Why do IKEA Hotdogs cost $1?

by | Jul 7, 2022 | Blog

When you walk out of IKEA, you see a big sign that says ‘$1 hotdogs’. Its super low price makes us think: why on earth would Ikea sell hot dogs for a dollar? 

One of the reasons that Ikea might do this is because of something called “recency bias”. It’s when the thing that happened to us more recently is what that we tend to put more weight on in our memory.

So maybe IKEA knows that you came to buy a lamp, and four hours later you’re still walking around, now with a bunch of things you never planned on buying. You’re questioning if you need a new rug or not although you’ve already bought it. You’ve got a mattress topper and a whole bunch of candles. You had a fight with your husband, and you haven’t seen him since the homeware section. You’re freaking out. You go to pay, it costs two and a half thousand dollars. You’re not really sure if you wanted any of this but you have it now. And you sit alone eating an incredibly great value hot dog, and you go “wow, this hot dog was really cheap and delicious.”

According to recency bias, the $1 hotdog could re-code our memory for our overall IKEA experience. And when we’re driving home thinking back, the fact that we got a great treat at the end means that we like IKEA more. 

IKEA’s strategically placed $1 hotdog gives customers a sense of value as they leave. A cheap and delicious hotdog being their most recent memory, and not the fact that they wasted a few hours and spent more than a thousand on things they don’t need, makes the overall experience more delightful.

When I fired my bookkeeping agency, about five years ago, they did something really interesting. When I said that I don’t wanna work with them, they sent me a bunch of flowers saying thank you so much for working with us. And now in my memory, I’m like, “was my bookkeeping agency really that bad?” (They were that bad.) But my memory’s playing tricks on me because they sent me flowers at the end, and that’s recency bias at play. So now I’m thinking “that was a good experience, maybe everything else was a good experience as well.” (It wasn’t.)

So, how can you use recency bias in your business? For example, if I were running a hotel, I would make the checkout experience amazing because we know that checkout is more weighted in someone’s memory than check-in. The most recent experience is gonna be the thing that people remember more.

In your business, what is your $1 hotdog strategy?

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