Optimize Shopper Optimism for Price-Quality

Optimistic shoppers tend toward purchasing less expensive merchandise in an assortment. Researchers at University of Kentucky, Texas A&M, and University of Seoul say they’ve discovered a major reason why: Shoppers believe lower-priced items are likely to be of lower quality than higher-priced items in a category, but also of less predictable quality. Optimism leads to the shopper assuming the item they’re selecting will be an exception to the strict price-quality link.
     Optimism is often considered an enduring personality trait. However, in their studies, the researchers were able to influence the degree of shopper optimism by the wording on signage accompanying the items for sale. Optimism was increased with signage that appealed to bettering oneself. It was decreased with signage that warned about making mistakes.
     Perhaps, then, the researchers risk disrupting our optimism in using the results of their studies by warning us about making a particular mistake. The greater variability in quality estimates for lower-priced items was found for merchandise. It was not found for services. In fact, the researchers saw in their studies some evidence that consumers assume a greater variability in quality for both the lowest and highest priced services than for mid-priced services in the category.
     So optimism is less of a consideration for the price-quality link in services than in merchandise. Still, optimism does show itself in other avenues of shopper psychology.

• The California Lottery aimed to leverage consumer optimism with the tag line, “Believe in Something Bigger.” backed up by a choral arrangement of the song “California Dreamin’.” Optimism is a valuable commodity. As long as costs to the consumer are not excessive, using existing optimism to sell an item which prolongs optimism makes sense. 
• If you advertise “Up to 40% off regular prices,” shoppers think the item they’re seeking will be one of those tagged for close to the full discount. You’ll attract almost as many shoppers as you would have if you’d offered the 40% cut on all the merchandise. Advertise “Up to 39% off regular prices,” and people become even more likely to think they’ll be getting the maximum discount. It has to do with how our brains handle rounded versus precise numbers. 
• A customer’s decision about buying an extended service contract is influenced by their optimism toward life. Those with reason to feel less positive because they live on a very limited budget might benefit from the comfort of the ESC. 

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