I am one of those consumers whose majority of purchases are probably difficult to understand for a marketer because they are not always logical. I find that in most instances of my own irrational purchase decisions, they are driven by a lack of time for research or simply a lack of caring whether or not I find the right product that exactly meets my needs.
In his book, Predictably Irrational, Dan Ariely explains why many consumers just like me tend to behave irrationally in many of their purchase decisions.1 In this paper I will highlight three concepts Ariely uses to explains irrational purchase decisions. They are relativity, the decoy effect and zero to free. I show how these theories can be found during a simple trip to Home Depot to purchase a lawn mower. But first, let’s look at each one of these theories.
The first theory of relativity says that consumers are likely to make product and value comparisons based on what is easily comparable.2 Ariely uses the example of bundling products together to give the consumer a relative idea of what a component should be valued at. This can be highly effective on consumers who have no other framework for assessing the value of whatever product they want to buy.
The next theory called the decoy effect says that consumers will be swayed to prefer one option more than another option if a third option is added to the mix that is diametrically different.3 Adding the third product as an anchor price, can all of sudden make one of the first two options seem much better because the consumer now has something to compare each of the other offers to.
Finally, the last theory called zero to free says that when something is given away for free, such as free shipping, we can get so caught up in getting something for free that we forget the negative attributes or drawbacks associated with buying the product in the first place.4
Based on my own reflection however, I would add to his paradigm that we are more likely to purchase something based on irrational logic the less time we spend making a decision. Which in today’s world is an ever shrinking commodity. And thus, that is why I believe we are seeing more and more irrational behavior driving our purchase decisions.Let’s look at where we can find each one of these tactics while shopping for a lawn mower at Home Depot.
If I am a consumer shopping for a lawn mower, it is most likely that a) I bought a new house and need a new mower or b) my lawn blower just blew up and I need something new quickly so I can finish the job. In either case, the consumer seems to be scrambling for time. It is unlikely they sat around reading the latest consumer’s reports on how the newest lawn mowers compare against one another.
So how does the theory of relativity come info play? First consider the wide range of lawn mowers you could buy. Brands purposefully offer anything from a basic push mower, all the way up to a professional grade riding mower. As the theory of relativity states, we like to compare things that are easily comparable. When walking back to the display of lawn mowers at the Home Depot, the first thing we walk through are beautiful riding lawn mowers we wish we could purchase without getting in trouble with our wife. However, as you breeze by those, you might subconsciously take notice of the white, green and orange colors. Then when you get to the price range you are comfortable with, say between $150 and $200, you may have already cemented in your mind that these red, white, green and orange brands are the ones for you, since they make mowers good enough for the lawn professionals.
Finally, once you have settled into comparing the models and brands within your price range, you might start to look at a wider variety of price ranges to see if what you are looking to purchase is a good value or not. And much to your surprise, you might find that brand or model you are considering has a similar model priced significantly higher. The only difference you see are a couple extra inches of blade circumference or perhaps a slightly larger engine. This is certainly not a coincidence though. Any good marketing department has a distributed chart of what customers said they were willing to pay for a lawn mower. And they know that if they produce a batch of what Ariely calls the decoys, you are likely to think that the model which you first were considering is a great value since it looks similar to the more expensive version.
Finally, as you start to wrap things up, you might give the entire product set another lookover to make sure you have the right one. But wait, a competitor’s model, similar in price and feature set comes with a free gas can! Utilizing Ariely’s concept of zero to free, which says that for items that are free, we tend to forget about all of the negative attributes of a product5, we may just have changed our mind. And again because our time is valuable and we have already spent 20 minutes evaluating these options, we are ready to go and we walk out with the mower with the free gas can.
As you can see based story I just described, it is very easy to see why so many rational people behave irrationally in many of their purchase decisions. This experience was not unlike my own experience three years ago when I purchased a lawn mower at Home Depot. It was May and my wife and I had just moved into our house a few weeks prior and it looked like lawn needed some mowing. Without doing much research because I seemingly had a million other things to work on around the house, I simply when in and based on what product “felt” right to me based on all of the subconscious cues, I bought what I bought. It was a simple $150 lawn mower. And to this day, although I am fine with my purchase, I still walk by the riding mowers and think about how nice it be to have one of those. Perhaps next time I buy a new mower, I’ll sucked into buying a high-end mower.
- Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York, NY: HarperCollins, 2008. N. pag. Print.
- Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York, NY: HarperCollins, 2008. 3. Print.
- Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York, NY: HarperCollins, 2008. 5. Print.
- Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York, NY: HarperCollins, 2008. 50. Print.
- Ariely, Dan. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York, NY: HarperCollins, 2008. 54. Print.