Marketing Dec 5, 2017

Take 5: Holiday Shopping

Our faculty explain the reasoning behind some common shopping scenarios.

Michael Meier

The holiday shopping season is here in full force. And whether you are waiting in long checkout lines, browsing thousands of iPhone cases online, or even putting together your own wish list, Kellogg Insight has you covered.

This month, our faculty explain the psychology and economics behind some common holiday shopping scenarios, so you can navigate them with efficiency and cheer.

1. Don’t Let Choice Overwhelm You

Did you start your holiday shopping by plugging “iPhone 6 case” or “infinity scarf” into Amazon? If so, the tens of thousands of search results may have been enough to make you close the tab and save shopping for another day.

“Having a choice is a very basic need,” says Ulf Bockenholt, a professor of marketing at Kellogg. We feel satisfied when we are able to make a choice that is right for us—but there is such a thing as having too many choices.

Bockenholt and his Kellogg colleagues Blakeley McShane and Alexander Chernev recently studied a phenomenon called “choice overload,” the negative psychological, emotional, and behavioral effects of having too many options to choose from. Think “buyers remorse” or “analysis paralysis.”

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When are we most likely to experience these negative effects? In two studies, the researchers find that some broad factors can predict choice overload. These include the complexity of the choice set, how much you understand about your own preferences, and the difficulty and type of decision you are making—if you must choose quickly, for instance, or whether you are actually clicking “buy” versus simply putting something in your cart to purchase later.

As a customer, it may not be possible to completely avoid choice overload this time of year. But to ease the stress, do some research to narrow down your options and truly understand your preferences before it’s time to take out your credit card.

2. Know Your Winding Lines

If you dare to enter a brick-and-mortar store—or bakery or coffee shop or post office—in December, you may encounter another kind of hassle: lines. Lines are a nearly inevitable result of “system constraints”—constraints in staffing, space, or other resources—on the part of the service provider. It is nearly impossible for businesses, particularly ones that rely on foot traffic, to predict and adapt to ever-changing levels of demand. So we customers get in line.

As Marty Lariviere, a professor and chair of operations at the Kellogg School, puts it, “queuing in many instances is the price we pay to maintain flexibility. If you don’t want to have to schedule every service you might consume ahead of time, you have to accept queuing.”

What can be done by businesses to alleviate frustration when the queues get a little too long? Lariviere explains that many retailers use “pooling,” where a single queue is served by multiple cashiers. This has the advantage of reducing customers’ stress about being stuck in the wrong line. It also increases perceptions of fairness. But if it allows cashiers to slow down a bit, it may not necessarily lead to shorter average wait times.

3. Embrace Outlet Malls

If you relish hitting up outlet malls to score a perfect gift, you are not alone. Factory outlets are a fast-growing segment of the retail industry.

And while outlet malls may have a bad reputation as a dumping ground for defective goods, it is a reputation that is generally undeserved.

Lakshman Krishnamurthi, a professor of marketing at Kellogg, explains that rather than specializing in defective or otherwise unwanted inventory, outlet stores offer distinct lines of products. “There is vertical differentiation,” he says. “There’s a higher-price and higher-quality option, and then you open an outlet where products are lower price and lower quality.”

And interestingly, research from Krishnamurthi and a colleague finds that rather than turning customers off from brands, shopping those brands at outlet malls seems to encourage customers to visit traditional retailer stores more often.

“Once customers adopt the outlet channel, they increase spending in the retail-store channel,” Krishnamurthi says.

The researchers hypothesize that outlet malls allow customers to become increasingly comfortable with the brand at a lower price point.

4. Don’t Let Jealousy Affect Your Choices

About to purchase a sequined ball gown to wear to the annual holiday party when a black blazer is your standard fare? Maybe you are feeling jealous.

“Jealousy can actually motivate people to seek attention from the general public, and in order to achieve that motivation, they purchase products that are attention-grabbing,” explains assistant professor of marketing Ping Dong.

In one experiment, some participants were asked to recall a time when they felt jealous, while others recalled a more neutral experience. Then participants chose between clothes and accessories with either a small or large brand logo. Participants who had dwelled on their own jealousy were more likely to choose the items with large logos.

In a separate experiment, Dong found that people prompted to feel jealous favored a silly looking pair of asymmetrical plastic sunglasses (not unlike what you might see at a New Year’s Eve party) over a more sedate pair—even at a formal work party, where such an accessory would be inappropriate.

So, if you find yourself suddenly attracted to flashy garb, step back and reflect on your emotions. Did you just view an ad trying to feed off of your insecurities? Or perhaps you are irked that your cousin got way more attention than you at the family gift exchange.

5. Smile. Or Don’t.

There you are at the gift exchange, perfect gift in tow. But if you just aren’t feeling the holiday spirit, are you prepared to conjure up some manufactured cheer?

A study by Kellogg marketing professors Aparna Labroo and Ping Dong suggests mixed benefits to those fake smiles.

“If I signal that I’m having fun, I might attract other people and we might all bond better. No one wants to be with someone who’s looking miserable,” says Aparna Labroo, a professor of marketing. “But there’s value in being authentic too. For some people, we’ve found that if you try too hard to enjoy something, it reminds you that you’re not enjoying the situation.”

The idea, Labroo explains, is that similar actions are likely to be interpreted by our brain differently depending on the beliefs and mental associations that we have about those actions. If we believe that people smile when they are happy, then smiling can make us happier. But if we believe the opposite—that people in essence “fake it until they make it”—then smiling can actually make us feel worse.

“It becomes problematic when you try too hard, when looking happy becomes a very conscious and uncomfortable thing,” says Labroo. “If you’re trying to fake it, at some point you know.”

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