Gifts for everyone…It is (almost) Christmas

We are almost there….Christmas!!! Soon I will be heading back home for the holiday but before that there will be the annual gift buying ritual.

Gift xmas

I love gifts, especially when they are for me! Although I do not usually like surprises (do not try to organize a surprise birthday party for example!!). I love to receive gifts but I have the feeling that I owe something to the person who gave me it to me, on the other hand when I give something to someone, it just make me feel good. If I can see a smile or some kind of satisfaction I feel rewarded! 

 

All gifts are not created equally…meaning they are not purchased in the same way.

There are the ones you offer spontaneously, the ones that you have to offer, and the ones that are motivated (I am not the only one who had to do the last one I think). It is certain that depending on the conditions and assuming that the receiver do not know what intention underline the act of gift giving, I do not feel the same, starting from happiness and ending up with culpability, I will try to explain it.

 

In the analysis of gift giving act, by Sherry (1983) it is suggested that it has a social, economic, and personal aspects and develop a typology employing the nature of the gift, the relationship between the person who give and the person who receive, and situational conditions, like holidays. These are many variables but I am sure there is much more to take into consideration.

 

It seems that the gift search process has an importance as well according to Banks (1979), I am sure you can imagine searching a gift for hours, days, walking from one shop from another, how much value you will add to the wonderful Eiffel tower key chain and how the deception would be if the recipient do not even show half a smile…

 

When the time comes to make a gift to a certain person because you have to, the pleasure stop and the chore begins, it is even worse when it is an order. “They should have ask Amazon!”. Clee and Wicklund (1980) argue that the obligation to buy a present, (under certain conditions) could be perceived as a threat to freedom, eliciting psychological reactance leading to a rather a negative than positive experience.

While Belk (1979) observed that almost all gift item carry a symbolic meaning; thus the choice of present may be affected by the price that would be paid and the effort invested in the gift selection. The results of the process possibly carrying in function of whether the donor perceives the event as mandatory or voluntary. This tend to go in the same direction as Sherry’s (1983) study.

 

Gift phot

 

 

According to Schwartz (1967) “Gifts are one of the ways in which the pictures that others share of us in their minds are transmitted,” If I gift you with a beautifully designed bin bag, do not ask me any questions please. 

 

Merry Christmas Everyone !!!!!

 

http://anzmac.info/conference/2000/CDsite/papers/p/Polonsk2.PDF

 

 

 

 

 

 

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The magic numbers

99cents_is_better_thumbnail(http://cdn.designinstruct.com/files/459-product_pricing_99_is_better/99cents_is_better_thumbnail.png)

 

When I see a price ending by -9 or -95 or -9 I feel quite comfortable buying but when it comes to 10 or 20 I usually think more about buying a product. Ah, the magic of numbers!


I know that there is something about that in my mind but I am not sure exactly what is it. I did some experiments on myself, when I see a comfortable price let’s say 9.95£, I try to imagine it with a price like 10£… and instantly, I feel that the difference in price 5p as much higher! It is only 5 p difference but the effect on me is quite powerful.

The “99 ending effect” referred as underestimation mechanism, (Alpert, 1971) it seems as well that we have the tendency to pay less attention to the price rightmost digits, our brain not willing to make too much effort processing only so much information (Hinrichs, J. V., et al, 1982)
With more recent studies, a more precise understanding has been developed, it has been showed that 99-ending prices works better with low involved shoppers, lower educated with low income or on young people while the magnitude of its effect is affected by the brand positioning and the price level of the product category. If consumers see a product category as non pleasurable they will be more sensitive to the 99 endings but if feelings or hedonic involvement are present they will be much less influenced by the 99-endings (Gaston-Breton, C., 2011 pp. 21-22).

photo posted on post-gazette.com

(http://www.post-gazette.com/images4/20061217NintyNine_dm_230.jpg)

The more we are in a hurry, the more the involvement is utilitarian over hedonic, the more we can fall into the 99-ending trap and it seems that the majority of restaurant manager are aware of that or at least believe in the 99-ending efficiency (Mangelsdorf, M.E., 2011)

If I am happy buying a snack bar for 1.99£ if I want a high end product, it is a different story. If the product has a round price I might perceive some extra value in it, in my head it resonates a bit like if this high end product is so good that it does not require any marketing trick to be sold it must be really good! Another fact is, if I see two product side by side exhibiting one 99-ending price and on the other one a round price, I might see even more positively the 99-ending price and overestimating the economy realized if I buy it.

 

99 ending(http://1.bp.blogspot.com/-RR0ZuCqAGlg/UB28i9gX1KI/AAAAAAAAAng/tzGPlgrTskk/s1600/Fotolia_26890711_XS.jpg)

Alpert, 1971 in Robert M. S. and Thomas M.K. (1996) pp. 188 Increase Consumer Sales Response though Use of 99-ending prices 
and Hinrichs, J. V.,Berie, J. L., & Mosel, M. K in Robert M. S. and Thomas M.K. (1996) pp.188:http://camden-sbc.rutgers.edu/facultystaff/research/schindler/Schindler%20%26%20Kibarian%20%281996%29.pdf

Gaston-Breton, C., (2011) Consumer Preferences for 99-ending prices: The mediating role of price consciousness. pp: 21-22t:http://e-archivo.uc3m.es/bitstream/handle/10016/10707/wb110503.pdf;jsessionid=DC29F330478863148B2816AE4FF6BC03?sequence=1

Mangelsdorf, M.E., 2011 The big difference a penny make. MIT Sloan management review.:http://sloanreview.mit.edu/article/the-big-difference-a-penny-makes/

Do tomorrow what you can do today

procrastination 2

http://cdn.arkarthick.com/wp-content/uploads/2011/11/productivity-tips-procrastination.jpg)

Every time the same thing happens and a recurrent question come to my mind: ” Why do I always end up starting thinking about my assignments one week (if not less) before the deadline???”. No matter how many time, after submitting the assignments at the last minute, I said to my(stressed) self: “That’s it, next semester I will begin them well (well) in advance…”

So, my question today is Why do I procrastinate even if I know it is not good?

According to Ferrai, Johnson and McCown there are 4 main cognitive distortions that lead to academic procrastination:

  1. Overestimate how much time they have left to perform tasks
  2. Overestimate how motivated they will be in the future
  3. Underestimate how long certain activities will take to complete
  4. Mistakenly assume that they need to be in the right frame of mind to work on a project

Well, in my case all of the apply.

We might think that it is because of the task but according to a study by Shu Ayelet Gneezy procrastination is not limited to unpleasant tasks but it concerns positive activities that even have direct benefits. This is showed with gift vouchers, for example, that have a long expiry date consumers will be less likely to redeem them, an imminent deadline will, on the other hand, be more likely to make consumers use their voucher on time.

The study suggests that company needs to think carefully about they promotional offers if they have a long span of time since consumer will like the fact of a longer period of time to benefit from the offer but they will be less likely to respond. What company could do is to send reminders to customers few days before expiring that might work since the shorter time will give them a sense of scarcity and make them more likely to respond.

That just reminder that I have a gift voucher from last Christmas to use before the end of the year!!!

 

procrastination 4

(http://t3.gstatic.com/images?q=tbn:ANd9GcS7WthOnGGFsjCxntFpGGMdHwSLUawExYVm0n16Fgd4p467k8TQ)

 

 

http://www.apa.org/news/press/releases/2010/04/procrastination.aspx

http://www.newyorker.com/arts/critics/books/2010/10/11/101011crbo_books_surowiecki?currentPage=1

http://psychology.about.com/od/the-psychology-of/a/psychology-of-procrastination.htm

Ferrai, Johnson and McCown: http://psychology.about.com/od/the-psychology-of/a/psychology-of-procrastination.htmhttp://www.counselling.cam.ac.uk/selfhelp/leaflets/procrastination

Suzanne B. Shu, Ayelet Gneezy (2010) Procrastination of Enjoyable Experiences. Journal of Marketing Research: October 2010, Vol. 47, No. 5, pp. 933-944:

http://rady.ucsd.edu/faculty/directory/ayelet-gneezy/pub/docs/Procrastination_JMR2010.pdf

Where do your shoes come from?

When I want to buy new shoes I go, in the following order for: made in Italy, made in Spain, made in Portugal/Brazil, when I go for wine is: Italy, French, Spanish and…., even for tomatoes sauce I have my preference I want sauce made from Italian tomatoes! I feel a specific product coming from a specific country is better made or has better taste, and If I think quality is better I am willing to pay more.

Country of Origin bias (COO) for example French perfume, German car associated with safety and high quality. how country made influencing valuation. Our perception of the country and associated with the product and give it more value.

A study on Product and Prejudice (Products and Prejudice: Measuring Country-of-Origin Bias in U.S. Wine Imports, Eileen L. Brooks) on wine showed that wine bottle labelled from Italy and France can raise their price (per bottle) more than 50% compared to wines from other countries (e.g. South American wine).  The price is actually influenced by the COE ( Country of Origin Effect).

Customers view some countries associated with bad or good perception and that has an influence on prices.

What companies can do to take advantage of this COE is either to promote it or to mask. There are many example of products that promote the COO by making it a selling point for their product, stating in big characters the provenance for example on Olive Olive bottles if they are 100% from a country that has a good reputation for it (100% Greek, Italian or Spain).

Olio d oliva
(http://www.cavannaolii.com/_templates/images/prodotti/prod_centello/fotobig_centello_olio_extravergine_100_italiano.jpg)

 

Other if they feel that customers will perceive the COO of their product as negative they will try to mask it. For example while I was in Italy I was looking to buy a Moka (cafetiere) so I was looking at the most well known brand Bialetti. On the package it was written in big characters “Designed in Italy” or “Italian design” and then on the back and in very small characters…”made in China” or “made in Romania”.

Bialetti

(http://i.ebayimg.com/00/s/MTIxNVgxNjAw/$(KGrHqJHJBoE7yMgFi5zBPGg8p8uvg~~60_35.JPG)

 

Sometime, however, it is difficult to establish the COO of one product especially if it is food.

(http://youtu.be/cXolDLA428I)

It seems that many people accord a degree of importance to the COO but we can already see that some Companies abuse the system. Believing you are buying a product made in your country (lower carbon footprint, helping local economy…) and discovering (or not) that in the end the product has just been processed in the country.. If the idea to have local product seems to be good, we might need to put in place a tighter legislation. What do you think?

 

Products and Prejudice: Measuring Country-of-Origin Bias in U.S. Wine Imports, Eileen L. Brooks, University of California, Santa Cruz – Department of Economics, June 2003,UC Santa Cruz Center for International Economics Working Paper No. 03-10. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=421800 accessed on 21/12/2013.

http://onlinelibrary.wiley.com/doi/10.1002/hfm.20126/pdf

http://www.emeraldinsight.com/journals.htm?articleid=855271

http://www.youtube.com/watch?v=kFo6vYLd4bw

http://www.youtube.com/watch?v=JC4o7Gt8SSA

http://en.wikipedia.org/wiki/Country-of-origin_effect

http://www.citeman.com/20090-country-of-origin-effect-on-global-brands.html

 

(http://i1.cpcache.com/product/463716833/warning_cognitive_dissonance_wall_clock.jpg?color=NA&height=460&width=460)

I found an offer on a nice bottle of good white sparkling wine on the shelf of Tesco on a special price offer. On my way to the checkout while finishing my shopping I began to think about getting home, put the bottle in the fridge in order to get it fresh while preparing dinner and having a glass of it with my friend as an “aperitivo” with some nibbles and canapes before dinner. Once at the checkout and the cashier scanned the wine the price that came out was not the one I saw but it was more expensive (apparently somebody did not put it back on the right place) there was a difference of about £ 3…I could have left it, take another cheaper bottle but…No I took it, but why? If the correct price has been on the shelf (or the bottle on the right price tag) I would not have considered buy it…so what’s happened?

Apparently it all come to Festinger’s (1957) cognitive dissonance theory that suggests that we have an inner drive to hold all our attitudes and beliefs in harmony and avoid disharmony (or dissonance). So when our feelings and reality are in conflict you must find a way to lesser the discomfort that it causes us.

In the case of consumer behaviour that means that we will go ahead in order to reduce the dissonance created by the anticipation of the expectations and benefits that makes us feel more committed to the purchase. Where dissonance arrived its higher level, and will invalidate its decision or change its behaviour (Brehm & Cohen, 1962).

A Cialdini, Cacioppo, Bassett, and Miller (1978) study on two group of students is an example of cognitive dissonance low balling technique. One group was asked to come for a psychology study at 7 am, only 24% accepted. The second group was asked the same thing but without telling them the time 56% accepted and only after they have agreed to take part in the study they were told the time (7am) and that if they wanted they could still withdraw, the result was that nobody did. On the day of the actual test 95% of the second group showed up.

(http://istheory.byu.edu/w/images/5/5c/Cdt2.JPG)

Cognitive Dissonance can be use also in the recruiting process for example Zappo’s a US online shoe company. After a 2 weeks training the potential customer service candidates are offered two options either sign a contract with Zappos or take 2000$ and reject the job. That has two advantages first to stop candidates that are not 100% interested in working with them and second to create cognitive dissonance because even if in a moment in time they will regret not having accepted the money they will persuade themselves that they must have been a good reason (they love their job and Zappos…) to so otherwise they wouldn’t have denied the 2000$.

http://www.simplypsychology.org/cognitive-dissonance.html

http://www.simplypsychology.org/cognitive-dissonance.html

http://smallbusiness.chron.com/cognitive-dissonance-marketing-55693.html

http://www.sciencedirect.com/science/article/pii/S187704281101648X 

http://psychology.uchicago.edu/people/faculty/cacioppo/jtcreprints/ccbm78.pdf

http://www.questia.com/library/journal/1G1-283945599/the-relationship-between-cognitive-dissonance-and

Free!!!

FREE

The other day I was tiding the kitchen and I opened a drawer to clean it and I found about 3 packs of Haribo sweets and 5 chocolate bar (Bounty, Snickers, Milky way..)…I thought:” Why on hearth do all those sweets are coming from/Why on hearth are those sweets doing in my drawer?” then I remembered, it was on fresher week! On one day they were giving out sweets for FREE! I queued up at the stand to get them…..even if I don’t like those kind of sweet I will have just one bite of one of them and then leave them. So, what was the matter with me???

Thinking about it I fall to the “charme” of the magic word almost every time I go shopping for food, clothes etc….I cannot resist. Then I found myself submerged with dozen of biscuits, socks etc…

So, what is it hiding behind this word? Apparently Zero/free price is a special price that make us do strange things. It makes us feel good and it has no downside…apparently.

I guess the free price can be a useful tool to catch new customers that maybe otherwise will not taste/try your product, does it work? The psychologist Susan Krauss Whitbourne argue that since something was given to us without asking anything in return we will feel kind of compelled to buy the product in order to reciprocate. A bit like when someone is giving us a Christmas present and if we have not bought one for the person we feel almost in the obligation to him/her one.

One example is the 7 eleven supermarket Slurpee (ice drink) free day, people afterwards were more willing to buy Slurpee somehow feeling obligated to pay the company back.

Slurpee

(http://365thingsaustin.com/wp-content/uploads/free-slurpee-day.jpg)

Ryanair has done several time a free tickets sale which is very tempting however you still have to add extras like airport taxes, credit card fee and of course they hope that once on the plane you will spend money on foods, drink, scratch cards, duty free…and at the end it will probably cost more than flying with another airline.

 

Ryanair
(http://vintage.johnnyjet.com/images/PicForNewsletterIreland2005RyanAirSnapShot.JPG)

 

Some restaurant chains are offering free meals for children, the benefits will be that parents will be more willing to spend on other things like drinks or dessert which will be probably at the more expensive than a child meal.

I found this one quite funny:

The ‘free’ suicide curry

Everybody likes something for free. There are a small number of Indian restaurants that offer what is known as a ‘free’ suicide curry. This is a curry with a sauce so hot that few people can stomach it. The sauce is generously ladled over a gigantic plate of rice. The catch is that the suicide curry is only free if you manage to eat it all within a specified period, otherwise you pay the full price. Most people don’t succeed but the fact that it exists and that it’s free, is a major pull of customers to the restaurant.” (http://www.productfocus.com/pricing_psychology.php)

 

http://business.time.com/2011/02/17/the-power-of-freebies-why-companies-pay-to-give-free-samples-to-supermarket-customers/#ixzz2idyXV3MS

http://business.time.com/2011/07/11/odd-consumer-behavior-files-when-stuff-is-free-were-more-likely-to-buy/

http://people.duke.edu/~dandan/Papers/PI/zerofree.pdf

http://www.thinkaboutpricing.com/left-navigation/pricing-psychology.html

http://www.ipsos-mori.com/DownloadPublication/541_sri-the-impact-of-free-entry-to-museums-2003.pdf

http://pubsonline.informs.org/doi/abs/10.1287/mksc.1060.0254

http://business.time.com/2011/02/17/the-power-of-freebies-why-companies-pay-to-give-free-samples-to-supermarket-customers/#ixzz2idxibm00