The Psychology Behind ‘Sale’ Signs

Advertising an item as discounted can increase sales, even if price doesn’t change.

January 13, 2015

NEW YORK – A recent Business Insider article delved into the psychology behind those omnipresent bright red or yellow “sale” signs. The news source writes that, according to Mark Ellwood, author of "Bargain Fever: How to Shop in a Discounted World," it’s the signs that get shoppers to buy, not the actual marked-down prices.

Ellwood told the publication that sale signs are known as "information cues" and it’s human nature to be influenced by them regardless of if there's actually a sale going on. He cites a study conducted by MIT, in which 200 different products from 18 different locations of the same convenience store chain were put into three groups. Products in the first group (the control group) were sold in the same way at the same price as always. Products in the second group (the “quietly discounted” group) were marked down 12%, but no sale sign was used. Products in the third group were marked with a red and yellow “LOW PRICE” sticker, but the price remained the same as always.

The results of the study showed that, as one might expect, the quietly discounted group sold just over 17% more units than the control. The remarkable finding was that the group with the LOW PRICE sticker also increased sales by 3.4%, despite no reduction in the item’s price.

According to Ellwood, it's no coincidence that all those information cues are red, either. Red is an "eye-catching color" — literally — because it has the longest wavelength, making something that is red appear closer to us than it actually is. Both history and physiology cause people to notice a bright red sale sign more quickly and with greater interest than any other color.