Big Box Could Combat Online Retailers

Big box retailers may have had the secret to combatting online retailers all along: instant gratification. A new study from Columbia Business School that is published in the Journal of Consumer Research warns that the positive feelings consumers experience when receiving a discounted price fades dramatically if the consumer is then forced to wait for the product.

“This might spell trouble for online retailers like Amazon that offer discounted items and then force consumers to wait for the product,” said Columbia Business School’s Associate Professor of Marketing Leonard Lee, who performed the research with Rotman School of Management’s Associate Professor of Marketing Claire Tsai. “Our research shows that even if the wait is relatively short — as little as 15 minutes — the consumer’s enjoyment of the product decreases dramatically.”

Lee continued: “Keeping in mind that instant gratification has become a hallmark of society, brick and mortar businesses can add value to their bottom lines by offering in–store promotions on the products they know people want to experience immediately rather than waiting for delivery. This is a key competitive advantage they could have over online retailers and one that might secure their long–term survival in an expanding online marketplace.”

The research titled, “How Price Promotions Influence Post–Purchase Consumption Experience Over Time,” defies long–standing conventional wisdom that discounts cause consumers to enjoy products even more.

Lee and Tsai conducted four experiments across a variety of hedonic products to explore the consumer’s relationship between consumption and enjoyment. Lee and his research partner found that the shopping nirvana one feels for a product after they have received a discount only happens when the product is consumed immediately after it is paid for.

One experiment asked participants to purchase orange juice. All of the participants were told that the juice had the same retail price, but half of the participants received a 50 percent discount while the other half paid the full retail price. Then, half of the participants — regardless of whether they received a discount or not — drank the juice as soon as it was paid for, while the other half waited 15 minutes to consume the juice. The researchers found that when participants who had received a discount consumed the juice immediately, the experience was significantly amplified. However, when participants who had received a discount were forced to wait 15 minutes or longer, reviews of the juice were far less favorable than by those who were allowed to consume it immediately. In fact, when asked if consumers would purchase the juice in the future, those who waited said they would be less likely to purchase the item down the line.

Similar discoveries occurred when consumers were shopping for music. In a separate experiment, consumers who had to wait to download their discounted music enjoyed the music less than those who were able to download the music immediately.

“If you consider the consumer relationship from a long–term standpoint, in terms of customer satisfaction and brand loyalty, marketers in big box stores might want to pay more attention to the instant gratification factor because this is something no online retailer can provide at this time.”

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Big Box Could Combat Online Retailers

The Semantics Behind the Sale Price: When Does the "Original" Price Matter?

Consumers love a sale. In fact, when asked what makes a sale appealing, most simply say, “The price was good.” But this answer fails to acknowledge that subjective factors also contribute to the perceived value of a deal. According to new research published in the  Journal of Consumer Research, it’s possible to increase the perception of a good deal.  

“We find that the more a consumer relies on the original price when trying to determine a product’s worth, the more valuable they perceive the deal to be,” write authors Christina Kan, Donald R. Lichtenstein (both University of Colorado), Susan Jung Grant (Boston University), and Chris Janiszewski (University of Florida). “If a retailer can get a consumer to pay more attention to a $179 original list price, and less attention to a $99 sale price, when assessing the worth of a winter jacket, then the $99 sale price will seem like a better deal.” 
The study research summarizes three situations in which list prices have more influence on the estimated worth of a product and, by extension, the perceived value of the deal. In three different experiments, the authors reveal that when a consumer focuses on competing product similarities, they are more likely to consider all of the available information when judging the worth of a product. That is, both the original list price and the sale price are used to determine the perceived worth of the product. In contrast, when a consumer focuses on product dissimilarities, the consumer is more likely to consider only the sale price when determining the subjective value of the product. 

“This research provides insights for both retailers and consumers. Retailers can make a sales event more effective by encouraging the consumer to rely on the original price when assessing both the value of the product and the value of the deal. Additionally, by comparing product prices at competing retailers, consumers can lessen the impact of the original price on their assessment of the products’ overall worth,” the authors conclude. o

The Semantics Behind the Sale Price: When Does the "Original" Price Matter?

Don't Overwhelm Consumers with Too Many Images

If presented with looking at an image or reading a paragraph describing the same product, consumers often prefer the visual option. However, according to a new study in the Journal of Consumer Research, visual presentation can lead to information overload and result in less systematic consideration especially when making a purchasing decision. 

“Consumers prefer product information that is presented visually in pictures rather than verbally in words. Visual presentation feels easier and faster to process, and with visual depiction consumers perceive more variety in their selection,” write authors Claudia Townsend (University of Miami) and Barbara E. Kahn (Wharton School of the University of Pennsylvania). 

The authors studied how consumers process visual information in both small and large groups of images. Their experiments used eye-tracking software to identify whether the participants processed the image groupings in a more random pattern or in a more systematic, left to right, approach similar to reading. 

The results demonstrated that while people claim to prefer visual depictions, there are choice situations in which they should take more time to process the information more deeply. The authors also determined that small image sets are key to reducing visual overload, the less systematic processing of information resulting in a negative influence on perceptual and behavioral consequences. 
An example of visual overload is in mobile apps, which heavily favor graphics in the user interface. The use of too much imagery can unintentionally lead consumers to bypass the point of purchase. 

“While visual images are fun, there may be a tendency to gloss over them rather than make a purchase,” the authors conclude. “At the point of actual consideration for purchase, a text-based interface should cause consumers to slow down, review each option more carefully, and be less likely to opt out of the choice.” o

Don't Overwhelm Consumers with Too Many Images

The SoDA Report Vol 2, 2013

The SoDA Report (Volume 2, 2013) from SoDA

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The SoDA Report Vol 2, 2013