Cognitive Processes in Consumer Decision Making About Luxury Products
Have you ever wondered why consumers prefer luxury products? Many luxury products do not offer significantly more features than their standard competitors, yet they command a much higher price in the market. There are a multitude of factors that lead to consumer preference for a luxury brand or product, such as aesthetic appeal or brand status. Researchers in a study titled “Priming Thoughts About Extravagance: Implications for Consumer Decisions About Luxury Products” investigated the underlying cognitive processes that govern our decision-making regarding luxury products.
Economic theory presumes that we are all rational players and a rational consumer will always make a value driven assessment of a product. In other words, the product that offers the most utility at the best price will always be preferential to other products. However, this is not the case with luxury goods. Frequently, luxury goods are placed at a much higher price point and offer essentially the same features, yet consumers will prefer them to a product offering a better value. Think about your preferences, if you have a choice between two products, one a luxury priced item, while the other is an average priced item. Wouldn’t you choose the more expensive option, even without knowing anything about the product? A great example of this is generic versus branded drugs; both are the exact same compound, yet branded drugs consistently outsell generic versions despite a higher price point. So what drives this phenomenon? The researchers of the study posit that if a semantic concept is accessible in memory, it will direct attention to the attributes of the target that amplify this concept. When consumers are primed to appreciate the luxurious aspects of a product, then they will prefer the luxury item. If they are primed to analyze the value of the product, they will prefer the more value driven product. This hypothesis was tested in detail in the study. The researchers primed the concept of extravagance in relation to products consumers frequently make decisions about, such as socks and cars. They explain that extravagance means excessive and unnecessary cost. The researchers posit that priming extravagance is a negative concept surrounding luxury.
In the first experiment, the participants were separated into two groups, one the extravagance priming condition and the other was the no priming condition. The extravagance priming group was given 30 sentences to make sense of, 15 of which described extravagant behaviors, such as “money so trivial much waste on things”. The no priming group was given 30 sentences and 15 described negative behaviors unrelated to extravagance, such as “refused carry to help an elder luggage”. A second experimenter then administered an additional study. The self-focus condition was told that one in three participants would receive their choice between a 15$ pair of socks and five, three dollar pairs. This motivated them to choose selfishly. The other focus condition was told at the end of the first experiment that the next experimenter would have a gift for them. The next experimenter then said he or she needed help deciding on a gift to give to some other students in a different study and presented the participants with the same choice between the socks. The results illustrated that priming extravagance-related concepts in an unrelated situation decreased participants’ willingness to choose the luxury product for personal consumption. However, it increased their willingness to recommend the product to others. When extravagance was not primed, the participants displayed the opposite, they preferred the luxury item for themselves, but were less likely to recommend it to others. The second experiment confirmed the researcher’s assumption that knowledge of the product would allow the participants to make a more informed and value based decision about the product. Secondly, when participants were given information about the product, they paid more attention to it when they were considering it for personal consumption. This confirms that motivation plays a key role in product analysis and recommendations of products are less informed decisions. Therefore, there may be a social component to luxury product preference, when considering others we may wish to recommend the most socially desirable product.
Experiments 3a and 3b examined what participants would do if they were could not use cognitive resources to analyze the utility of the product in question. Participants were separated into two conditions: extravagance priming and no priming. The extravagance priming group was asked to read two articles. The first article was titled “Increasing spend-thrifts among youngsters” and it criticized excessive and wasteful consumption. The second article was unrelated to consumer behavior; it was about wood carving as a hobby. The no priming group received the same wood carving article and replaced the extravagance article with an article about coral reefs. After completing this task, participants were given a product choice task. They were told to make a decision for personal consumption. Half of the participants were placed under a cognitive load. They were told to remember a nine digit number throughout the decision task. The other half received no load. The choice was between either shoes or speakers. The two shoes were one luxury brand costing 285$ or a less expensive brand costing 65$. The speakers were one luxury brand costing 1,500$ or a cheaper alternative costing 669$. The results showed that priming extravagance increased preferences for a luxury item when participants were distracted from making a thoughtful decision. When priming extravagance was paired with a cognitive load (distracting them from making a careful decision) participants’ likelihood of choosing a luxury product increased. Researchers attributed this result to the fact that when participants cannot analyze the utility of a product, they must rely on their affect towards the product. When there was no cognitive load present, participants were able to make a rational decision about the relative value of the product and showed no preference for the luxury item. So when people have the motivation and cognitive resources to effectively analyze a product, they make the rational choice. When they are not motivated or able to cognitively analyze a product, participants were prone to make errors in judgment leading to a preference for a rationally inferior choice. Finally, experiment 4, confirmed the results found in experiments 3a and 3b; both the ability and the motivation to think about a product mediate for priming extravagance.
Extravagance is a negative concept associated with luxury. Extravagance implies wastefulness, which accounts for the results showing that when primed to think about extravagance, participants will reject the luxury option. This confirmed that a more accessible semantic concept will govern a decision making process. The results suggest there may be a strong social influence in buying luxury goods. When we account for what others will think, we know to prefer the luxury product. If the decision eliminates social factors and the person is making an isolated decision about their product preference, then they are able to make the rational choice. The other factor is the cognitive load. When participants were placed under a cognitive load, they were unable to make the rational decision and preferred the luxury product. The results also showed that when the participants were motivated and knowledgeable about the product, they preferred the more valuable product. This rationality evaporated when placed under a cognitive load. So when people do not correctly apply their cognitive resources, they are unable to make the rational decision. This manifests in sales environments, in which people are consistently confronted with decisions that deplete their willpower and cognitive resources. Techniques such as the drop down sales technique require consumers to say no over and over, thus depleting their willpower and making them more likely to eventually say yes. In any retail environment, we are faced with a myriad of decisions. The vast majority of these we must say no to. The fact that we are required to continually process information and make decisions repeatedly leads to decisions that do not reflect the correct values of the products. In short, be wary of environments that deplete willpower and use up cognitive resources. Furthermore, this study illuminates that if consumers are not primed with the idea of extravagance they are likely to prefer the luxury product. When we are primed to reject luxury with a prime of extravagance, we can only do so if our cognitive resources are fully operational. If our cognitive resources are dampened, then priming extravagance will still increase our preference for a luxury product. This study uncovers latent processes that we undergo when we make decisions about a luxury product.
The article analyzed in this post is available here:
http://0-psycnet.apa.org.library.colby.edu/journals/xap/20/1/40.pdf
I really enjoyed this post. I thought that the social aspect was really interesting especially because it isn’t necessarily that we want to appear to have things of luxury but we want to suggest it to. Its almost as if we want others to think that we are that type of person when if we are rational we know what the best choice is. I also found it interesting that under cognitive load we choose the luxury item for ourself. It is almost as though we are using system 1 processing the faster more unconscious one instead of system 2 processing the more rational one. I wonder if stores intentionally try and overwhelm our cognitive system, so we resort to system 1 processing. I also found the semantic priming part very interesting. I didn’t think that when you primed something like extravagance. It makes sense that when you are primed with something like that you are more aware of some of the negative connotations of the word and think more rationally about choosing an item of luxury. In a world that is so brand oriented it would not be such a bad thing for people to begin to look at the quality of the product over the name. I feel like more often than not the less expensive non brand name thing ends up being higher quality. This will definitely give me something to think about the next time I go to purchase something. I will also be more conscientious that I’m not experiencing cognitive load because clearly that has an impact on your judgment and decision.