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The Irrational Consumer: Four Secrets to Engaging Shoppers

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Economists and marketers have long assumed that potential customers rationally weigh the costs and benefits of every possible choice before deciding what to buy. Under this assumption, marketers use tidy frameworks to help identify ways to influence consumer decisions.

As it turns out, this assumption is wrong. While shopping, we don't think as much as we think we think.

Recent discoveries in behavioral economics and psychology demonstrate that consumers seldom behave rationally, meaning that neat frameworks are not, in fact, useful for predicting consumer behavior. A revised understanding of consumer mental processes indicates how marketers need to rethink purchase decisions; to create effective in-store and online strategies, marketers must make the connection between mindset and behavior. Research from the Yale School of Management has provided new insights and guidelines to help managers improve their marketing strategies. Specifically, marketers should:

Use Environmental Cues to Shift Mindsets

Nuances in the shopping environment have a big effect on the consumer's goals and mindset. Consumer psychologists have long known that our goals influence how we make decisions, and it's estimated that up to 40% of consumers change their minds at the point of purchase because of something they see, learn or do.

But recent studies by the Yale School of Management show that environmental stimuli can have a more powerful impact on shifting shopping goals than previously understood. One firm that understands this is the upscale department store Nordstrom, which works hard to provide cues to shoppers whose goal is luxury. Nordstrom's fashionable settings, attentive service, classical music and other factors are all aimed at putting consumers into a goal-oriented mindset as they shop. Environmental stimuli like these help shift consumer mindsets that carry over into their purchase decisions.

Shift the Shopping Momentum

A browser and a buyer may seem to be looking at the same object, but they are two very different creatures. A browser's mindset is what psychologists call "deliberative," weighing costs versus benefits (price versus quality, for example). A buyer, on the other hand, is much more "implementation-oriented" -- having made the decision to purchase, her shopping "momentum" has kicked in. The trick for marketers, then, is to shift the customer's mindset from browser to buyer. But how?

The key is to increase shopping momentum by creating compelling front-of-store displays that offer "no-brainer" items for purchase. For example, "at the front of the store, put items like newspapers and umbrellas in the rainy season, which don't require a lot of deliberation," says Uzma Khan of Stanford, a coauthor on a study about shopping momentum and a graduate of the Yale School of Management. "Those kinds of things can get customers on a shopping roll." Putting reasonably priced, complementary products nearby also increases shopping momentum.

Increasing momentum is critical: once consumers have decided to buy a first item, research shows that customers buy more items overall. (Incidentally, the research also shows that the best way to stop shopper momentum is to make browsers walk through a divided layout.)

Offer Complementary Products

When we shop, we often buy multiple items in the same general category. For example, we might buy products that can be substituted for each other (such as different flavors of one brand of yogurt) or make purchases that complement each other (such as different oral care products like toothpaste, mouthwash and dental floss). Marketers can engage potential customers by understanding what kind of mindset is at work while shoppers are considering both brands and complementary products.

Someone who is considering buying a brand of yogurt, for example, is in what researchers call a "concrete" mindset. She is focused on lower-level goals and product features, and she thinks about the differences among items that can be substituted for each other. She is also less likely to make multiple purchases in that category. But a shopper who is in what researchers call an "abstract" mindset is thinking in broader terms; she wants to satisfy higher-level goals, such as having clean teeth and healthy gums. So when a consumer in an abstract mindset sees complementary products like toothpaste, mouthwash and dental floss, she is likely to purchase more in that category. Thus, cues that activate higher-level goals (such as oral care) should be placed in aisles with complementary products.

Pay Attention to Psychological Distance

We know that the consumer journey begins long before the point of purchase. From the first moment consumers are exposed to a brand, they are likely to be influenced. But what kind of influence works best? New research shows that how "far" a consumer is from a purchase determines which kind of message will resonate most.

Distance makes the central message stronger. That is, if a purchase is distant in time or physical space, it's also "psychologically distant." For example, when sitting at home and flipping through a magazine or watching TV, a consumer is psychologically distant from a purchase. In this setting, the central claim of a toothpaste ad that talks about "clean teeth" and "fresh breath" will resonate more. On the other hand, when consumers are temporally or physically closer to a purchase (and thus more "psychologically close"), they are more influenced by peripheral marketing claims such as "easy-to-use flip top" and "comes in purse and air-travel sizes."

The message to marketers is clear: For maximum effect, let your television and print ads carry central claims, and highlight peripheral benefits in your online search ads and in-store displays.

We tend to think of consumers as rational beings with stable preferences. But recent research shows that it just isn't so. Small changes in things like environment or messaging can change consumers' goals and mindsets (and ultimately their purchasing behavior) in ways that are both predictable and profound. As marketers learn to embrace this new, multi-dimensional model of consumer behavior, they can continue to discover new and more effective ways of influencing the decision making process.

Note: As adapted by Bronwyn Fryer