Price anchoring is a psychological tactic used in marketing where a higher-priced item is presented alongside a lower-priced one. This comparison helps consumers perceive the lower price as a better deal. For example, if a smartphone is shown with a price tag of $1,000 next to another model priced at $700, the $700 phone seems more appealing due to the higher anchor. This strategy influences buying decisions by setting a reference point in the consumer's mind. When shoppers see the higher price first, they are more likely to feel satisfied with the lower price, making them more inclined to purchase the smartphone.