Consumer-behavior research can teach us about pitfalls
The findings from this relatively new academic field can help explain our actions at the mall and why we often make poor buying decisions.
As we scurry about during the highest of all shopping seasons, our money habits are on full display. Yet the motivations behind how we spend are often hidden, stemming from our most ancient and fundamental human tendencies.
The relatively new academic field of consumer behavior takes a closer look at the odd beast that is the modern-day consumer. Its findings help explain our actions at the mall or supermarket and why we often make poor buying decisions.
The field finds fascinating answers to basic questions. Would you spend more or less cash if the bills in your wallet were new and crisp? Why do we prefer to buy matching brands of chips and salsa? How does sadness affect our spending?
Marketers know the answers. It can help if we do, too. Here are a few recent findings in the field of consumer behavior.
Crisp bills:Consumers spend more with credit cards than cash. And when they spend cash, they are hesitant to spend large-denomination bills — they more readily spend four $5 bills than a $20 bill.
Now, we find shoppers are also hesitant to spend crisp bills, unless they’re showing off, according to the Journal of Consumer Research.
“Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others,” write authors Fabrizio Di Muro, of the University of Winnipeg, and Theodore Noseworthy, of the University of Guelph.
Matching brands: Consumers prefer matching brands for products used together. Apparently, we believe they have been designed and tested to work in concert, even if it doesn’t make much sense.
Consider chips and salsa, write University of Minnesota authors Ryan Rahinel and Joseph P. Redden in the Journal of Consumer Research.
In one study, consumers ate Tostitos tortilla chips and Tostitos salsa but were told the chips and salsa were various combinations of fictional brand names.
The finding? Though it makes almost no common sense, consumers enjoyed the chips and salsa more when told they were the same brand.
So, perhaps when buying chips and salsa, or a television and DVD player, you’ll get more satisfaction if you buy matching brands. But realize that little effort might have gone into making them work well together. They might simply be marketed together.
So, make purchasing decisions based on traditional — and probably more important — factors, such as the individual quality of each and their prices.
Myopic misery: Another study about misdirected focus addresses being sad.
Sadness increases people’s impatience and creates a focus on obtaining money immediately instead of later, which can lead to financial losses, says a paper published in Psychological Science.
One obvious example arises when a loved one dies, the authors note. A survivor is sad and at the same time might have to make huge financial decisions, from funeral arrangements to settling the estate.
The person is more likely to make choices for immediate gratification, which are often the wrong ones when it comes to money.
Simply being aware of your tendencies during periods of sadness might cause you to take a more thoughtful and long-term view when making such decisions.