Saturday, December 14, 2013

Seem Exploited, But Never the Exploiter

Consumers who are shopping for bargains get a bonus kick out of thinking they’ve misled a retailer.
     Researchers at University of Florida, Stanford University, and Columbia University compared the appeal to shoppers of two types of discount offers:
  • The retailer tells the shopper the offer has been specially designed to fit the shopper’s individual characteristics 
  • The offer fits the shopper’s individual characteristics, but the retailer doesn’t say this 
     Consumers expressed more joy about the second type and would be more likely to make the purchase. The reason, uncovered by the studies, was that the consumers believed they’d outsmarted the retailer. “I’ll bet the store didn’t realize I’d be willing to pay above the bargain price for this item because of how well it fits me.” How delicious to feel you’ve exploited an opportunity.
     Allow shoppers to think they’ve fooled you, but don’t be a fool. Always have in mind how sensitive shoppers are to signals that you’re putting one over on them. They know that retailers have the power to trick consumers into making decisions which profit the retailer, but are not in the best interests of the customer.
     Researchers at University of Central Florida-Orlando and Erasmus University in the Netherlands looked at this issue from the standpoint of what consumer psychologists call “biasing cues.” These are bits of information given by the retailer in a way which can mislead a customer. For instance, most of us carry around a price-quality bias. We tend to assume that if we pay more for something, it must be better. Yet, many lower-priced products are quite good and many higher-priced products are quite bad. If a retailer sets an exorbitant price solely to indicate higher product quality, that's a biasing cue.
     Using purchase decisions about orange juice, polo shirts, and paper towels, the researchers found that biasing cues could influence shoppers once. But the probability of fooling them again was pretty much gone after the purchaser actually tried out the product.
     How does this apply to the Florida/Stanford/Columbia discount types? When the retailer withheld information about the intent, or even existence, of the discount offer customization, was the retailer misleading the shoppers? I’d say no. The retailer didn’t lie. Unlike the situation with inferior orange juice, polo shirts, or paper towels at inflated prices, the retailer who withheld information did deliver on the promise of a bargain price for a desired item.

Click below for more: 
Intrigue, But Don’t Mislead 
Personalize Discount Coupons

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