While some of
those things are pretty obvious to recognize – such as not picking up items
while you’re in the checkout lane, knowing they’re probably cheaper somewhere
else in the store – other factors aren’t as intuitive. You might not realize
it, but even the payment method you choose to use can have some bearing on the
decisions you make.
In a series of
recent studies by Professor Promothesh Chatterjee of the University of Kansas
and Professor Randall Rose of the University of South Carolina, the connection
between payment method and how we look at products was examined.What the researchers discovered was that customers who were primed for credit were more likely to focus on benefits, whereas customers that were primed for cash were more likely to focus on costs.
Among the specifics that the researchers discovered:
·
Consumers
who were primed for credit were much more likely to remember benefit-related
words than they were to remember cost-related words.
·
Cash
primed customers, on the other hand, had better recall of cost-related words
than they did of benefit-related words.
·
Cash
customers were more able to identify all aspects of cost, including things
beyond simply the purchase price of an item. They looked at things like
delivery or installation costs, installation time, and even warranty costs.
·
Credit
customers were more likely to be drawn to high-image products, and those
products with greater benefits.
·
For
credit customers, the “pain of purchase” is low. The purchase process is
separated by a month or more from the payment process. This isn’t something
that was newly discovered in this research; rather, the results in these
studies seemed to confirm the idea.
·
Consumers
who were primed for credit responded more quickly to benefits than they did to
costs.
·
Consumers
who were primed for cash responded more quickly to costs than they did to
benefits.
·
Researchers
were able to prime consumers simply by putting credit-related ideas into their
minds. In retail applications, this could include things such as placing credit
card stickers on the doors, having offers for credit inside the store, etc.
This research
has a number of implications for us as consumers. It reminds us that, while we
might try to always make good purchase decisions that fit within our budget,
credit can be alluring.
It’s easier to
make an irresponsible and frivolous purchase with a credit card than it is with
cash. When you pay with cash, you immediately get to watch your cash deplete.
When you pay with credit, you don’t feel that pain, and are likely to make
decisions that don’t factor in cost as much as they do benefits.
If you want to
make a cost-conscious buying decision, you need to pay with cash and train
yourself to ignore all of the credit priming that businesses do when you walk through
their doors.
David
Rodwell is a seasoned writer in business and personal
finance who takes a particular interest in payment processing technology. You
can find more of his articles located at CreditCardProcessing.net.