Let’s go shopping to beat the credit crunch. No, that’s right, I’m suggesting that instead of all this belt-tightening malarkey, we throw caution to the wind and splurge. Let’s go crazy in the aisles, just in case we regret missing out on those Topshop jeans in later life.
While it may sound as if I have lost my economic marbles, I’m basing my idea on research from two academics in the US that suggests people who unduly resist self-indulgence suffer from excessive farsightedness or “hyperopia”. By inhibiting consumption, they are not only depleting marketers’ incomes but damaging their own happiness and wellbeing.
The research has been carried out by Anat Keinan, assistant professor of business administration at Harvard Business School, and Ran Kivetz, professor of marketing at Columbia Business School. Keinan told me: “Although our research seems provocative and counterintuitive, it is a phenomena we can all relate to.”
As one element of their study, Keinan and Kivetz talked to 57 consumers in advance of a shopping trip to consider two purchases: an expensive garment that would make them happy or a cheaper alternative that would free up money to spend on more practical things.
Half the group were then asked to predict which of the two items would cause them more regret the next day while the others were told to anticipate the regret they might feel several years later.
Later, Keinan and Kivetz examined the group’s actual purchases. They noted that those who predicted regret the next day tended to buy more practical goods while those who anticipated long-term regret had bought more self-indulgent products.
The academics’ conclusion, which will be explored more fully in an upcoming issue of the Journal of Marketing Research, is that thinking about short-term regret drives people to make “virtuous” or self-denying choices, while thinking about distant regrets encourages extravagance.
The research was carried out in America but Keinan says that she has talked to people “of various ages and backgrounds in Europe and the US…they could all relate to this phenomenon”.
She adds that the findings are particularly relevant for marketers of luxury brands. These goods try to appeal to a consumer need for “creating pleasurable and memorable experiences”. While shoppers are often unaware of this “pleasure” need when making a decision in-store, they regret neglecting this area when later contemplating life with hindsight.
So luxury brands need to use their marketing skills to evoke a fear in consumers of missing out on a valuable emotional experience in the long-term by not buying a product or service right now.
It isn’t just those selling products at the premium end of the scale that could gain from the insights in this study. The report suggests that even everyday mini-indulgences could have a significant effect on happiness in the long-term. “That broader time perspective can make ordinary indulgences seem like a special opportunity or memorable occasion,” explains Keinan.
The research is also useful for brands in crowded sectors, where consumers can feel bewildered by the sheer choice of products and services. Keinan notes that self-control dilemmas for shoppers can be triggered by any situations where “the optimal choice is not transparent” to consumers. So if someone is faced with 19 pairs of jeans on the rack, they may face an “intra-personal tussle” where they tend to make a decision based on short-term guilt rather than long-term happiness.
This suggests that if brands can convince potential customers that buying their products (in effect, making the “right” choice) will lead to long-term happiness, they may generate more sales.
Let’s apply a little cynicism, however. Keinan and Kivetz’ report is music to marketers’ ears: “What’s that? Making people buy more stuff is good not only for my business but psychologically for mankind?” Whether marketers can use this information practically in a credit squeeze to get people spending is another story.
Keinan admits that only some consumers suffer from “hyperopia”. Her work is intended to highlight how excessive self-denial could have long-term happiness implications. She doesn’t suggest this mentality applies to everyone. Nevertheless, if brands want to get people to part with cash in these economically dour times, perhaps the idea of convincing them that if they don’t buy now, they’ll feel bad about it in future has some merit.
So let’s get on with buying those Topshop jeans straight away. Why Topshop, you ask? Well, the canny retailer may already be aware of Keinan and Kivetz’s research. A quick browse of the chain’s flagship store the other day revealed multiple racks of clothes emblazoned with the slogan: “Buy now or regret it later”. Here’s to guilt-free shopping, folks.