Date:06/07/2008 URL: http://www.thehindubusinessline.com/bline/iw/2008/07/06/stories/2008070650471300.htm

Back Bitten by shopping momentum

Buy one and get some free? Indulge.

B. Venkatesh

Sometime back, my wife and I visited one of our favourite ready-to-wear stores. Our objective was to merely explore if the store had any new designs for kids. An hour later, we walked out carrying four sets of dresses for our daughter. The funny thing is that the store did not have any new designs! How can economics explain our spending decision?

Behavioural economics provides some explanation to this madness. They call it “shopping momentum”. It refers to the shift in the consumer mindset, from deliberation to implementation.

Shift in mindset

Suppose you are out shopping with your family. On the way home, your daughter asks you for a pizza. After some hard negotiation, you agree. When you actually place the order, the counter clerk makes you an offer — buy two regular pizzas and garlic bread and you get a smaller pizza free. You give in. That is shopping momentum.

The first purchase is done with much deliberation. The subsequent purchases are more instantaneous. You would have deliberated on purchasing the first pizza. Having moved from deliberation to actual purchase, buying more pizzas was easy.

We are, however, not always bitten by shopping momentum. Suppose you find the CD of your favourite roots-rock band — Creedence Clearwater Revival — selling at 40 per cent discount. You immediately take the CD and are thirsting to buy more. Other CDs are, however, selling at regular price. This breaks the shopping momentum. The shopping momentum would kick-in if other CDs also sell at a discount.

Indulgence factor

Similarly, consider your indulgence at the pizza shop. Suppose you bought a floor carpet at a shopping mall — a totally frivolous purchase. You are feeling guilty about the purchase and the emotions spill over when your daughter wants you to buy pizza. You, therefore, reject any store offer and buy your daughter just a regular pizza.

My wife and I were not suffering from such guilt when we entered the ready-to-wear store. We were, hence, bitten by shopping momentum and came out with (small) cart load of stuff for our daughter.

(The author is an investment strategist.)