Prod Frugal Shoppers’ Needs with Discounts

Will a surprise deep discount on an item successfully persuade frugal shoppers to purchase the item? Researchers at Washington and Lee University, Virginia Tech, St. Edward’s University, and Auckland University present the arguments for opposite answers to this question. Yes, they’ll buy it because frugal people love spending less. No, because frugal people hate spending at all.
     Which path is taken depends on how strongly the frugal shopper decides that they need—not just want—the item. But the researchers find that encountering an unexpected deep discount can increase the frugal shopper’s perception of how much they need the item. The justification for spending the money is then the opportunity to take advantage of a serendipitous great bargain. The cautious spender is temporarily transformed into an impulse buyer.
     In the studies, self-rated need for the item increased notably after presentation of a “60% off” deal. This worked only if there was at least a moderate need for the item to begin with. There was no evidence the technique worked much at all with shoppers who are not clearly frugal or with frugal shoppers when the discount was for only 10% off.
     Historically, research has indicated that deep discounts are more influential on hedonic, pleasure-oriented, items than on utilitarian, functional items. The good deal gives the consumer an excuse to indulge. But this current research suggests that in circumstances of prevalent frugal shoppers, you’re better advised to reserve those margin-reducing deep discounts for the functional items, since at least a moderate need is already felt.
     A habit of carefully planning purchases and monitoring expenditures is stimulated by tight economic circumstances, such as during business recovery from a pandemic or natural disaster. But some people are by nature chronic tightwads regardless of the state of the economy. Tightwads aren’t the same as frugal shoppers. Frugality is driven by a pleasure in saving. Tightwads are driven by a pain of paying.
     Facilitate tightwads spending their money with you by reinforcing their sense of responsibility. Congratulate tightwads on how they shop carefully. Tightwads take pride in limiting their spending, but feel more comfortable when loosening up within reason. So describe upgrades as “small expenses.” Remind tightwads that you’ll be responsible in what you recommend to them. Then keep your promise by explaining how the products and services you sell give full value. Dealing with a responsible retailer will ease the pain of paying.

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Have Unannounced Discounts on Common Purchases 

Bundle Utility, Discount Hedonism 

Loosen Up Tightwads’ Wallets