How Retailers Use The 'Rule Of 100' To Lure Consumers

Why do some discounts look more attractive than others? And what's the secret to creating demand around your product?

We recently sat down with Wharton Marketing Professor Jonah Berger to learn about the psychology behind deals, which he covers in his book, Contagious: Why Things Catch On.

He says that savvy retailers will use "the rule of 100" to price their products. The idea is that a $20 shirt is more appealing at 25 percent off versus $5 off, but a higher-priced item, say a $2,000 laptop, is more attractive marked down $500 versus 25 percent off. "When something is an amazing deal, you've got to rush in and get it," Berger tells us. "It's all how you frame a deal to make it more enticing."

Berger also gave us some tips on how companies create an "air of exclusivity" around their products, and how popular brands like Apple balance both mainstream and sub-culture appeal. Watch our discussion here:

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