Thursday, September 27, 2012

Arouse Money Thoughts for Quicker Decisions

When shoppers have money on their minds, they buy faster:
  • They worry less about risks—financial, social, and so on—in making the purchase. 
  • They’re more independent in buying items for themselves, feeling less need to wait for the advice of experts. 
  • They’ll look at primary features and the brand name rather than getting bogged down in details. 
     Researchers at University of Salzburg, University of Heidelberg, and University of Mannheim give examples of this last one based on results of their set of studies:
  • A TV would be selected on the basis of the picture quality, without the shopper checking out the warranty. 
  • A Mercedes brand bicycle would be instantly rated favorably because of the prestige of the brand name, not because of an analysis of the bike’s features. 
  • In selecting a yogurt, money-thinking health-oriented consumers would look at nutrition claims and money-thinking pleasure-oriented consumers would think about the taste, but neither group would pay much notice to the design of the package. 
     This quick decision making may not be to the benefit of your shopper or of you.
  • People who ignore the risks of a purchase might endanger themselves and then hold the retailer responsible. 
  • Ignoring the advice of experts means your shopper won’t benefit from the knowledgeable counsel you have to offer them. 
  • Assessing an item by brand name alone means missing out on lesser-known offerings which would provide more value for the consumer and a higher profit margin for the retailer. 
     Still, there are circumstances where quicker decisions are beneficial all around, in which case you’ll want to arouse money thoughts. You could do this by showing cash or pictures of cash.
     To enhance the effect, give change for cash purchases using bills of varied denominations. Researchers at University of Iowa found that a shopper with a single $100 bill was less likely to make purchases than a shopper with five $20 bills.
     Why was this? Was it because one person had one bill and the other had five bills? Those questions led to the study design in which each person had five bills to start with. What the researchers called “a bias for the whole” still came through. The shoppers who had the bills of varying denominations were more willing to spend their money on a watch, a T-shirt, or a flash drive. Having smaller denomination bills eased the bias to keep the whole amount.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Separate Soft Money from Hard Advice 
Give Change in Varied Denominations

1 comment:

  1. Great points, I see some of the spending traits mentioned in myself too. Keep the great posts coming!