Tightwads and spendthrifts

Marketers are a restless lot. They’re never happy with the amount of buying that consumers do. To them, consumers never buy what marketers want them to. And, even if consumers do buy the marketer’s brand, consumers never seem to buy enough of it. On the contrary, consumers switch their brand preferences the moment a new brand enters their (mental) shopping space.

What’s worse, competitors, like sharks, are always lurking around the corner, ready to take a bite out of the market and the marketer’s business. Often, new brands enter the market with distinctly better benefits, plus heavy marketing spends, creating havoc with the dynamics of the marketplace – and, once again, with the marketer’s business.

To most marketers, the problem lies with consumers. Consumers never seem to respond well enough, quickly enough or repeatedly enough, to the marketer’s messages – created by great advertising minds – or the pricing and the placement that great strategists recommend. Even if consumers do respond to these messages, they never seem to keep their promise of buying more and more of the marketer’s brand, in tandem with the marketer’s brand investments.

Often, marketers feel consumers are a disloyal lot.

But, really, how should consumers behave? Is there a formula or a pattern that consumers should follow to please marketers for all the effort that marketers put in to create brands – and build demand for them? Why should consumers even provide information about their brand preferences and buying behaviour to marketers? And, even if they do, why should consumers stick to their preferences and buying behaviour when the moment to decide on a purchase actually arrives?

In reality, consumers behave in any way they wish. And, good marketers know this well. Predicting consumer behaviour is really what marketing is all about and marketers simply will not rest until they find some magic formula to make this happen. That’s why I was not surprised to read an article from The Wharton School last week about a research – and a hypothesis under test – on the consumer’s acceptance of pain when paying for a purchase.

It’s an interesting angle to the consumer behaviour discussion… and I’m sure neuromarketing will have something to say about it sometime soon. For the moment, the research – conducted by Scott I Rick from Wharton, and Cynthia E Cryder and George Loewenstein, both from Carnegie Mellon – proposes to test a measure of individual differences in the pain of paying on a ‘Spendthrift-Tightwad’ scale.

The Wharton article, titled Are You a Tightwad or a Spendthrift? And What Does This Mean for Retailers?, says, “while ‘tightwad’ and ‘spendthrift’ are not exactly labels that most people would welcome in a discussion of their spending habits, they are valuable as predictors of consumer behavior.” The researchers seem to believe that “an anticipatory pain of paying drives tightwads to spend less than they would ideally like to spend. Spendthrifts, by contrast, experience too little pain of paying and typically spend more than they would ideally like to spend.”

“According to the researchers,” explains the Wharton article, “tightwads are defined as people ‘who feel intense pain at the prospect of spending money, and therefore tend to spend less than they would ideally like to spend’. Spendthrifts ‘feel insufficient amounts of pain at the prospect of spending and therefore tend to spend more than they would ideally like to spend’.”

Apparently, the “Spending differences between tightwads and spendthrifts are greatest in situations that amplify the pain of paying and smallest in situations that diminish the pain of paying.”

I wonder what the marketers have to say about this. And, would the consumers agree?

The Wharton article Are You a Tightwad or a Spendthrift? And What Does This Mean for Retailers? can be found here.