Denying the Urge to Splurge

You can’t always get what you want. But even when you can, you’re more likely to get what you need instead, if the two choices are presented simultaneously. Consumers naturally prefer goods that bring them pleasure to those that satisfy basic needs. (In these flush times, “basic” is a relative term. A cell phone counts as basic in many quarters. A PSP video game system does not.) Research shows that consumers try to justify their fun purchases by—among other things—focusing on those items’ utilitarian value. If I buy the 60-inch high-definition television, I won’t have to pay outrageous ticket prices at the box office. Carrot cake is good for my vision. But shoppers are less likely to choose goods that are just plain fun if a more practical alternative is staring them in the face, according to my new study of consumer choices in a variety of situations. A shopper sees a DVD player with a built-in MP3 feature at the mall and succumbs to temptation, even though she knows what she really needs is a new food processor. If, on the other hand, she sees both the DVD player and a comparably priced food processor in the same store, she will probably buy the required utensil, assuming she cannot afford both. It is simply too difficult to justify buying what she wants when that choice results in rejecting what she needs. Suppose the shopper isn’t struggling with the choice between the fun and the useful but instead simply deciding whether or not to spring for the fun. In that case, how (as opposed to how much) she has to pay is a major influencer. Here, too, she needs wiggle room to justify her purchase, and paying money (a set price) doesn’t give her that flexibility. But if she has the opportunity to spend time instead of money—by, for example, waiting an hour in line to be among the first 100 customers at a new store and receive 50% off the DVD player—well, she probably would have wasted that hour watching television anyway, and she can always make it up by skipping lunch on Tuesday. For the food processor, by contrast, she’s comfortable paying full price. If she really, really needs it, she may even be willing to bid up that price on eBay. The message for merchandisers: If you’re selling the stuff of dreams, try to position it away from the stuff of day-to-day reality. And when possible give people the chance to work a little more and pay a little less.

Denying the Urge to Splurge

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