Shopping Psychology

"Damnit, Jim, I'm a shopper, not a psychologist!" (lame Star Trek reference, sorry)

Why do I shop the way I do? Heck if I know. I will bend down to pick a penny up off the ground, I'll switch to an off-brand or whatever brand's on sale to save ten cents, but then I'll drive through McDonalds and blow 4 bucks on a Value Meal without giving it a second thought. Where's the logic in that?

Who can figure out the psychology of shopping? Not me. But there are some folks who try to, and I came across an interesting article about it in the July 5th New York Times. "‘Two for One’ ... ‘Free Delivery’ ... Hooked Yet?" by Alina Tugend talks about several shopping studies that had some interesting insights into why people make purchase decisions.

In one study, a Duke University professor of behavioral economics (wow, didn't know there was such a thing, and my undergrad degree is in econ) did a study to see how pricing would affect a consumer's decision to choose either a pricey Lindt truffle or a Hershey Kiss. When the higher-quality Lindt truffle was priced at 15c (half what it would usually cost if bought in bulk) and the Kiss was 1c, more people chose the Lindt. When they dropped the price of both by 1c, making the truffle 14c and the Kiss free, people overwhelmingly chose the Kiss. They were willing to sacrifice quality because the Kiss was "free." He concluded that the word "free" has a powerful effect on consumer behavior, maybe even leading to irrational decision-making.

In another study, a Wharton marketing professor found that people were more attracted to a free shipping offer (worth $6.99) than an offer for $10 off their total order price. He found that when the free shipping was based on a minimum order, people would buy unnecessary items just to reach the threshold. Again, this provides an example of irrational decision-making.

In a third study, an M.I.T. marketing professor did a study on online auctions and found that people who bid with credit cards, versus having to pay cash (with access to an ATM), were willing to bid higher. The credit cards made the cost seem more abstract, thus people were more likely to make bad spending decisions.

I guess it doesn't really matter WHY we do the things we do as long as we try to be more aware of what we're doing and more logical in our shopping decisions.