researchers found that 80% would not. The value of the discount is relative to the total cost of the item. For the speakers, $15 was a 60% discount. For the computers, it was only a 1.3% discount.

Consumer Decisions Are Fast, Intuitive and Emotional

95% of all consumer decisions are made quickly and unconsciously by the-fast thinking emotional part of the brain. While that part of the brain can do rough comparisons of numbers, it can’t perform precise calculations. The relativity cognitive bias is closely related to the anchoring bias, which ties value calculations to recently-seen numbers. In online marketing, there are several ways you can use this relativity comparison tendency. They can influence consumers and trigger conversion decisions:

Understanding Common Cognitive Tendencies Boosts Sales

The examples shown above are just some of the ways neuromarketers can help online sales of products and services. The relativity bias is just one tool that can help you outsmart your competition. Often, more than one tendency in the brain to act quickly can be used at the same time. That amplifies the effect. A comprehensive neuromarketing strategy, applied throughout your internet marketing will ensure your success. As the Midwest’s only neurormarketing firm that specializes in web design, SEO, and PPC advertising, we can help you achieve your goals. Contact us to get the conversation started. Let us show you how neuroscience-based marketing can boost your revenues.

Is $15 a significant discount? That depends on how it relates to the total price. The relativity cognitive bias affects how the brain instantly compares numbers.
Learn What Matters to Your Sales. Discover the secrets of how brain makes buying decisions. Get a FREE In-Depth Analysis