The second was a Cafe study of cash vs. credit, which was completed in a lab setting, the respondent base included 147 undergraduates between the ages of 20 to 46 years of age with a median monthly income of $1,000 or less. The objective of this lab study was to determine the elasticity of demand for desserts when the respondents were given $10 in cash and told they could spent it on any item of their preference. The third study, also a Cafe-based lab experiment, was based on a recruited base of 229 undergraduates in the 19- to 28-year-old age group with a monthly income of $1,000 or less.(Bagchi, Block, 2011). All three studies had data captured using observation and also self-reporting by respondents. Researchers also observed trade-offs the respondents made in selecting one dessert over another.
The results showed that when the respondents had more cash, they opted for the higher-calorie and more extravagant desserts. When they were using debit cards (even in simulations without their own funds) they chose the healthier, lower-cost fruit bowls (Bagchi, Block, 2011). When the respondents were given additional cash in a cafe setting they also opted for the more decadent desserts, proving the hypothesis of the researchers that when respondents have cash they often will opt for the more luxurious, decadent desserts regardless of calories. Calories become secondary to seeing the dessert as a reward (Bagchi, Block, 2011).
There are several significant shortcomings of this research. First, the respondents are undergraduates in two of the three studies and often don't have discretionary funds to purchase more decadent desserts. Clearly when they have an extra ten dollars they are going to spent it on an item they typically cannot afford. Second, sampling bias is rampant in this study and respondent bias is as well, as it is clearly the case the researchers want to test the elasticity of demand and preference for desserts. The respondents may be attempting to please the researcher by choosing the dessert. Third, the debit card purchases of healthy products also signal the respondents believe they must choose healthy items as the perception of purchases being tracked with this form of payment exists.
The aggregated lessons learned from these four studies suggest that consumers don't behave as logically or predictably as many studies suggest. It is contrary to popular belief that consumers won't automatically choose aspirational brands for example, or that consumers with debit cards purchase healthier desserts over the more decadent ones. There is also the fact that multigenerational marketing fails to take into account the nuances of psychographic variables and their implications on lifestyle segmentation. What emerges from this analysis is just how much isn't known about consumer behavior and the significant gaps that exist in this field.
Based on this analysis, the following recommendations are made with regard to how marketers can use consumer behavior to their advantage:
1. Consider how psychographics can be used to bring a greater depth of dimensionality to data on multigenerational marketing (Williams, Page, Petrosky, Hernandez, 2010). Create more effective frameworks that ensure a high degree of integration between the purely demographic and the psychographic over the long-term.
2. Define aspirational brands based on more than use prestige, look at value as well (Eastman, Eastman, 2011). Despite the high level of income in this specific respondent base of the study, there is a lack, even a rejecting of aspirational brand value. This is surprising a clear message to marketers to concentrate on value over just relying on their brand name awareness (Eastman, Eastman, 2011).
3. Home appliance purchases and the consumer behavior regarding selecting a retailer is more focused on trust, less on pricing, even in regions of the world known for their price inelasticity (Janaki, Premila, 2012). Concentrating on building trust as an appliance retailer matters far more than just selling on price.
4. Consumers will reward themselves with greater luxuries when they pay in cash and the reward component is attacked to the item (Bagchi, Block, 2011). In contrast to aspirational brands, reward-based banding is far more effective even when calories are being counted on decadent desserts.
Bagchi, R., & Block, L.G. (2011). Chocolate cake please! why do consumers indulge more when it feels more expensive? Journal of Public Policy & Marketing, 30(2), 294.
Eastman, J.K., & Eastman, K.L. (2011). Perceptions of status consumption and the economy. Journal…