As more customers continue to shop online, new research from Professor Elizabeth M.S. Friedman indicates that retailers should take care when offering consumers alternative purchases options.
For example, say you consider purchasing a new shirt that costs $25. While on that landing page for the shirt, you notice below there’s a section with other recommended products, including a pair of headphones.
“If your objective is to sell the item that the consumer is looking at, don’t give them very different products to consider,” Friedman says. “Wait for them to add their originally intended item to the cart and move on, then you could try selling them something different.”
Friedman and co-authors Jennifer Savary of the University of Arizona and Ravi Dhar of Yale University detailed their findings in “Apples, Oranges, and Erasers: The Effect of Considering Similar versus Dissimilar Alternatives on Purchase Decisions,” published in 2018 in Journal of Consumer Research.
“If you’re thinking about making a purchase and then think about either a similar or dissimilar way to spend your money,” Friedman explains, “it has a big influence on whether you choose to buy that original item.”
As the study reveals, what matters is how an alternative item affects the shopper’s original goal.
Friedman says the researchers use “goal” in a broad sense, meaning a “desired end state,” not necessarily the achievement of a concrete target.
“When you’re thinking about potentially buying a shirt, a goal has been activated,” Friedman says. “The goal could be buying something new to wear, or it might be improving your wardrobe and looking nice at work.”
What happens next is that everything that serves the goal gets evaluated more positively. So, if you consider buying a different style of shirt, you’re still motivated to focus on achieving that goal.
That changes when you see some headphones you might like.
The study indicates that retailers and marketers should avoid offering dissimilar products to a potential buyer to ensure they are capitalizing on that window of time when a customer’s “goal” is active.
Friedman says her findings could also offer customers guidance when they are navigating the modern retail environment, where offers arrive every day in emails and on social media sites.
“You might want to get in the habit of actively coming up with a range of very different ways you could spend your money before deciding to buy something,” Friedman says. “It’s a good way to save and reduce impulse purchases.”
The paper also hints at future research that moves beyond monetary transactions to examine how consumers spend time, though Friedman says it’s a “tricky” area.
“It is different, most notably in that time gets spent no matter what you do,” Friedman says. “You can decide not to buy the shirt or the headphones and just save money. You can’t bank time in the same way.”
About the researcher
Elizabeth Friedman is a faculty member at Columbia’s Graduate School of Business. She researches consumer decision making. Her research explores why consumers...Read more.