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Journalism of Courage
For many years, marketers and salespeople have realised there is money to be made selling people features they do not need and may never use. Many people report being stumped when asked about the intricacies of their DVD players or the complexities of their digital cameras; most sport-utility vehicles with complex off-road traction systems are rarely driven on anything but asphalt.
So if people don8217;t use expensive high-end features, why do they pay more to get them? Jaebeom Suh, an assistant professor of marketing at Kansas State University, conducted a series of experiments that explored this question. Suh found that people buy unnecessary features because of two cognitive errors: they overestimate the risk that a product without such features will become obsolete, and they overestimate the likelihood that they will learn to use the new features.
Consumers, especially those buying expensive electronic items, fear that 8220;if I don8217;t buy this feature and a new product launches on the market, I may have to rebuy everything again,8221; Suh explained.
Because features introduced more recently feel as though they are less likely to become obsolete, consumers who buy them experience less anxiety. The money they pay is really not for the feature but for the psychological solace it purchases.
In another experiment, Suh found consumers tend to think of new features as a kind of investment8212;something that costs money but will pay for itself as they learn to use and love it. Of course, most people never do learn to programme their VCRs, meaning the investment is largely a bust.
Cognitive errors, of course, are not the only reason people buy things they cannot afford. Sociologist Allison Pugh at the University of Virginia found that parents, especially poor parents, tend to buy products they cannot afford because they are acutely focused on whether their children are fitting into peer groups.
8220;Children live in an economy of dignity,8221; Pugh said. 8220;This is a system of meanings in which certain things have particular interpersonal power. It can be experiences like going to Marine World or seeing some movie. Those objects and experiences have social power8212;they define who belongs and who does not, who can participate in the conversation and who cannot.8221;
Pugh said that detailed interviews she has conducted with 5- to- 9-year-old children and their parents show that low-income parents do not splurge because they fail to understand the importance of delayed gratification or because they are impulsive. Rather it is because they are acutely sensitive to how certain consumer products influence their children8217;s 8220;search for dignity8221;.
8220;Every 8-year-old boy in my sample had a Game Boy or Nintendo,8221; Pugh said. 8220;This was among parents who were incredibly poor, who were working to stretch their food dollars at the end of the month. They were choosing their child8217;s psychological desires over their own material needs.8221;
There is one last reason people pay more than they should for products: They mistakenly believe a product has more value because it costs more money.
Reader S. Krishnamoorthy Aithal of Falls Church, Virginia, said he recently tried to give away a small folding table. He put a flier on the bulletin board of his local grocery store in early June. Two weeks later, there were no takers. In late June, Aithal replaced his flier with a second advertisement, this one offering the same table for 10. The new ad prompted a quick response. A buyer showed up and, after a vigorous bit of bargaining, triumphantly walked away with the table for 5.
The Washington Post
