Jamie loves to shop. She spends most of her disposable income on bags of all varieties. At the point of purchase, she is often filled with an intense sense of excitement and delight, fuelled by the promise of her latest buy. However, Jamie is an extremely busy executive who works long hours. She knows, deep down, that she doesn't have the time or energy to transfer and track her belongings from bag to bag. Therefore, her new bags will likely end up inside her storage unit for a very long time.
Nonetheless, Jamie enjoys the experience. New purchases never fail to brighten her day - even if only momentarily. When questioned about her shopping habits, she laughs off her bag-buying impulses as a form of 'retail therapy', and that everyone indulges in such exercises of consumerism every once in a while. However, she admits that she often regrets her purchases later on, especially when she reviews her credit card statement.
Jane Wang, an assistant professor at SMU's Lee Kong Chian School of Business, believes that consumers like Jamie make irrational purchase decisions because they neglect to consider the diminishing enjoyment from using or owning a product. While most consumer products are expected to provide satisfaction over a time period, the experiential benefits of the product might fade due to factors such as waning novelty, changes in user expectations and shifts in reference points.
To understand this consumer idiosyncrasy, Wang embarked on a study with Nathan Novemsky and Ravi Dhar, both marketing professors at Yale University. Their paper, Anticipating Adaptation to Products, was published in the Journal of Consumer Research in August 2009.
In anticipation of lacklustre experiences
Past research has shown that people tend to hold inaccurate views on how their own feelings (about any product) changes over time. As a result, they make choices that they ultimately regret.
Imagine that after much thought, a person chooses to spend $500 extra to buy a high-end stereo with many cutting edge features instead of a basic model. A few months later, the initial thrill of the new stereo fades, enjoyment falls dramatically, and the person has nothing but a $500 higher bill to show for the short-lived enjoyment of the extra features, the authors wrote.
Many studies have also indicated that people are quick to adapt to both good and bad experiences -- from mundane pleasures or discomforts (e.g. eating, listening to vacuum cleaner noise) to great fortune or tragedy (e.g. winning the lottery, becoming physically disabled) -- but they are poor at gauging how they might adapt to hedonistic or highly pleasurable experiences, especially if such experiences are extended.
One study found that people believed they could adapt to some extended experiences, if it were pleasant, such as listening to their favourite music, but not unpleasant experiences, such as eating unsweetened yoghurt. Another study found that people failed to predict a decrease in the intensity of enjoyment from experiences that last several minutes, for example, getting a massage or listening to vacuum cleaner noise.
The authors noted in situations in which consumers hold accurate beliefs that product enjoyment will diminish over time, they may still fail to spontaneously apply these accurate beliefs when forecasting future enjoyment at the time of purchase. But why might people fail to predict the extent to which they might enjoy a product?
For one, consumers tend to only make sense of the information that is provided and presented within the decision environment. Information not presented is most often ignored. Furthermore, even though we already store a set of beliefs in our memories, studies have found that we may only access small parts of it at any given time.
We may also fail to consider changes in the way in which we enjoy a product over time, as people are often bad at contextualising hedonistic experiences, especially if such experiences are prolonged. Still, consumers would do well to consider the prospective duration of which they might actually derive enjoyment from a purchase.
Would Jamie act differently if she were reminded of a bag's diminishing utility over time - at the point of purchase?
Understanding the deluded consumer
To investigate consumers' miscalculations of utility versus actual product experiences, the authors surveyed two groups of undergraduate students. The first group was given a kaleidoscope and told they would be contacted within a week to answer some questions. Half of these students were contacted one day later and asked to rate how much they enjoyed the kaleidoscope. The other half was contacted one week later.
The second group of students were handed a kaleidoscope to play with briefly, after which, half of the students in this group were asked to predict how much they would enjoy the kaleidoscope the next day. The other half was asked to predict how much they would enjoy the kaleidoscope a week later.
The authors found that the first group of students (who were given the kaleidoscope) registered a decline in enjoyable experience on Day one and Day seven. However, the second group (who only got a brief taste of the kaleidoscope) forecasted similar levels of enjoyment from Day one to Day seven. Furthermore, they did not think that their enjoyment would decline if they were to possess the kaleidoscope.
This confirmed for the authors that people tend to predict experiences rather inaccurately. They believe that when people attempt to predict future product experience, beliefs about changes in experience at a future time are likely to be disregarded. People might, instead, choose to predict future enjoyment from the viewpoint of someone who is deprived of the product.
To verify this, the authors conducted another study that focused the participants' attention specifically on the 'duration' over which the product would be experienced. The rationale: to actively prompt participants to think about experiential changes over time, so as to increase the prospect that people might forecast future product enjoyment more accurately.
Participants were asked to choose between two different models of a stereo set: cheaper, low-end versus expensive, high-end. Those who were prompted to consider 'duration' forecasted a decline in experience over two points in time (Week one and Week 52). Only 29 percent of these participants then indicated that they would choose to purchase the expensive stereo. This contrasts with other groups of participants, one of which had 58 percent opting for the expensive set following a single cue (respondents were only asked to predict their enjoyment at Week 52), and another of which had 49 percent opting for the expensive set where they received no cue at all.
The authors noted that predicted enjoyment in the distant future mediated the effect of condition on choice. So when people are made to think about product experience at both near and distant points in time, there is a systematic impact on predicted distant future enjoyment. Playing up the duration of product ownership influenced choice. Would it, however, influence purchase intent?
In a follow-up study, 85 Participants were separated into three groups. Group A was asked to predict product enjoyment after one year, then indicate their purchase intent; Group B was asked to predict product enjoyment after one week and after one year before stating their purchase intent; and Group C predicted product enjoyment after one week and after two weeks before stating purchase intent. This manipulation [in Groups B and C] should draw attention to duration because participants are forced to think about two points in time, the authors hypothesised.
According to the results, 17 percent of participants in Group C predicted a decline in product enjoyment between week one and two, and 90 percent in Group B forecasted a decline from week one to fifty-two. As the researchers had expected, purchase intent decreased significantly for these participants who compared product enjoyment at two points in time.
The substantial decrease in purchase propensity suggests that direct priming of diminishing enjoyment is not driving our effect, the authors wrote, stressing that it is only when consumers are made to think about two separate points in time, rather than just one future point, that accurate beliefs on product enjoyment is triggered. This, in turn, influences purchase intent.
If you can't convince them, confuse them
Past studies have shown that people's enjoyment of a product can be extended as they seek variety within the product. Would perceived variation within a product therefore alter consumer beliefs and decisions, the authors asked.
So they surveyed 157 undergraduate students on a product that offers variety - the iPod. Two product descriptions were shown to different groups of students. In one version, the iPod was described as being able to store songs of your favourite artist (low variation). In the other version, the product description said it would store songs by numerous artists (high variation).
In the low variation condition, participants predicted that product enjoyment would lower substantially in two years time. They also indicated a large decline in enjoyment from week one to two years later. Those who were cued to consider product enjoyment at these two points were significantly less intent on a purchase.
This was not the case for participants in the high variation condition. They predicted that product enjoyment would be just as high one week later or in two years time. Their purchase intent did not falter - not even for those who were prompted to think about enjoyment at two different points in time.
The findings here suggest that people believe they would enjoy a product more or less equally, at different points in time, if the product was perceived to be variable. Even slight differences in a product's description could affect people's beliefs about their experiences with the product over time.
But ultimately, the authors believe that dissatisfaction in a product can be the result of consumers' failure to consider 'duration' when forecasting potential enjoyment. They wrote: If consumers do not think about diminishing enjoyment when making a purchase decision, they may feel particularly dissatisfied when their enjoyment actually does decrease.
One phenomenon that can arise when consumers fail to consider such diminishing utility is the tendency to overspend. The authors point to a report in the The Los Angeles Times that documented one such incident, where a couple living on the edge of the financial cliff drove themselves to such a predicament by nothing other than their casual spending on a host of frivolous products that they quickly adapted to, such as fancy throw pillows and sitcom DVD sets.
Finally, the study holds implications for professionals in marketing. For one, customer interests in a product may be affected if marketers inadvertently sell attributes that trigger 'duration' considerations in customers - for instance, reminding them of three-year guarantees or warranties.
Such messages cue customers to think about future product enjoyment, which, depending on the product, could decline. They may also remind customers to guard themselves against spending on items that might offer diminishing enjoyment over time.
For that reason, sales associates serving customers like Jamie would do well to focus on the here and now, where enjoyment is most likely at its peak. After all, 'retail therapy' is most beneficial for the impulsive customer... and shrewd marketers.