Posts Tagged ‘unpredictability’

Why We Impulse Buy

Posted on: October 12th, 2010 by

Financial Planning - Rockville, MDWe may be inclined to classify a purchase as an impulse buy the second it is proven to be frivolous, but what exactly should be considered one?  “By definition, impulse buying is any purchase made without any preconceived plans,” Michael McCall, professor and chair of Ithaca College’s Department of Marketing and Law, explains.  This means that an impulse buy can include buying a pack of gum while in line at grocery store or purchasing a Rolls Royce while out window shopping.

To capitalize on consumers’ general unpredictability, stores are always looking for ways to get you to make additional or more expensive purchases.  Interestingly enough though, the tactics differ dramatically depending on the price of the item.  Retailers typically get consumers to pick up small items by overloading their check-out areas and carefully organizing in-store displays.

Big ticket items, conversely, are impulsively purchased when a customer considers them scarce.  This means, for example, that you’re more likely to pick up a cashmere sweater when it’s the last one on the rack, especially if another customer is eyeing it.  Similarly, the retailer can achieve the same result by offering a provisional discount, the idea being that you can only get that car at that price at that very moment.

While the idea that you can be manipulated into buying may seem rather daunting, recent research indicates that we may not be as controlled by our impulses as we think.  A 2009 study led by Wharton marketing professor David Bell argues that only 20% of purchases can actually be considered unplanned.  He explains that you can’t classify a choice between two brands as unplanned if you intended to buy that particular category of item to begin with.  For example, choosing Coke or Pepsi can’t be considered an impulse buy if you know you are going to buy soda.

The same logic can be similarly applied to most big ticket purchases.  Additionally, purchases that may indeed be considered unplanned aren’t necessarily problematic.

Go to the store with a plan:  Your inclination to impulse shop is determined primarily by how much time you spend in the store and where you travel while in it.  As such, the most frugal shoppers are those who enter a shop with a plan and subsequently stick to it.  For example, taking the extra time to write out a list before going to the grocery store may actually minimize the items that make it into your cart.

Stick to a budgetMinimize big ticket impulse purchases or, more pointedly, to avoid jumping at a retailer’s “one time only” deal, don’t allow yourself to purchase anything that will put you over your monthly budget.  Retailers have become increasingly aggressive these days in an attempt to coerce even careful shoppers.

Visit stores during off-peak hours:  To minimize getting stuck and/or redirected, you should try to visit stores during off-peak business hours.  This can be as simple as visiting a supermarket in the early afternoon or as extreme as avoiding all retail stores on Black Friday.

AVOID online shoppingOnline shopping is especially dangerous for impulse buyers. Online retailers are increasingly good at playing the scarcity card, as Amazon’s listing for Apple’s popular iPad. The page pointedly lets consumers know that they should “order soon” as there are only four of the devices left in stock.

Cash is King:  Online purchases are also susceptible to impulses in that they require a credit card or other electronic mode of payment.  Consumers tend to become more frivolous when they break out the plastic.