The Role of Emotion in Consumer Behavior - Article Example

The Role of Emotion in Consumer Behavior To be successful, a business must take the psychological aspect of consumer emotion into account when pricing and marketing products and services. Buyers are not always entirely rational and do not usually have ideal information when they purchase products. Perfect rationality implies that decisions are made in a way that maximizes the gain on every pound spent while accomplishing the goals and outcomes expected. Consumers are sometimes quite irrational in the way they go about making purchase decisions, particularly as they become influenced by their emotions. Buyers characteristically make many purchase decisions on an almost daily basis primarily based upon how the purchase will make them feel. They participate in this process within the context of the many other decisions and activities which make up their lives, causing varying degrees of stress and/or satisfaction. In the marketplace, they encounter a wide array of vendors and product offerings with a complex variety of benefits, prices, terms, and promotional messages all promising, to some degree or another, a desired emotional outcome. Research findings suggest that much of what people do when they buy products and services follows a definite logic. Consumers look for cues to help simplify decision making, and often rely on simple rules of thumb that will help them meet their present emotional need. Correspondingly, it is possible to identify patterns of behavior in the way buyers go about satisfying their needs (Morris, Morris, 1990). One of the primary means by which consumers determine their levels of emotional satisfaction is determined by their perception of the purchase made. Consumers often have few indicators of quality, so price may be perceived as one of the better available cues.  However, in making a purchase that gives them an emotional boost, they may also feel remorseful or guilty about the extravagance of purchasing something for their own gratification and make following purchases with an eye toward economy. By studying the various psychological aspects of consumer behavior as it is shaped by emotion, it becomes possible to market products and services to be of maximum appeal to the target market. In determining how emotion affects consumer behavior, one of the first questions that must be asked is what is emotion and how is it defined. According to Richins (1997), this is the biggest problem in the field as no easy answers have yet been proposed. “Plutchik (1980) reviewed 28 definitions of emotion. He concluded that there was little consistency among the definitions and that many of them were not sufficiently explicit to give a clear idea what an emotion actually is” (127). One of the more common understandings of what is meant by the term emotion is any kind of feeling that is brought about by a particular perception of a situation. However, this feeling cannot be intellectually based such as in the form of a judgment of others or a building curiosity and it cannot be physically based such as when someone is particularly energetic or worn down. Numerous studies are available attempting to place the role of emotions into a biological context, to predict probable emotional reaction to particular stimuli or to determine emotional reaction to advertising, but most of them are limited not only in their scope, but also in their ability to accurately measure the basic, fundamental emotions that drive much of the actions of human beings, such as love (Richins, 1997). Other problems with these types of studies are the tendency of these types of studies to test the extremes of emotions outside of the consumer context. “It is quite unlikely that consumption experiences will result in such extremes of emotional intensity” (Richins, 1997: 129). Instead, consumer emotions are much more subtle and exists within a narrower range of extremes. Studies attempting to more accurately measure the range of emotions associated with consumption behavior identified emotions such as “guilt, worry, eagerness, and optimism” (Richins, 1997: 142) as playing significant roles in purchasing decisions. Other emotion states that were identified as having an impact on purchasing behavior were suspicious, bored and uninvolved. A broadly recognized assumption regarding consumer behavior is that the consumer continuously moves through a cycle of emotions when making purchase decisions. The cycle begins when the consumer makes an indulgence purchase, meaning spending money on unnecessary but desired objects intended to provide a present and possibly future feeling of satisfaction or fulfillment. In making this purchase, the consumer is both excited and remorseful, considering that the money spent perhaps would have been better spent in a more economical or practical way. Rather than experiencing emotions in well-defined, easily recognizable stages, consumers feel mixtures of emotions even while making the purchase that are typically some combination of positives such as happiness and anticipation and negatives such as guilt or regret (Ramanathan & Williams, 2007). This regret is believed to encourage the consumer to economize and limit further indulgencies for a time. The degree to which this process occurs is variable by the individual depending largely upon the availability of disposable income, perception of purchase and degree of impulsivity. However, the consumer invariably returns to indulgence after a varying period of time, suggesting that the levels of guilt and regret are perhaps not such strong limiting factors and other emotional reactions may be at work in consumer’s buying behavior (Ramanathan & Williams, 2007). This process, repeated often, begins to allow the individual to focus upon the present desires at the expense of long-term goals, contributing to growing issues of credit card debt and repossession. Looking into the field from the marketing viewpoint suggests some reasons why the consumer’s resistance to indulgence in today’s market may be weakened, primarily from the standpoint of how merchandisers use buyer’s remorse to bring in higher profits. While a great deal of research has been conducted regarding how knowledge of consumer emotion can be manipulated in fields such as advertising or packaging to bring about greater sales, one of the greater but less investigated factors regarding how emotion may influence consumer purchasing behavior is the perception of value as it relates to consumer emotional involvement pre- and post-purchase. Consumers often develop internal reference prices, or expectations about what something should cost, based mostly on their experience and a peculiar social phenomenon in which the public’s collective mind determines what a particular product or service should cost. For example, early Coca Cola advertising made specific reference to the price of a its product at a mere dime, making it difficult to change the price later when the cost of production and distribution had increased as a result of inflation because of a public perception of the ‘appropriate’ cost per bottle. To appeal to consumers feeling guilt for having indulged in a particular high stakes purchase, certain brands and retailers position themselves as providing value and quality at a low cost. There are certain specific prices (price-points) at which people become more willing to buy a certain type of product because of a perception that they are being thrifty. ‘Under £100’ is a popular price point. An amount below £20 including sales tax is another popular price point because it is the most popular denomination of money that people typically carry with them. Dropping the price to a popular price point might mean a lower profit margin, but the increase in sales volume offsets the loss as consumers continue to indulge in satisfying other emotional needs (Teton, Allan, 2005). Offering an opposite approach from that of the low cost brands, perceived value equals reverse discounting as a means of appealing to the consumer’s need for reducing guilt while still permitting them to self-indulge. Retailers using this strategy work on the old maxim that quality is in the eye of the beholder. It is perceived, not necessarily real. A high price tag can help create a high perceived value on a particular product. After all, is Mercedes really worth three times more than a Ford? Prestige pricing refers to high markups and/or pricing above the market appealing to consumers seeking material status. Many consumers are willing to pay more for a product or service because it is felt the product or service is of higher quality or possesses brand or manufacturer prestige (Passewitz, n.d.) above that of similar products or services, boosting their self-confidence and perception of individual worth. While a business can price its product to simply cover its costs or to target a specific status-conscious clientele, it can also price structure to get deeper into the psychological mind of the average customer. Some prices just sound like a smaller expenditure than others even when they are very close to each other in value. 99 pence sounds less expensive than a pound the same way that £19.99 does with £20. People buy on emotion first, rational thought second. If they can say “and it’s under £100,” it’s one more plus for the business owner. It is because of this basic way of thinking and buying on emotional rather than intellectual thought that has many products priced with peculiar endings. Rather than selling something at £10, it is sold at £9.99. Another theory of why this works is that consumers will conceive the £9.99 price as nine pounds plus change rather than the effective £10. Recent research has shown that odd price endings appear to have some modest effects under some circumstances. Odd endings may have significant implications for the positioning of goods. Discount stores tend to use these endings, while upscale department stores often use whole dollar amounts as a sign of quality. While inflation has undoubtedly changed the figures involved, research done in the 1980s suggested odd prices were more effective below £7, where people often wanted to feel they got a bargain, while consumers who paid more than that amount seemed to prefer the assurance of quality implied by a whole figure. To achieve the perception of savings, value-bundles offer something for nothing. Value-bundling involves grouping products and setting one price for the arrangement. This works best if the grouped products have a logical association with one another. Customers tend to assign value to a bundle, based upon the probable cost of individual pieces. Value-bundling is a powerful method if the price of the bundle equals the price of the most expensive component (Evoy, 1999). Vacation packages bundle air tickets with hotel and rental cars to be advertised at one eye-catching price. Rather than conceiving of purchasing tickets to France and the associated headaches of having to book hotel reservations, rental cars and conceiving of an itinerary, packages provide the customer with the satisfaction of having all the headachy travel arrangements already managed, leaving them with nothing to do but pack their bags, all for one low price. Thus, they are economizing and indulging all at the same time. If the price of the bundle is only a bit more than what the customer would pay for the air tickets independently, the customer has a “something for nothing” feeling with the purchase further encouraging them to purchase again rather than building up buyer’s remorse. Internet service providers are another example of this approach to influencing consumer behavior through the emotions. They bundle a number of products and interactive services together, and charge one price for all of them, “all for one low price” even when all of the products will not be useful to large portions of the consumer base. In pricing products, perception has been demonstrated to be a mighty psychological tool. Consumers are able to indulge in their desires while economizing and reducing their guilt for the extravagance. Through understandings of price points, perceived value and other strategies, merchandisers are able to manipulate the emotions of consumers to encourage them to purchase or to purchase more. Multiple Unit Pricing is a value-bundling strategy where the customer perceives quantity buying equates to greater savings. An example of this is an item that normally sells for 49 pence. Multiple pricing would change this situation to a two for 89 pence or perhaps three for £1.39. In general, multiple unit pricing is usually effective in increasing immediate sales. However, this pricing technique may not increase the rate of consumption of the product. People will buy extra units of the product and use them as needed. Because they are saving money while providing themselves with a reserve of a particular commonly used item, they are able to satisfy their need to conserve and provide them with some justification for future indulgence. Studies have indicated that the bargain concept of multiple pricing is not usually effective over the £10 range further indicating its appeal for the economizing, guilt-ridden consumer. It is, however, very effective for items within the £1 range (Passewitz, n.d.). Discounting can be used in a variety of other ways, for seasonal deals or special markets like seniors and students. However, just as consumer behavior can be shaped by their emotions through the element of pricing, so can their emotions shape merchandiser pricing. Flexibility in pricing is largely driven by customer perception of a product and the competition. For example, if a grocery chain sells its own private brand of instant coffee, the coffee better sell for less than other brand names. Bump that price up and watch inventory sit on the shelves. But if you sell a top-of-the-line, in-fashion, gourmet brand of coffee, it can be almost a license to print money. Uniqueness is understood and valued by the customer (Evoy, 1999). Most consumers unwittingly acquire mental attitudes about the price they are willing to pay for a product or service. There is considerable evidence that the importance of price in the decision to purchase varies from product to product and person to person based upon their level of emotional involvement. Consumers often tend to respond strongly to price increases, and particularly when certain ceilings are reached. In the 1970s, the price of cereals neared £2 per box. Consumers were found not to buy over that barrier. Many manufacturers, rather than raising the price, reduced the package sizes to increase revenue (Passewitz, n.d.). For this reason, manufacturer’s suggested retail price is at best a misleading figure. MSRP’s are intentionally set high so full service retailers can sell at a psychological discount. However, for this approach to be used legally, the statement must be factual. Consumers are doubtful of discount claims made by businesses and have a propensity to disbelieve the accuracy of such claims. A claim of a 30 percent reduction might translate into a perception of 15 percent actual savings in an educated consumer’s mind. At the extremes of this strategy though, when an item is marked down to a clearly improbable amount (e.g., a used car is marked 50 percent below market value), that tactic does indeed lead to some perceived savings by consumers (Passewitz, n.d.). An often used yet unethical psychological technique to appeal to the emotions of the consumer is the bait and switch. Using this technique, a deeply discounted product is advertised but when the consumer arrives in the store, sales personnel attempt to persuade them to buy a more expensive option by pointing out that it is a much better value or otherwise fits their needs to a much greater degree. Often, very little or no quantity of the advertised good is on hand, and the selection of available styles, colors, etc. is very restricted. Some businesses will use this technique by discounting a red model, for instance, while keeping the black model at the regular, non-discounted price. To satisfy their expectations of acquiring what they came to acquire without sacrificing on their personal tastes or other needs, consumers will turn to the higher priced item as a means of demonstrating they are slightly ahead of the crowd. A modification of the technique occurs when travel agents advertise fares which are not actually available. The flight may have one or two seats at the advertised price but these are sold out very quickly and always, seemingly, just before a customer called. However, with their heart already set on the vacation they so desperately need now that they’ve been induced to make the phone call, few consumers are willing to return to everyday life without the promise of a trip in their back pocket. By looking into a specific element of the consumer research field, particularly into the realm of retailer pricing, the role of consumer emotion in purchasing behavior can be better understood in relation to those emotions that are known to play a role in the unique environment of the marketplace. Some economic models tend to deny or ignore the subconscious mind’s ability to influence what we as consumers do when making our purchasing decisions by suggesting that even young children are capable of making rational, judicious decisions based upon an underlying understanding of the true cost of an item and other rational considerations of present versus long-term goals and desires. However, the effectiveness of prestige pricing, reference pricing, odd-even pricing and traditional pricing as tools in the psychological arsenal of businesses setting their pricing structures as a means of appealing to their target market’s emotional needs should not be ignored. Whether they are accustomed to or too sophisticated for such pricing strategies to be effective on a surface level, consumers continue to be influenced by them at the subconscious level. Consumers allowing themselves to indulge in a product purchase may be encouraged to justify such purchases with a perception that they are saving money through value bundles or other discounts that provide ‘something for nothing’ or a stock supply of products within personal storage until they become necessary, as occurs in many bulk purchases. Retailers, aware of the need for consumers to feel good about making their purchases while attempting to reduce the anxiety and guilt experienced, purposely use psychological means of alleviating concerns. By directly acknowledging the type of product offered – either a budget item or a true indulgence – retailers are able to present many indulgence items as budgetary necessities thanks to creative pricing strategies and placement. A vacation package may be considered an indulgence by many, but because they can frequently offer something of additional value that would push the trip out of the affordable range, the argument begins to be made that a break from the everyday is not only necessary but economical. While much remains to be understood regarding how consumer emotion affects purchasing behavior, it is evident that the process remains highly complex and relatively universally applicable thanks to creative, up-to-date techniques employed to take advantage of it. References Evoy, Ken. (1999). Make Your Site Sell. The Psychology of Pricing. Retrieved 3 November 2007 from Morris, Gene and Michael H. Morris. (1990). Market-Oriented Pricing: Strategies for Management. Quorum Books, p. 55. Retrieved 3 November 2007 from Passewitz, Gregory R. (n.d.) Ohio University Fact Sheet Small Business Series. Retrieved 3 November 2007 from < http://ohioline.osu.edu/cd-fact/1326.html> Ramanathan, Suresh & Williams, Patti. (August 2007). “Immediate and Delayed Emotional Consequences of Indulgence: The Moderating Influence of Personality Type on Mixed Emotions.” Journal of Consumer Research. Vol. 34, 212-223. Richins, Marsha L. (September 1997). “Measuring Emotions in the Consumption Experience.” Journal of Consumer Research. Vol. 24, 127-146. Teten, David and Scott Allen. (2005). The Virtual Handshake: Four models for calculating your pricing. Amazon Books. Retrieved 3 November 2007 from Read More