Everyday We Fall Everyday We Fall ‘Victim’ to an ‘Victim’ to an Impulse BuyImpulse Buy

Professor Warden Professor Warden NCKU IMBANCKU IMBA Consumer Consumer BehaviorBehavior

Darcy CaskeyDarcy Caskey David ChenDavid Chen Patrick ChenPatrick Chen Jonathan NewtonJonathan Newton Florence WuFlorence Wu

ContentsContents

What is an Impulse Buy?What is an Impulse Buy? Psychological Forces Psychological Forces at Playat Play

The PsychologyThe Psychology The Reasons Behind Impulse The Reasons Behind Impulse Buying Buying

The ServicescapeThe Servicescape A Layout that Encourages Impulse A Layout that Encourages Impulse Buying Buying

Field ObservationsField Observations Impulse Buying at Impulse Buying at WorkWork

Conclusion Conclusion The Decision Still Lies with the The Decision Still Lies with the ConsumerConsumer

What is an Impulse Buy?What is an Impulse Buy?

Psychological Forces at PlayPsychological Forces at Play

Yes, without realizing it, everyday we fall victim to an Yes, without realizing it, everyday we fall victim to an impulse buy. Whether it is a large expensive purchase or impulse buy. Whether it is a large expensive purchase or a small incidental one, we still do it!a small incidental one, we still do it!

There has been a vast amount of research on the topic There has been a vast amount of research on the topic of Impulse Buying over the last twenty years that the of Impulse Buying over the last twenty years that the number of definitions that currently exist border on number of definitions that currently exist border on infinite.infinite.

Blackwell et. al. (2001) defines Impulse Buying as Blackwell et. al. (2001) defines Impulse Buying as “a “a sudden and powerful urge to buy something sudden and powerful urge to buy something immediately”immediately” and acting upon that urge. and acting upon that urge.

What is an Impulse Buy?What is an Impulse Buy?

This has been described by Statt (2001) as highly This has been described by Statt (2001) as highly emotional and unconscious behavior. He justifies this emotional and unconscious behavior. He justifies this statement by describing the sentiments that cause this statement by describing the sentiments that cause this behavior. They are namely:behavior. They are namely:

An unexpected urge to purchase something upon seeing itAn unexpected urge to purchase something upon seeing it Intense motivational pressure stronger than all other Intense motivational pressure stronger than all other

considerationsconsiderations A feeling of euphoria or excitementA feeling of euphoria or excitement Disregard of possible consequencesDisregard of possible consequences

Marketers and retailers have long been trying work out the Marketers and retailers have long been trying work out the right merchandising layout to encourage this sort of right merchandising layout to encourage this sort of behavior. However, it is more difficult to spark than it behavior. However, it is more difficult to spark than it seems.seems.

What is an Impulse Buy?What is an Impulse Buy? Since impulsive Since impulsive behaviourbehaviour is an emotion-dependent reaction is an emotion-dependent reaction

each individual each individual has different emotional triggers, has different emotional triggers, personalities, personalities, tastes tastes and preferences. and preferences.

It would be impossible to formulate a plan or layout that would It would be impossible to formulate a plan or layout that would appeal to all in-store customers and maximize their impulse appeal to all in-store customers and maximize their impulse buying buying behaviour.behaviour.

There have been major research developments in defining the There have been major research developments in defining the consumer’s actual reasons for such behavior and also on consumer’s actual reasons for such behavior and also on optimal store layout. optimal store layout.

With this insight retailers may increase the possibility of such With this insight retailers may increase the possibility of such purchases but there is no guarantee that impulse buying will purchases but there is no guarantee that impulse buying will increase. increase.

The PsychologyThe Psychology The Reasons Behind Impulse BuyingThe Reasons Behind Impulse Buying

DittmarDittmar et.al. (1996) observed that consumption has become a et.al. (1996) observed that consumption has become a means of self-expression, leisure and sometimes even a means of means of self-expression, leisure and sometimes even a means of reward. reward.

Shopping and especially impulse buying gives people a certain Shopping and especially impulse buying gives people a certain amount of social gratification.amount of social gratification.

Rook and Fischer (1995) state that impulsive buying often Rook and Fischer (1995) state that impulsive buying often possesses an underlying bad connotation. possesses an underlying bad connotation.

Impulse buys can often lead to feelings of guilt and cognitive Impulse buys can often lead to feelings of guilt and cognitive dissonance once rationality has again set in.dissonance once rationality has again set in.

On the other hand, they also state that many impulse buys are On the other hand, they also state that many impulse buys are made purely with good intentions. Some appropriate examples made purely with good intentions. Some appropriate examples would be: would be:

buying an incidental gift for one’s spouse orbuying an incidental gift for one’s spouse or seeing something that a friend once mentioned was difficult to find. seeing something that a friend once mentioned was difficult to find.

The reasons for this behaviour would naturally tend be rooted in The reasons for this behaviour would naturally tend be rooted in the above mentioned need for self-gratification and reward the above mentioned need for self-gratification and reward derived from helping others.derived from helping others.

The PsychologyThe Psychology

Bayley and Nancarrow drew up a brief list of perspectives Bayley and Nancarrow drew up a brief list of perspectives that cause an impulse buy. They are namely:that cause an impulse buy. They are namely:

Freud’s immediate gratification theory (basic instincts conquer Freud’s immediate gratification theory (basic instincts conquer logic)logic)

Existentialist theory (breaking worldly constraints)Existentialist theory (breaking worldly constraints) Social Constructionist Theory (building of one’s own self-image)Social Constructionist Theory (building of one’s own self-image) New Cognitive Theory (simple relationship between need & New Cognitive Theory (simple relationship between need &

solution)solution) Economic Man Model (irrational & dysfunctional decision Economic Man Model (irrational & dysfunctional decision

making)making)

Based on the above research, impulse buying is an Based on the above research, impulse buying is an emotional decision which can be sparked by various emotional decision which can be sparked by various psychological triggers.psychological triggers.

The The ServicescapeServicescape Layout that Encourages Impulse BuyingLayout that Encourages Impulse Buying

The concept of a The concept of a ServicescapeServicescape was developed in 2000 by was developed in 2000 by Johnson which he described as:Johnson which he described as:

““The physical and informational environment in which the sales The physical and informational environment in which the sales and the service proposition are created and delivered. It is the and the service proposition are created and delivered. It is the

creation of a working environment that provides clues and creation of a working environment that provides clues and cues to customers and suppliers, internal and external about cues to customers and suppliers, internal and external about

the organization, its operations, and its services.”the organization, its operations, and its services.”

When dealing with a retail outlet this pertains to the layout of When dealing with a retail outlet this pertains to the layout of the store that makes purchasing decisions easier for in-store the store that makes purchasing decisions easier for in-store customers. customers.

It has already been noted that there is no hard and fast It has already been noted that there is no hard and fast solution that promises impulse buying, but it can still certainly solution that promises impulse buying, but it can still certainly be encouraged by an appropriate be encouraged by an appropriate servicescapeservicescape..

The layout of a store can lend itself towards a sensory The layout of a store can lend itself towards a sensory ambience that may stimulate certain buying behavior. ambience that may stimulate certain buying behavior. Moreover, the actual in-store arrangement of merchandise is of Moreover, the actual in-store arrangement of merchandise is of strategic importance to encourage impulse buying. strategic importance to encourage impulse buying.

The The ServicescapeServicescape Statt states that only a minority of consumers, approximately one Statt states that only a minority of consumers, approximately one

third, plan to buy particular products when they enter a retail outlet. third, plan to buy particular products when they enter a retail outlet.

They rely on the They rely on the servicescapeservicescape to provide them with cues and to provide them with cues and prompts on which brand to choose. This phenomenon can also prompts on which brand to choose. This phenomenon can also stimulate impulse buying behavior.stimulate impulse buying behavior.

It is not uncommon for producers to pay stores for the appropriate It is not uncommon for producers to pay stores for the appropriate physical positioning on their shelves. physical positioning on their shelves.

Certain products are more likely to be purchased on impulse. Certain products are more likely to be purchased on impulse. Research shows that incidental groceries like shampoo, toothpaste, Research shows that incidental groceries like shampoo, toothpaste, magazines, soft drinks and candy rank amongst the highest. magazines, soft drinks and candy rank amongst the highest.

It is therefore no coincidence that some of these items are usually It is therefore no coincidence that some of these items are usually placed near the entrance or the check-out point in eye-catching placed near the entrance or the check-out point in eye-catching displays. displays.

Research studies have shown that items placed at point-of-sales Research studies have shown that items placed at point-of-sales promotions are usually increased. Interestingly, once the display is promotions are usually increased. Interestingly, once the display is removed the products ‘off the shelf sales’ return to normal. Point-of-removed the products ‘off the shelf sales’ return to normal. Point-of-Sales is probably the most common form of encouraging impulse Sales is probably the most common form of encouraging impulse buying. buying.

Field ObservationsField Observations

Impulse Buying at WorkImpulse Buying at Work Following is a photograph in a convenience store of two Following is a photograph in a convenience store of two

childrenchildren just picked a product based on its packaging and placement. just picked a product based on its packaging and placement. They are probably more intrigued by the presence of Snoopy They are probably more intrigued by the presence of Snoopy

on the outside of the box than the actual contents inside the on the outside of the box than the actual contents inside the box. box.

Also note to their right the positioning of the products. The Also note to their right the positioning of the products. The height is of importance. height is of importance.

All the candy and related goods are at eye-level and easy to All the candy and related goods are at eye-level and easy to reach for children of their age.reach for children of their age.

This supports Judd This supports Judd McIlvain’sMcIlvain’s statement: statement: “Kid’s cereal is “Kid’s cereal is placed lower on the shelves so the youngsters can see it placed lower on the shelves so the youngsters can see it and choose the box with the best characters or prizes.”and choose the box with the best characters or prizes.”

Here is another Here is another example, candy in a example, candy in a department store is department store is laid out at the perfect laid out at the perfect height for children height for children walking by to just walking by to just impulsively reach out impulsively reach out and grab it. Of course and grab it. Of course the parents will have to the parents will have to pay for it later. The pay for it later. The display also rotates and display also rotates and has lights that makes has lights that makes the display even more the display even more attractive to children.attractive to children.

Field ObservationsField Observations The servicescape also influences adults. The following The servicescape also influences adults. The following

pictures are of a customer testing out a new pictures are of a customer testing out a new PlaystationPlaystation 2 2 game. game.

He then spotted the limited Winter He then spotted the limited Winter EditionEdition PS2. PS2. The service attendant informed the customer that Sony only The service attendant informed the customer that Sony only

manufactured a thousand of them. manufactured a thousand of them. He was immediately interested even though he already had He was immediately interested even though he already had

the original version.the original version.

It is literally identical to the original except for color and It is literally identical to the original except for color and obviously price. obviously price.

This customer ended up buying the Winter Edition PS2 after This customer ended up buying the Winter Edition PS2 after entering the store with the intention to purchase one CD-entering the store with the intention to purchase one CD-ROM game. ROM game.

When asked what he would do with the regular version at When asked what he would do with the regular version at home he said he wasn’t sure but thought he might try to home he said he wasn’t sure but thought he might try to sell it on the internet. sell it on the internet.

Field ObservationsField Observations The next picture is of people lined up outside a The next picture is of people lined up outside a

bakery in a department store awaiting a fresh bakery in a department store awaiting a fresh baked goods.baked goods.

Not all the customers had specifically come to buy Not all the customers had specifically come to buy the bread. Some of them saw the line and became the bread. Some of them saw the line and became interested. interested.

When asked, they explained that the crowd and When asked, they explained that the crowd and the smell attracted them so they decided to buy the smell attracted them so they decided to buy some themselves. some themselves.

This is a good example of how an event can catch This is a good example of how an event can catch the attention of customers, who then impulsively the attention of customers, who then impulsively buy the product.buy the product.

Schreider also researched the use of store Schreider also researched the use of store atmospherics to stir impulses. He explained: atmospherics to stir impulses. He explained: “Wafting aromas from … in-store recipe demos “Wafting aromas from … in-store recipe demos seduce and succeed as they trigger suggestion seduce and succeed as they trigger suggestion impulses.”impulses.”

Field ObservationsField Observations In the following photo, the customer was very interested in a In the following photo, the customer was very interested in a

MP3 player in front of him and bought it within minutes. After MP3 player in front of him and bought it within minutes. After the sales people had left, we spoke with the customer. the sales people had left, we spoke with the customer.

His reason was for being there was that his wife was on the 5th His reason was for being there was that his wife was on the 5th floor for an underwear sale. He felt embarrassed there, so he floor for an underwear sale. He felt embarrassed there, so he came up to browse and waste some time.came up to browse and waste some time.

His reasons for his purchase were that it looked very His reasons for his purchase were that it looked very sophisticated and sophisticated and

portable. Furthermore, when the sale’s staff informed him portable. Furthermore, when the sale’s staff informed him about its uses he was convinced. Note that he didn’t originally about its uses he was convinced. Note that he didn’t originally intend to buy anything and didn’t know how to actually use the intend to buy anything and didn’t know how to actually use the iPodiPod..

His attention was drawn to the exhibition stand as he came out His attention was drawn to the exhibition stand as he came out of the elevator. of the elevator.

The Apple section is very attractively laid out and that caused The Apple section is very attractively laid out and that caused him to stop where he spotted the tiny MP3 player. This lay out him to stop where he spotted the tiny MP3 player. This lay out at the entrance is what sparked the impulse for him to at the entrance is what sparked the impulse for him to ultimately make the impulse buy.ultimately make the impulse buy.

ConclusionConclusion The Decision Still Lies with the ConsumerThe Decision Still Lies with the Consumer

Servicescape layouts and strategies explain how consumers can be enticed into Servicescape layouts and strategies explain how consumers can be enticed into making unplanned impulse purchases. Response to the presented stimuli is making unplanned impulse purchases. Response to the presented stimuli is unpredictable.unpredictable.

Research shows that while not every in-store customer can be moved to buy a Research shows that while not every in-store customer can be moved to buy a specific product, a large number will be. specific product, a large number will be.

The interviews, photographs and observations cited in this report support the The interviews, photographs and observations cited in this report support the fact that impulse buying is literally an everyday occurrence. fact that impulse buying is literally an everyday occurrence.

our own human impulses, emotional and rational state at the time are the deciding our own human impulses, emotional and rational state at the time are the deciding factorsfactors

but the servicscape still plays an important role in the arousal of these deciding but the servicscape still plays an important role in the arousal of these deciding factors.factors.

Impulse buying is ultimately the individual’s final decision, note that most Impulse buying is ultimately the individual’s final decision, note that most websites on impulse buying are warnings to consumers against devious ploys by websites on impulse buying are warnings to consumers against devious ploys by retailers/ marketers retailers/ marketers

Most people in a retail outlet or department store intend to spend money on Most people in a retail outlet or department store intend to spend money on something. An impulse buy means that the individual didn’t intend on something. An impulse buy means that the individual didn’t intend on purchasing that sort of item at all. However, the intention on spending was still purchasing that sort of item at all. However, the intention on spending was still there and the underlying satisfaction behind impulse purchases is still desirable there and the underlying satisfaction behind impulse purchases is still desirable to the consumer. to the consumer. The decision lies with the consumerThe decision lies with the consumer..

With the modern day escalation in work and family pressures coupled with the With the modern day escalation in work and family pressures coupled with the continuous bombardment of advertising media and merchandising, it would be continuous bombardment of advertising media and merchandising, it would be safe to assume that most consumers impulse buy nearly on a daily basis.safe to assume that most consumers impulse buy nearly on a daily basis.

Question & AnswerQuestion & Answer