Buyer beware — of how you’re being coaxed into spending
Chances are, given the time of year and all, you’re about to go shopping (and shopping and shopping and shopping and shopping).
But beware. It won’t be just a walk in the mall. Shopping is a far more complex undertaking than you probably realize, according to researchers who delve into the intricacies of consumers’ buying habits.
“We have a difficult time controlling our shopping behavior,” says Alexander Chernev, associate professor of marketing at the Kellogg School of Management at Northwestern University in Evanston, Ill. “It’s influenced by lots of forces we usually don’t take into account.”
We take account of some of them below.
The five senses
“Everyone in the world of retail is trying to get you to spend in their location,” says Paco Underhill, author of “Why We Buy: The Science of Shopping” and “What Women Want.” “They try to engage you with all five senses.”
What you see: Retailers work to present their merchandise in the best light — literally. “They use lighting to make something that looks good look even better,” Underhill says. “Everything tends to look better in the store than it does when you get it home.”
What you hear: If you like the music a store plays, chances are you’ll like the products it sells — and vice versa. That, at least, is the message many stores hope to send with their soundtracks. For example, the strains of Justin Bieber crooning “Someday at Christmas” are pretty much a shout-out to young girls that this is the store for them. Middle-aged nerds? Not so much. “The music can tell you either you belong or you don’t belong,” Underhill says.
Just as music can attract people into a store, it can help to keep them there, or hurry them out the door. That’s because customers respond to the tempo of a store’s music, says Deborah MacInnis, professor of business administration and marketing at the USC Marshall School of Business. “Studies show that the slower the tempo, the slower people walk through the store, so the more they put in their baskets and the more they end up buying. If the tempo is faster, people walk faster too. They don’t stop to look so much, and they don’t buy as much.”
What you smell and taste: The sweet aroma of roasting chestnuts. Free samples of Christmas cookies. Like music, those are effective ways of inviting customers into a store and making them feel welcome.
Well duh, you may say. But smell and taste can serve another subtle function too, Underhill notes. “They get your saliva glands going, and that makes you hungry. And when you’re hungry, you’re more apt to buy anything, not just food.”
What you touch: Signs encouraging customers to touch the merchandise are far less common in stores than signs imploring them not to. But research shows that retailers may be missing a rather lucrative boat. “There are three ways that touching an object can make you willing to pay more for it,” says Joann Peck, an associate professor of marketing at the Wisconsin School of Business in Madison who has conducted a number of studies analyzing the role of touch in shopping behaviors.
One way — the most obvious — is by giving shoppers information they can’t get otherwise, such as how much the object weighs, how soft or hard it is, how rough or smooth it feels. A second way is also quite intuitive. You may be willing to pay more for a cashmere sweater or a small, sleek smart phone just because you like how it feels.
More surprisingly, Peck says, apart from any information or pleasure it gives you, simply touching an object can make you feel a certain sense of ownership. “And you’ll pay more for anything you feel like you own.”
(Sometimes a lot more. In an experiment at Duke University, researchers asked students who had won tickets for the Final Four basketball tournament how much they’d be willing to sell them for — the answer, on average, was $2,400. They also asked students who had entered the lottery but not won how much they’d be willing to pay for tickets — in that case, the average was a measly $170.)
There are big individual differences in how much people like to touch things, Peck says. But the rule of thumb should probably be, “If you don’t want it, don’t touch it.”
Suppose you go to a store to buy a new USB cable for your camera. That’s all you need. That’s all you want. But it may not be all you buy. For while you’re standing in line at the cash register, all set to pay and go home, what to your wondering eyes should appear but “The Hair Traffic Controller — the world’s greatest pet hair remover”? Now, it just so happens that you own the world’s shedding-est sheepdog, and, well …
It’s not merely random good fortune that you should find this fantabulous product — on sale, no less! — where you do. Retailers often identify potential “impulse buys” and stock them at the ends of aisles and close to the checkout stand. Shoppers may not plan to make these sorts of purchases, but stores do plan to make these sorts of sales.
“If shoppers suddenly ceased to buy on impulse,” Underhill wrote in “Why We Buy,” “believe me, our entire economy would collapse.”
Buying on impulse is often seen as a personal budget-breaker. A survey of adult women conducted for ShopSmart Magazine last year found that the average price of the women’s most recent impulse buy was more than $100. And 35% reported regretting at least one impulse buy they’d made in the previous year.
If shoppers want to cut down on impulse buys, most experts advise that they make a list before they go shopping, and then stick to it. A 2009 article in the Journal of Marketing Research offers a less obvious approach. The study found that by eating a typical Thanksgiving dinner, with plenty of turkey and mashed potatoes — and thus plenty of tryptophan and carbohydrates — shoppers could cut down on impulsive buying later. The posited explanation: The neurotransmitter serotonin is known to reduce impulsive behavior, and it’s synthesized from tryptophan.
At first glance this result seems to have very fortuitous implications for shoppers on the day after Thanksgiving. But unfortunately, the effects of a Thanksgiving meal will wear off by then, says the study’s co-author Arul Mishra, assistant professor of marketing at the David Eccles School of Business at the University of Utah in Salt Lake City. “But it does have implications for online shopping.”
Money, money, money
The best price in life is free. Or not. Customers are more likely to buy something if they think they’re getting a good deal on it. And simply including something free with a sale often does the trick: Buy this $1,500 refrigerator and get a free six-pack of Coke. (Wee!) Buy three pairs of shoes, and get a fourth pair free. (Who cares if you don’t need any new shoes at all?)
“The power of ‘free’ is really quite incredible,” says Dan Ariely, professor of psychology and behavioral economics at Duke University in Durham, N.C., and author of “Predictably Irrational.” In a series of experiments described in his book, Ariely found that people consistently preferred to get something free over paying a little for something, even though they’d actually come out ahead in the latter case.
For instance, he offered mall-goers in Boston the following choice: a $10 Amazon gift certificate free or a $20 certificate for $7. Most opted for the freebie, even though they would have netted more money from the $20 certificate ($13 versus $10). In a second experiment, he offered a slightly different choice: People could buy a $10 gift certificate for $1 or a $20 certificate for $8. Again, the $20 certificate was $3 more profitable, but this time — with “free” off the table — people went for it.
Knowing that the free option isn’t always best may make shoppers consider free offers more carefully. On the other hand, Ariely admits that he once bought an expensive new car at least partly because it came with three years of free oil changes.
The theory of relativity. (Not Einstein’s.) Like everything else in the world, prices are relative. And shoppers rely on that relativity to judge value. In an experiment with 100 graduate business students that Ariely also reported in “Predictably Irrational,” he listed three choices for subscriptions to the Economist (which he had found in an actual ad). For an Internet-only subscription, the price was $59; for print only, it was $125; and for both print and Internet it was also $125.
Happily for the reputation of the business school, none of the students chose the print-only option — obviously a bad deal because the print-and-Internet option was available for the same price. In fact, 16 students chose Internet only, and 84 chose print and Internet. But then Ariely downsized the options to two, eliminating the print-only option that everybody had wisely rejected before anyway. So the choices were Internet only for $59 and both print and Internet for $125. This time, 68 students chose Internet only, and 32 chose the print-and-Internet package.
The upshot in the experiment? Though the choices were essentially the same both times, just having the print-only option there the first time around seemed to confuse the issue. To most students, apparently, it made the print-and-Internet option look irresistibly good by comparison. Free of that distraction in the second experiment, many more of them opted to spend less money.
The upshot in real life? The value judgments shoppers make for any particular item can change depending on what they have to compare it with. So, for example, a computer store can probably sell more $100 printers if it also has a $300 printer for sale than it could if the $100 printer were the most expensive one they carried.
Although shoppers do make price comparisons, they’re not always very good at it, as shown in a paper published last year in the Journal of Consumer Research. In that study, people were given a choice between two pens on which the authors had manipulated the prices. When the lower-priced pen cost $2 and the higher-priced pen cost $3.99, 44% chose the higher-priced one. But fewer than half as many — only 18% — chose the higher-priced pen when the prices were changed by just a penny — to $1.99 and $4.
Comparing only the first digits of prices may seem foolish. But it may be just one example of decision-making shortcuts that humans often take out of necessity. “We focus on what is easy to process,” MacInnis says, “because we can’t consider everything.”
And sometimes it helps to compare apples to oranges, Ariely says. “If you’re trying to decide whether to buy a coffee maker for $50, ask yourself what else you could do with $50. If there’s something else you’d rather do, then don’t get the coffee maker.”
Giving cash some credit.
Paying with a credit or debit card can almost seem like not paying at all. No actual money changes hands. There’s no real evidence that you’re any poorer than you were before. But when you pay with cash, money does change hands, and not in a pleasant direction. You end up with less than you had before. You’re demonstrably poorer. It hurts.
A number of studies have shown that shoppers are less prone to impulse buying if they leave the plastic at home and force themselves to endure the pain of paying with cash. Ideally, they should use bills of large denominations, according to a 2006 paper in the Journal of Consumer Research. “People are less likely to spend if they are carrying a $50 bill compared to when they have 10 $5 bills,” says Mishra, a co-author of that article.
Part of the herd
Let’s say you’ve been shopping for what seems like forever, and you’re running out of ideas for gifts — but not out of friends to give them to. It may be time to join a herd — buy some books just because they’re on the bestseller list, buy some wine just because it’s on the “best wines under $20" list (these aren’t really close friends!), wander around the mall and — trying your best not to look like a stalker — observe what other shoppers are buying, and buy it too.
As Ariely says, “Herding happens when we assume other people know something we don’t.” You may not end up with super-personalized gifts this way, but you’ll save yourself some effort at a time when you’re starting to flag.
The Big Mo
So. You’ve been really, really good — staying mindful of your budget, considering every option (if you get this for person A, then you’ll get that for person B), not rushing into anything. In other words, your holiday shopping has yet to progress from looking to buying.
And then finally one day, you decide it’s time. You’ll buy this one surefire thing, a box of Aunt Erma’s favorite chocolate truffles. So you do. And — poof! — your careful, cautious prudence evaporates, and you start buying left and right, smart and dumb.
So-called shopping momentum can be triggered, researchers reported in a 2007 article in the Journal of Marketing Research, when a shopper buys a single item, and in doing so shifts her mind-set from mulling things over to taking action now.
Hunters and gatherers
“There’s a shopping center in Germany with a play area for men,” says Daniel Kruger, a professor in the School of Public Health at the University of Michigan in Ann Arbor. “A woman can drop off her partner there, and while she shops he can drink, work with power tools or watch sports on TV.”
The point being, both of them are happier that way. “Men just want to get what they want and get out,” says Kruger, the lead author of a 2009 study published in the Journal of Social, Evolutionary, and Cultural Psychology that documented fundamental differences in the shopping behaviors of men and women. “Women have a much greater appreciation of detail, a much greater desire to actually experience what they’re getting. They want to see several items and compare them.”
The researchers linked these differences all the way back to when the man of the cave went out hunting while his mate stayed home gathering nuts and berries — “which is very similar,” Kruger observes, “to going to a flea market today and sorting through everything to see what’s good.”
For the man, a hunting expedition, which might take him far afield, would only count as successful if he brought home the bacon, er, woolly mammoth meat. For the woman, food gathering was more of a social event, something she did with friends, enjoying their company. And if she didn’t find much one day, it was no big deal since she could easily go again the next.
These days, the lesson for women may be: If your partner hates going shopping with you, maybe it’s not because he’s a jerk. Maybe it’s just because he’s a guy.