The New York Times reports on a study in The Journal of Commercial Research which concludes that consumers will spend more if they think about how much money they have right before shopping. Specifically, supermarket shoppers surveyed who thought about their wealth before buying spent 36% more than those who did not.
This study suggests that people spend based on how much they think they have -- what I would call their "cognitive wealth reserves." In one experiment, 55 shoppers at a supermarket in Cambridge, MA were asked a series of nosy questions about their wallets: Did they have any library cards? Did they carry pictures or cash? How many other wallets did they own?
An equal number were asked similar questions about their financial portfolios instead.
Both groups then went shopping. The second group of shoppers, who had been asked to think about their bank accounts and thus had a large reserve of money "cognitively accessible" to them spent $9.09 -- 36% more than the group who had thought about their wallets -- who spent an average of $6.68. So what?
These findings have implications for marketers and shoppers. If you're trying to save money, think about all the bills you have to pay before you go to the store and you'll spend less. If you want someone to buy you an expensive gift, remind them of the big bonus they just got before they enter the store.
And if you're a marketer, target wealthy consumers in your ads and show them closing a big business deal so they'll have big "cognitive wealth reserves" when they go into the store to buy your products.
Do these findings apply to you? How could you profit from them?
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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