Shopping behaviour – Page 3 – Behavioural Design

Why rich people bargain with poor vegetable vendors

Published May 16, 2016October 13, 2014 by Anand Damani

We find this situation pretty much every time we go to the vegetable market (anywhere in India). But in reality its not just rich people who behave irrationally, it’s everyone. Two stalwarts of behavioural economics – Daniel Kahneman and Amos Tversky – explain such behaviour with the help of the following example in their paper “The framing of decisions and the psychology of choice” published in Science in 1981.

Suppose you have two errands to run today – to buy a new pen and a suit for work. At a stationary store, you find a nice pen for Rs. 250 (in the original paper the amounts are different and in $). You are set to buy it when you are told that the same pen is for sale for Rs. 150 at another store 10 minutes away. What would you do? Would you take the trip to save Rs. 100? Most people faced with this dilemma say they would take the trip to save Rs.100.

Now you are shopping for your suit. You find a luxurious gray pinstripe suit for say Rs. 5000. You are about to buy it when another customer tells you that the exact same suit is for sale for Rs. 4900 at another store 10 minutes away. Would you make the 10-minute trip? Most people say they would not.

What’s going on here? Is 10 minutes of your time worth Rs. 100 or not? Whether the amount from which this Rs. 100 will be saved should be irrelevant. But in comes the problem of relativity.

We make comparisons which are easy and available locally. We compare a cheap pen with an expensive one and this contrast makes it obvious to us that we should spend that extra time to save Rs. 100. At the same time, the relative advantage of the cheaper suit is very small, so we spend the extra Rs. 100.

Says Dan Ariely, “This is why it is so easy for a person to add $200 to a $5000 catering bill for a soup entrée, when the same person will clip coupons to save 25 cents on a one dollar can of soup. Or a person will find it easy to spend $3000 to upgrade to leather seats when he/she buys a new $25000 car, but finds it difficult to spend it on a leather sofa.”

Now if we can think broadly about which transactions could help us save a lot, and how else we could use that saved money we’ll be using our money and time better. As far as vegetable vendors are concerned, that money you saved by bargaining is relatively a lot for them.

Sometimes it pays to make things complicated

Published November 11, 2013 by Anand Damani

Simplicity in design is one of the most sought after deliverables. After all, look at the products created by Apple. The products are so simple and intuitive that my friends 4-year-old son began touching and moving his fingers over his TV screen, getting frustrated over why nothing would happen. But here’s a scenario where just the opposite seems to be working. We’re talking about Diesel’s store design.

If you have walked into any of the Diesel stores you are likely to feel that you have walked into a party. Latest house/hip-hop music. A television playing a football match. No helpful signs pointing to men’s or women’s sections. No staff members in sight. Being confronted by 35 different types of blue jeans with strange names.

While clothing retailers like Zara have standardized and simplified the layout of their stores in an effort to put customers at ease, Diesel’s approach is based on the unconventional premise that the best customer is a disoriented one.

Says Warren St. John of New York Times, “Indeed, it is at just the moment when a potential Diesel customer reaches a kind of shopping vertigo that members of the company’s intimidatingly with-it staff make their move. Acting as salesmen-in-shining-armor, they rescue — or prey upon, depending on one’s point of view — wayward shoppers.”

”We’re conscious of the fact that, outwardly, we have an intimidating environment,” said Niall Maher, Diesel’s director of retail operations. ”We didn’t design our stores to be user-friendly because we want you to interact with our people. You can’t understand Diesel without talking to someone.”

For a behavioural designer, serving customers means relieving them of frustration, of confusion, of a sense of helplessness. Make them feel in control and empowered. But to the Diesel’s sales staff, this is an opportunity to present themselves as rescuers, ready to offer assistance, to provide just the answers customers will be led to believe they had been seeking.

Douglas Rushkoff, a media critic who has written about Diesel advertising campaigns, says the company’s store design is a new take on an old trick. In the 1950’s, the shopping mall designer Victor Gruen realized that when shoppers were distracted by confusing mall layouts and grandiose visual stimuli, they seemed more prone to impulse buying.

”They realized the best way to get people to buy stuff is not to facilitate their shopping but to disorient them,” Mr. Rushkoff said. ”Diesel shoppers say, ‘I’m not hip enough to get this,’ and then in comes the hip salesperson. What makes them hip is that they know how to navigate the space.”

We think Diesel gets away with making things complicated because their clothes are popular and considered fashionable. And wandering through the store is part of the experience. But would the same technique work for other retailers?

Ecommerce will soon be bigger than you can imagine

Published December 9, 2014September 10, 2013 by Anand Damani

Let us tell you why we think so. Our starting assumption is that most of the shopping online in India in the future will be done via plastic card (credit or debit card) rather than cash, because of convenience. We understand that cash on delivery is convenient too, but you still got to have cash to pay, so it’s not as convenient. And paying by card is a lot different than paying by cash.

Paying by card fundamentally changes the way we spend our money. When we buy something with cash, the purchase involves an actual loss – your wallet feels lighter. Credit cards, however, make the transaction more abstract and we don’t really feel the downside of spending money. As George Loewenstein, neuroscientist at Carnegie Mellon says, “The nature of credit cards ensures that your brain is anesthetized against the pain of payment.” Brain imaging experiments suggest that paying with plastic literally inhibits the insula. Insula is the region of the brain associated with negative feelings. It’s the brain area responsible for making sure you don’t get ripped off. So when the insula is inhibited, it makes a person less sensitive to the cost of an item, making him/her more willing to buy.

Spending money by card doesn’t make you feel so bad, so you spend money easily. And buying stuff over an app is even easier with the pressing of the ‘Buy Now’ icon. Not to forget, the Internet is full of deals that make people end up buying things that they don’t even need.

The middle path to getting picked up

Published December 9, 2014May 20, 2013 by Anand Damani

There a lot of biases that affect the way we make choices. We of course go about our daily routine completely unaware of them. Here’s one such interesting example, called the ‘Centre Stage effect’ – our preferential bias towards items located in the middle.

Paul Rodway, Experimental Psychologist from University of Chester and his colleagues showed 100 participants a questionnaire consisting of 17 questions, wherein each question featured five different pictures of the same type of item (e.g. five scenic views). Each set of five pictures was arranged in a horizontal row and the task for participants, depending on the question, was either to pick their most preferred or least preferred item. Central items were selected approximately 23 per cent of the time. The selection rate for items in other locations averaged below 20 per cent. By contrast, no position bias was found when selecting their least favoured items.

A second study was similar to the first, but this time each array of five items was arranged vertically – once again there was a bias for the central item. A third study used real objects – five pairs of identical white socks – pinned in a vertical array on a large piece of cardboard. Again, participants were asked to pick out their preferred option and again they showed a bias for the middle choice.

These findings build on past researches showing that observers tended to overestimate the performance of quiz show contestants located in central positions.

I wonder whether this phenomenon has to do with our beliefs linking importance or prestige with being centrally located. If we look at sports podiums on which winners get facilitated, Gold being the most prestigious award, is placed in the middle. In office meetings you are most likely to find the top boss sitting in the middle of the boardroom table. The bride and groom at wedding receptions always sit in the middle overlooking the hall.

This ‘middle’ bias has implications on consumer’s shopping behaviour. If a brand has 5 variants, with the same MRP, the one with the maximum margin should be placed in the middle. If your brand competes with others on retail shelves, ensure its placed bang in the middle, as long as consumers can view all options at one go. But no guarantee about you getting picked up if you stand in the middle of your friends at the night club. Well, you could try.

If you’re good at math, consider yourself blessed

Published May 16, 2016November 26, 2012 by Anand Damani

I struggled all my studying years with MATH (Mental Abuse to Humans). I was so bad at math that I had even developed a method of memorizing patterns to solve problems, so that I could apply them in case a similar question came up in the exam paper. If you were and are good at math, I have very high regards for you, because most of the human race is simply bad at it.

Consider these two promotions. One is a flat ‘33% off’ on the MRP. The other is 33% more quantity of the product free. In short – ‘33% extra free’. Are both similar? Which one seems more attractive to you?

If both are similar in terms of a proposition to you, but you still prefer ‘33% extra free’, you’re in the majority. In a study, Akshay Rao, the General Mills Chair in Marketing at the University of Minnesota’s Carlson School of Management, asked undergraduate students to evaluate two deals on loose coffee beans — one with 33% more beans for free, the other at 33% off the price. All the participants chose ‘33% extra free’, inspite of ‘33% off’ being a quantitatively bigger and better offer favouring the customer. (33% off = 50% extra free)

The reason why we opt for ‘33% extra free’ is not just that we suck at math, but we are also infatuated with the idea of getting something for free. It seems as if the power of ‘free’ makes us worse at math.

Now, how you take advantage of this will depend on whether you are a consumer or a marketer.

Illustration by Mayur Tekchandaney

The way you make me move

Published April 17, 2013September 24, 2012 by Anand Damani

This is a story from my days at Lowe Lintas. We were invited to make a communication pitch for Reliance Fresh. So I flew the next day to Hyderabad to Reliance Fresh’s first retail outlet at Banjara Hills. The newly opened swanky 3,500 sq. ft. store was a wide store with two openings – one for entry and the other for exit. But the entry to the store was on the right hand side and the exit on the left hand side. Which meant that people had to move inside the store in an anti-clockwise direction. What I saw inside the store was chaos. Not the kind we see everyday in the vegetable markets in Mumbai. It was different. There were mostly women in the store at that point in time. And they were walking around like zombies. Something had gone terribly wrong, but none had figured what was going on. Women kept going back and forth as if they had forgotten that the only way was to move forward. But I don’t blame the women, well at least not this time.

If you stay in India, I’m sure you’ve visualized what had gone wrong. Because we in India drive on the left hand side of the road, we write from left to right, we have gotten used to the habit of moving from the left to the right. As far as the store was concerned, the same principle applied too – enter, move in a clockwise direction from left to right. But it wasn’t the case for the American consultant who designed the store for Reliance Fresh!

Illustration by Mayur Tekchandaney

Music by design

Published December 9, 2014August 27, 2012 by Anand Damani

Music they say has healing powers. True that. It can lift your spirit. It can relax you. It can set your heart pumping faster. But could music influence you to buy wine from a particular country?

In a study of exactly that question, four French and four German wines, matched for price and dryness, were placed on the shelves of a supermarket in England. French and German music were played on alternate days from a deck on the top shelf of the display. And indeed, on days when the French music played, 77 percent of the wine purchased was French, while on the days of German music, 73 percent of the wine purchased was German. (Source: Subliminal by Leonard Mlodinow)

As people strolled down the aisle they looked at different wines, pondering on each label concerning the grapes each wine is made from, the wine’s vintage, cost, etc. They consciously weighed all that information, and in addition they’d probably considered what they’ll be eating with the wine. But what worked on their sub-conscious mind was the music. And a little nudge like music turned out to be key in influencing their decision of the origin of wine.

When asked whether the music influenced their choice, only one shopper in seven said that it had, while the truth was just the opposite. And that’s because we don’t realize the extent of influence our environment has in our decision- making.

The next time you visit McDonalds, notice the pace of music. Greater the crowd, faster the music. Faster the music, quicker the food consumption. Quicker the food consumption, quicker the tables turn free. I’m not sure if they play slow music when the restaurant is relatively empty. Though that could make people eat slower and sit longer, creating the perception that the restaurant has a good number of visitors and is therefore doing well.

Illustration by Mayur Tekchandaney

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