Tag Archives: shopping

The Licensing Effect and the Unhealthy Habit of Vitamin Supplements

The licensing effect is the phenomenon whereby positive actions or decisions taken now increase negative or unethical decisions taken later. I’ve written about this previously, before I was aware of a general effect:

A Taiwanese study has provided us with a new instance of the licensing effect in action, this time with vitamin supplements. The study found that taking vitamin pills or dietary supplements for health protection increases unhealthy and risky behaviour.

Afterwards, compared with placebo participants, the participants who thought they’d taken a vitamin pill rated indulgent but harmful activities like casual sex and excessive drinking as more desirable; healthy activities like yoga as less desirable; and they were more likely to choose a free coupon for a buffet meal, as opposed to a free coupon for a healthy organic meal (these associations held even after controlling for participants’ usual intake of vitamin pills). […]

The vitamin-takers also felt more invulnerable than the placebo participants, as revealed by their agreement with statements like “Nothing can harm me”. Further analysis suggested that it was these feelings of invulnerability that mediated the association between taking a postulated vitamin pill and the unhealthy attitudes and decisions.

BusinessWeek also points out that this loop of benevolent and self-indulgent behaviour is plainly evident in the shopping habits of consumers… something that marketers know all about.

via @vaughanbell

Dark Patterns for Marketers, or: Practical Behavioural Economics

Taking a systematic approach to implementing findings from behavioural economics into a sales cycle can “unlock significant value”, according to McKinsey’s Ned Welch. To help business do exactly that, Welch–in what, at times, reads a bit like a ‘dark patterns guide for marketers’–has written an article looking at four practical techniques from behavioural economics that marketers should use to persuade purchasers. The techniques:

  1. Make a product’s cost less painful.
  2. Harness the power of a default option.
  3. Don’t overwhelm consumers with choice.
  4. Position your preferred option carefully.

There’s not much new here, but the summaries are nice and succinct. From item four, I found this bit of grocery store choice architecture interesting:

Another way to position choices relates not to the products a company offers but to the way it displays them. Our research suggests, for instance, that ice cream shoppers in grocery stores look at the brand first, flavor second, and price last. Organizing supermarket aisles according to way consumers prefer to buy specific products makes customers both happier and less likely to base their purchase decisions on price—allowing retailers to sell higher-priced, higher-margin products. (This explains why aisles are rarely organized by price.) For thermostats, by contrast, people generally start with price, then function, and finally brand. The merchandise layout should therefore be quite different.

via Nudge

(If you don’t have a McKinsey account, you can read the article here or here (PDF).)

Privacy and Tracking with Digital Coupons

Data collection and mining can be quite lucrative pursuits for many retailers, and technological advances are providing them with more novel and extensive methods of doing just that.

Data mining is a topic I’ve been fascinated with ever since I was introduced to it in university, and this look at how digital coupons track us and provide retailers with detailed data is a worthy addition to my virtual collection:

Invented over a century ago as anonymous pieces of paper that could be traded for discounts, coupons have evolved into tracking devices for companies that want to learn more about the habits of their customers. […]

Many of today’s digital versions use special bar codes that are packed with information about the life of the coupon: the dates and times it was obtained, viewed and, ultimately, redeemed; the store where it was used; perhaps even the search terms typed to find it.

A growing number of retailers are marrying this data with information discovered online and off, such as guesses about your age, sex and income, your buying history, what Web sites you’ve visited, and your current location or geographic routine — creating profiles of customers that are more detailed than ever, according to marketing companies. […]

Many companies have the technology — and customers’ permission, thanks to the privacy policies that users accept routinely without reading — to track minute details of people’s movements.

I’m mostly fine with this sort of tracking as it is typically done on a large, impersonal level: complex algorithms are used to determine when to send what vouchers to who, all without direct human intervention. The piece ends with a thought that is somewhat close to my opinion on this particular privacy debate: “I would be concerned […] if they get very granular and are tracking me specifically.”

via @Foomandoonian

Prevention of Attainment Increases Desire, Decreases Attractiveness

Being prevented from obtaining something we desire simultaneously increases our desire for the item and decreases its eventual attractiveness. That’s the counterintuitive result from a study that shows the various surprising effects of “being jilted”.

We show how being “jilted”–that is, being thwarted from obtaining a desired outcome–can concurrently increase desire to obtain the outcome, but reduce its actual attractiveness. Thus, people can come to both want something more and like it less. […] In Experiment 1, participants who failed to win a prize were willing to pay more for it than those who won it, but were also more likely to trade it away when they ultimately obtained it. In Experiment 2, failure to obtain an expected reward led to increased choice, but also negatively biased evaluation, of an item that was merely similar to that reward.

It seems that by being unavailable our expectations are raised to an unreasonable degree and we eventually become disappointed. I guess this is a warning for those thinking of scarcity marketing.

The Influence of Sold-Out Products

Sold-out products create “information cascades” where we infer that the next-best item must also be of a similar high quality and value for money: sold-out items ‘validate’ similar products, persuading us to purchase more readily.

“Sold-out products create a sense of immediacy for customers; they feel that if one product is gone, the next item could also sell out. […] Research shows there’s also an information cascade, where people infer that if a product is sold out, it must have been good and therefore a similar available product will also be desirable.”

The study […] found 61 per cent of shoppers would buy a particular five-hour ski pass for $20, but that figure rose to 91 per cent when they thought a 10-hour ski pass for the same mountain slope for $40 had sold out.

A similar study of merlot wines found 49 per cent of consumers would buy a bottle if they had one choice, but when they thought a similar wine had sold out next to it on the shelf, nearly twice the number of shoppers would take home the available bottle.

The researchers note that for common ‘stock’ items a sold-out status breeds contempt, whereas new and sold-out products signal an unanticipated demand for a quality product.

It goes without saying that the sold-out items didn’t necessarily have to exist, right?