Tuesday, May 11, 2010

That Extra Nudge: Manipulating the Shopper's Emotions

I want to briefly comment on an intriguing article on behavioural economics by The Globe and Mail's Sarah Hampson. Titled "Why do I spend? I don't want to know", the piece is a diatribe on the side-effects of thinking more about what we're purchasing and why. The recession has bred a more thrifty, pragmatic, and mindful shoppers who are cutting down on impulse buying and spending more time thinking about purchases before they make them.

As Hampson puts it:
"At this rate, I can self-diagnose every impulse, thanks to all the information out there. I buy something I don't really need and I immediately know it has something to do with: a) denial of credit-card debt; b) feeling of entitlement I probably don’t deserve even though I think I do; c) compensation for disappointment over a work-related issue; or d) maybe-short-lived euphoria over my rocking love life."

But is it really possible to make a purchase based purely on rational thinking and a cost-benefit analysis? Based on much of the functional, benefit-laced advertising that's out there, you might believe that it is. These ads try to make a rational case for buying a product, providing us with a clear product benefit and several "reasons to believe" as supporting evidence. To the purely rational mind, going with the facts would be a no-brainer. But, despite the heightened awareness of how we're spending our money, our purchase decisions aren't completely based on rational facts, are they?
"Economists often make assumptions with models that hypothesize that we are very logical and consistent with how we make decisions. [But] there are very minor things that make people change their minds even though the facts are the same."

As Nina Mazar, a behavioural economist and assistant professor at the Rotman School of Management, explains in the quote above, the reality is that shopping decisions aren't based purely on the facts, as an economist might argue. There are very small ways in which shoppers can be swayed into spending by going beyond the mind and appealing to their hearts. A few examples: shoppers who are feeling strong emotions (including happiness and sadness) spend more, and do so irrationally. Visual signals, such as bright lights and shiny objects, can also tap into inner feelings and push the shopper towards a sale. As Hampson puts it:
"'If you’re sad and shopping, watch your wallet,' warns one report on a study that showed people’s spending judgment disappears when they’re depressed. Another report tells us that when we’re elated, we make poor purchasing decisions. Other studies explain that the brain lights up when human beings look at shiny, new objects. We’re like crows, I guess."
Applying knowledge such as this to shopper marketing programs and manipulating the shopper's emotions in store may indeed provide brands with that "extra nudge" that results in a sale...

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