Do you ever wonder why you left the mall with $500 worth of clothes when you were not planning to get anything or bought one pair of shoes over another? It is not just personal preference. Psychologists have found that there are several forces that govern our consumer behavior and cause us to make decisions that are not necessarily rational or in our best interest. However, understanding why we buy what we buy can help us make better decisions in the future.
Why is it important to make smart shopping decisions? Many people put purchases on their store or credit cards. If you charge too much and are unable to pay off your balance in full, you could wind up with debt that takes years to pay off and costs thousands of dollars in interest charges. Even if you don’t get into debt, overspending can take away from important saving goals, like a down payment for a house, college, or retirement.
This module covers factors that commonly affect the psychology of our spending, including:
- The Role of Advertising
- Keeping Up With the Joneses
- Spending Habits
- Impulse Buying
- Bargain Hunting
- Retail Therapy
- Money as Love
- I’ll Worry About Tomorrow Tomorrow
Chapter 1: The Role of Advertising
If you watch television, read magazines, listen to the radio, or even just drive on major roads, you are probably very familiar with advertising. A common tactic that advertisers use is to appeal to a certain fear or desire or imply that their product or service can provide the image or lifestyle you want. When you buy a roll of biscuits, you are not just buying a roll of biscuits – you are buying a cheerful, loving family gathered around the kitchen table for brunch. Of course, consciously, no one thinks that biscuits have some magical power of making your family happy, but decision-making is influenced by unconscious thought, and advertisers know how to play to that.
The following are some emotional appeals commonly used in advertising:
The desire for health and well-being: Used to sell nutritional, exercise, and other health related products.
The desire to look our best and be appealing to others: Used to sell products to enhance our physical appearance, such as clothing, jewelry, and cosmetics.
Fear of physical harm and financial loss: Most often used by insurance companies, home security firms, and manufacturers of other security products.
The desire for recognition: Commonly used by sellers of status symbols denoting association with fame or wealth.
Enhancement of our self-esteem: Used by sellers to promote knowledge based products, such as self-help courses or educational degrees.
Financial gain: Used by all advertisers to promote “sale” or “discounted” purchases and also by companies to market products that claim to generate income and wealth.
The desire to have a perfect, happy home: Often used by sellers of cooking and cleaning products.
The desire to be loved: Used by a variety of sellers, typically to encourage us to purchase products for others.
Advertising is not solely based on emotional appeals – many are quite informative. Having product information (e.g., size, capacity, energy efficiency, number of horsepower) allows us to compare similar items and choose the best one. (Of course, you can also do independent research on-line and in magazines like Consumer Reports.) Furthermore, the product or service advertised may represent a real personal need we are seeking to satisfy. The challenge is to recognize the emotional appeals being made in most ads and minimize them so you can rationally judge the true value of what is being sold. As you encounter advertising in your daily life, think about the validity of the images being presented and what it is that you will actually get from the product or service. Those biscuits may not bring your family happiness, but they can provide a tasty breakfast.