The Idea:Choose shopper marketing tools with care — some can backfire.
Retailers increasingly use a variety of shopper marketing tools — from sale signs and special promotions to more subtle environmental cues such as sounds and scents — in an effort to increase sales. The tools are often costly, and it’s not clear that they always work as intended. While the economy continues its sluggish recovery, firms regularly try to optimize their spending to maximize sales.
Professor Leonard Lee, working with Ziv Carmon of INSEAD, Ravi Dhar of Yale, and Ayelet Fishbach of University of Chicago, took a closer look at the efficacy of shopper marketing tools. The researchers conducted lab and field experiments designed to measure shopper behavior and learn about the psychological impact of shopper marketing tools. They find that pushing these tools can actually induce an effect they call the ironic prudent spending effect, in which shoppers perceive the promotions as reminders to not spend too much rather than as prompts to spend more.
Marketing Managers, Retailers
You can use this research to fine-tune which marketing tools you direct toward retail consumers, better allocate your marketing budget, and determine whether to link specific types of products to such promotions. The research suggests that customers exposed to shopper marketing tools shift their perception so that hedonic products become less tempting to purchase; utilitarian products may not suffer the same effect.
In experiments carried out at convenience stores and small markets, shoppers presented with a basket or flyer bought fewer hedonic products, such as snacks or sweet drinks, and instead concentrated their shopping on utilitarian items, such as cleaning products and batteries. These shoppers also spent less money than they otherwise would have had they not been given a basket or flyer. Further, researchers found that shoppers who perceived themselves as impulsive were most sensitive to the shopper tools and viewed the tools as warnings or reminders not to overspend rather than invitations to purchase more. (View chart, GIF, 888 KB).
In lab experiments, the researchers found that participants who were exposed to the mere idea of shopping at the start of the experiment rated hedonic products as less tempting, and the goal of prudent spending as more important, than participants who had not been primed to think about shopping in advance.
Leonard Lee is associate professor of marketing at Columbia Business School.
Publication type: Working paper