Drive Toward Quality via Budgets

You ask the shopper, “About how much did you intend to spend on this item?” Your objective is to save time by limiting the alternatives. Once a candidate to be purchased is selected, you can present higher-priced options.
     You might think encouraging your shoppers to set a budget on their expenditures would lead to them spending less money with you. Surprise! Researchers at Brigham Young University and Emory University find that making a purchase with a budget in mind can lead the shopper to spend more if the budget is for one item, not the total shopping expenditure. The reason is that budgeting encourages attention to quality, and people who attend to quality are willing to put out extra money.
     Here’s my adaptation of the examples given by the researchers: Your customer has decided to spend no more than $150 on a mobile device. He sees price points at $80, $120, and $160. Sticking to the budget, the customer eliminates from consideration the $160 alternative. Because of how a consumer’s brain works, this decision to scratch the highest-priced model has two effects. First, it leads the customer to consider the other two models to both be okay to purchase. Second, it speeds the decision because there are now fewer alternatives.
     The result is that product quality and the inclusion of extra features become relatively more important and price relatively less important. The customer is now more likely to select the $120 model, if it’s higher quality, than if budget wasn’t in mind at the time of choice.
     This outcome depends on the budget being for a specific item (“I’ll spend no more than $150 on this mobile device”) rather than being for an entire shopping trip. It depends on how the budget was made.
     Other researchers, at Duke University, University of California-Los Angeles, and University of Florida, found parallel results regarding shopping lists: It depends how the list was made.
     People who carry around store shopping lists created from memory—the consumer trying to remember what they need and what the store carries—actually end up more likely to make purchases they will later regret.
     Making a shopping list from memory uses mental energy. Every shopper has a limited pool of mental energy, and when a great deal of it is consumed in making the list, there is less mental energy left to resist purchasing unnecessary or foolish items.

Click below for more: 
Encourage Stimulus-Based Shopping Lists