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The 'IKEA effect': Psychological hacks they use to sell more

Posted 3 years ago

The 'IKEA effect': Psychological hacks they use to sell more

Posted 3 years ago

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Business Case Studies & Hacks (IKEA, Apple, Starbucks..)

Deep dive on how the world's largest companies (eg. Apple, Ikea, Starbucks) use psychological hacks to get people to spend money.

The 'IKEA Effect'

IKEA is the world's largest furniture brand. With annual sales hitting ~$50B+, it's the King of "buy stuff you never planned to buy".

Unsurprisingly, IKEA designs its stores with various psychological tricks to get you to spend more money.

(1). IKEA's first psychological hack is the business model: sell furniture that requires the effort of self-assembly. A 2011 Harvard study found people assign higher value to self-assembled goods (willing to pay 63% more vs. pre-assembled). Shocker: it's named "The IKEA effect"

(2). Store locations: IKEA stores also require "effort" (and time) to get there, with many of the chain's 440+ locations outside of big cities and in suburban areas. Once a shopper arrives after a long trek, they'll be motivated to buy something so as to not "waste the trip".

Shopping at an IKEA store is a different experience than shopping from any other furniture store.

(3). Store flow: The "effort" continues in the store: first, you walk through IKEA's "showroom" (including 50+ inspirational settings.) After travelling 1km+, you pick up furniture in the "market hall". Subconsciously, buying goods is a reward for all the distance you've covered.

(4). Maze-like design: IKEA as a maze is a popular meme...but also true. Even though there are exits and shortcuts, the store is designed for a shopper to see everything on offer in the showroom. And, again, the "effort" of solving the maze increases the perception of value.

(5). Guiding arrows: The maze-like design is complemented by floor arrows that guide shoppers. This is another hack: you are handing over your decision-making (where to go) over to IKEA. This is psychologically disarming and primes you for a later purchase.

Desensitizing environment, like casinos, IKEA's showrooms and market halls don't have windows. Shoppers lose sense of time and space, staying focussed on the task of shopping.

Writing down a list: IKEA makes pencil/paper available to write down the item # you want to pick up. While it's a memory aid, the act of writing plays on a classic persuasion hack: consistency. Once you've written down an item, you'll want to "follow through" on a purchase.

(6). In-store dining: IKEA's founder Ingvar Kamprad said "You can't do business with someone on an empty stomach." IKEA's have cafes where shoppers recharge, talk over potential purchases and -- crucially -- stay in the store longer. Insanely, IKEA sells 1B+ meatballs a year.

The Design

IKEA has a "democratic design approach". It reverse engineers a product based on price first. The Scandinavian aesthetic (simple, clean designs) lends itself to furniture that can be "flat-packed" for easy pick-up. Also, self-assembly reduces cost (and price).

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