The [brand] connected consumer – Tiffany White 


Tiffany White tells a cautionary tale about the modern, connected consumer.

Tiffany Barnett White is Associate Professor of Business Administration and Bruce and Anne Strohm Faculty Fellow at the University of Illinois, College of Business. She joined the faculty at Illinois in 1999 and received a Ph.D. in marketing from Duke University in 2000. Professor White is a consumer psychologist with research interests in the area of consumer-brand relationships. Her research addresses affective, cognitive, and behavioral aspects of these relationships, including self-brand attachments and the development and deterioration of consumer trust. Her research has been published in top journals in marketing and consumer psychology. She is married and the mother of two children.

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10 Reasons Why People Spend Too Much

Make better financial decisions with behavioral economics.

Source: 10 Reasons Why People Spend Too Much

Shahram Heshmat Ph.D.

Many Americans live beyond their means. The recent CFPB survey found that about one-third of people ages 30 to 49 had more credit card debt than savings (CFPB, 2017). What drives us to spend too much? Behavioral economics provides some insights as to why we go over budget and how to curb the impulse.

1. Opportunity cost neglect

In a world of scarcity, choosing one thing means giving up something else. When we spend money on one thing, it’s money that we cannot spend on something else, now or later. So there is an opportunity cost to everything we do. And that cost is expressed in terms of the next-best alternative. For example, the true benefit of buying a new car can be assessed in terms of other equally significant items we could have done with the money.

2. The curse of mental accounting

Mental accounting involves dividing your money into separate mental accounts, such as accounts for food, clothes, rent, school supplies, indulgence, and the like (Thaler & Sunstein, 2008). Spending is constrained by the amount in different accounts. That is, we only consider the opportunity costs within a specific account without looking at the bigger picture. For example, I gave my daughter money for her birthday. She was behind on her student loan. She should have definitely spent the money on that. But she was reluctant to do so. She perceived the birthday gift as “free” money. The alternative to having mental accounts is to consciously compare all your purchases.

3. Special occasion

We tend to overspend on “special occasions” (birthdays or Christmas), because we don’t keep track of just how many of them we have. Consequently, we end up spending over our normal budget (Sussman, & Alter, 2012). Failure to incorporate an exceptional purchase into our budget as one in a series of special purchases can encourage overspending. You can budget for infrequent expenses by creating special savings accounts earmarked specifically, say, for birthdays.

4. Present bias

Present bias occurs when individuals place extra weight on more immediate rewards than those in the future. For example, my future self may want to buy a home, but my present self wants to splurge on a tropical vacation. The more we disregard our longer-term interests in favor of immediate gratification, the more likely that we will have the overspending problem.

5. Hard cash versus credit

Present bias explains why people have an easier time spending money on credit cards as opposed to spending real money. Paying with cash is more painful than paying with credit cards (Ariely and Kreisler, 2017). The main psychological force of credit cards is that they separate the pleasure of buying from the pain of paying. So if you want to get your spending under control, stop using credit cards.

6. The “what the hell” effect

The so-called “what-the-hell” effect suggests that falling off the wagon causes a feeling of failure, which leads to more indulgence (Herman, and Polivy 2010). This is a case when minor lapses snowball into self-control collapse (“If I’ve already blown it, I might as well go all the way”). For example, an amount, say, $100 for dinner in the context of a $3,000 monthly credit card bill seems smaller, less significant, and less painful than it does on its own. This is a common bias, especially where the credit card is involved.

7. Low on willpower

Willpower refers to effortful control that is exerted with the purpose of controlling our impulsive behavior. Willpower can be viewed as a resource. When resources are depleted, people tend to act on impulse and are more likely to be swayed by desires, urges, and cravings, although they may regret them in the long run. This insight suggests that shoppers who are distracted with music or displays will likely increase impulse purchases. In contrast, being deliberate allows one to see the overall context and be less concerned with sensation.

8. Retail therapy

People admit engaging in “retail therapy” (Cryder et al., 2008). The negative feeling causes a behavioral shift toward immediate improvements in mood. And when we are feeling down, we tend to splurge. Shopping allows people to visualize themselves in a “better” life, where they’re dressed in nice clothes or surrounded by nice things. Buying makes these visualizations a reality.

9. Shopping addiction

Shopping addiction is characterized as an impulse-control disorder (Black, 2007). About 6 percent of the population could be considered compulsive buyers. This disorder exists along a continuum. There are excessive shoppers, and there are compulsive shoppers. They buy things they do not need and often cannot afford, and place their work, their families, and their mental health in jeopardy. Some of those people who end up in bankruptcy are binge buyers, suffering from a disease similar to alcoholism. The most effective first step for treatment is to identify why and how your shopping initially became a problem. Experts suggest starting a journal to keep track of your triggers.

10. Self-justification

People are concerned with justifying their choices to themselves and to others. Making sense is a deep human motivation, but making sense is not the same as being correct (Wilson, 2011). For example, the person who has bought a luxury item, but feels guilty about it may try to alleviate his guilt by coming up with additional reasons that justify his choice, such as “it was on sale, I had to buy it.”


Ariely D. and Kreisler J. (2017). Dollars and Sense. NY: HarperCollins Publisher

Black D. W. (2007). A review of compulsive buying disorder. World Psychiatry 6 14–18.

Consumer Financial Protection Bureau (CFPB), Financial well-being in America September 2017,

Cryder CE, Lerner JS, Gross JJ, Dahl RE. Misery is not miserly: sad and self-focused individuals spend more. Psychol Sci. 2008 Jun;19(6):525-30.

Herman, Peter C. and Janet Polivy (2010), “The Self Regulation of Eating: Theoretical Practical Problems,” in Handbook of Self-Regulation: Research, Theory, and Applications, 2d ed., Roy F. Baumeister and Kathleen D. Vohs, eds. New York: Guilford, 522–36.

Sussman, A. B., & Alter, A. L. (2012). The exception is the rule: Underestimating and overspending on exceptional expenses. The Journal of Consumer Research, 39, 800–814.

Thaler, Richard H. and Cass R. Sunstein (2008). Nudge: Improving Decisions About Health, Wealth, and Happiness .Yale University Press.

Wilson, TD (2011) Redirect: The Surprising New Science of Psychological Change. Little, Brown and Company.


Shahram Heshmat, Ph.D., is an associate professor emeritus of health economics of addiction at the University of Illinois at Springfield.

In Print:
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Why Image Is Everything – Media Psychology

Recent research reveals that image and emotion beat fact and logic Source: Why Image Is Everything Douglas Van Praet If you think you purchase the goods and services you do based upon rational thinking, think again. Have you ever wondered why ads feature beautiful models, adorable puppies, cute babies and hilarious gags? Recent research reveals, […]

via Why Image Is Everything — consumer psychology research

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What Consumers Should Know About Good-Better-Best Pricing

Marketers sell different priced products to customers hoping for heftier profits

Source: What Consumers Should Know About Good-Better-Best Pricing

Utpal Dholakia Ph.D.

These days, good-better-best pricing is everywhere. When purchasing an airplane ticket, for example, passengers can buy the default coach ticket (good), pay for some extra leg-room by upgrading to “premium economy” (better) or pay through the nose and buy a business class seat (best). With all three tickets, the basic service is the same―aerial transportation from point A to point B. But the amenities (or the degree of discomfort suffered, for the cynical among us) vary.

Along similar lines, in bars, alcoholic drinks are priced low as rail drinkswhen the customer does not ask for any branded alcohol (good), higher as call drinks when a specific brand is requested (better), or highest as top shelf drinks for premium liquor brands (best). An Acura TLX vehicle comes in three versions: the base model has a 2.4 liter engine and an 8-speed automatic transmission (starting at $31,695; good); the mid-version has a 3.5 V-6 liter engine, and a 9-speed automatic transmission (starting at $35,320; better), while the high-end version is 3.5 V-6, 9-speed automatic with all-wheel drive (starting at $41,576; best).  As these examples illustrate, when using a good-better-best pricing approach (also known in the trade as “tiered pricing”), the marketer sells several different versions of the same product to consumers at different price points and corresponding quality levels.

1955 & 1956 Chevrolet ads by Insomnia Cured Here Flickr Licensed Under CC BY 2.0
Source: 1955 & 1956 Chevrolet ads by Insomnia Cured Here Flickr Licensed Under CC BY 2.0


For decades, marketers have packaged and offered different products to different customer segments. See the Chevrolet ads from the mid-1950s. No one would mistake the hoity-toity target customers of the 1955 Bel Air convertible with the blue-collar family that would find the 1956 Handyman station wagon to be appealing.

But this way of designing and pricing products based on customer segment differences is changing. With the good-better-best pricing approach, marketers now systematically offer different product versions to pretty much the same customers based on how much they want to shell out on a given purchase occasion. For instance, someone flying for work may buy a business class airline ticket because her company is paying for it; but on another occasion, she may fly in coach when shelling out of her own pocket.


So what do shoppers need to know about good-better-best pricing?

1) Marketers want consumers to trade up from the good option to the better option or from better to the best option.

By offering different choices, at the first blush, it may appear that marketers have shifted the decision of which version to buy each time over to the customer. But the truth is that through subtle and overt signals, marketers encourage customers to purchase the more expensive option than the one they had in mind to begin with.

Take the case of pork chops. A grocery store uses good-better-best pricing, promoting a deal on thin-cut chops (the good version) in the meat case at a mouthwatering price. But the meat case display strategically exhibits thicker-cut (better) and pasture raised organic chops (best) right next to the cheap chops. In such a line-up, the thin-cut chops won’t hold their own for most shoppers. The goal of such overt comparison is to lure buyers towards the more expensive choices. Kent Harrison, marketing VP of Tyson Fresh Meats described the logic in this way:

“Retailers must make sure to stock their case with a variety of choices, to give consumers the option of moving up to the next tier of quality, which will also be an opportunity for the retailer to gain higher total dollar sales.”

2) Many consumers oblige the marketer and trade up to the more expensive better or best options without careful thinking.

Once shoppers have made up their minds to purchase something, they are relatively easy to persuade about which specific item to buy. They routinely change their minds at the point of purchase. Often times, the situation itself may make the trading up decision an easy one. For example, if someone else is paying for your airline ticket, upgrading to premium economy or business class makes sense on a long-haul flight. Or you may be at a bar and having a really good time with friends. In the midst of this fun, ordering a top-shelf drink instead of a cheaper rail drink feels like a natural decision (after all, it’s only a few dollars more!). Or you may justify the expensive choice to yourself in other ways―“After all, I don’t buy a new car every day, so I might as well opt for the version with the bigger engine and the all-wheel drive.”

Pricing expert Rafi Mohammed provided an interesting example of Southwest Airlines introducing a “Business Select” fare in which customers paid $10 to $30 more, receiving amenities such as priority boarding, faster passage through security lines, and a coupon for an alcoholic drink. In evaluating the introduction of this better option, Mohammed noted:

“In its first year, I estimate this best version increased Southwest’s revenue by $100 million and operating profit by 10%.”

Why do marketers push consumers away from the good option and towards the better and best options so hard? The answer is straightforward.

3) As consumers’ choice shifts from good to better, and from better to best, marketers earn heftier profit margins.

In most cases, the good option is the company’s bread and butter. For airlines, it’s the coach seats on their planes in which close to 90% of their passengers fly. For vehicles, it’s the customers who buy the base version of the car or truck. And for hotels, it’s the travelers who book the standard room on the property. The good options are core products sold to core buyers that allow companies to cover their costs and stay in business year after year. Not surprisingly, companies are conservative about how much they are willing to charge for their good options. They cannot afford to lose this core business, so they will usually restrict prices on the good option. But things are different for the other options.

Somewhere over America by Thomas Hawk Flickr Licensed Under CC BY 2.0
Source: Somewhere over America by Thomas Hawk Flickr Licensed Under CC BY 2.0

When offering better and best options, such conservatism in pricing does not apply. By its very definition, customers interested in these more expensive choices are not as price sensitive. They are more conscious about factors like appearance, status, style, and performance. So companies can and do mark up these options to a much greater degree. Take the case of airline seats. On a flight from New York to London, an economy ticket may cost around $900, the premium economy ticket may cost $1,800 to $1,900 while a business class ticket may cost $4,000-5,000. Clearly, the incremental costs of offering the marginally greater leg-room, better meals, and free alcoholic beverages are not proportionally greater. So the airlines make much higher profits from these upgraded seats.

So what should consumers do?

Rather than evaluating actual prices of good, better, and best choices, consumers should focus on both price and quality differences between the choices. In some cases, the differences may justify an upgrade from the good to the better option, or from the better to the best. Paying a few hundred dollars more for being able to sit more comfortably and stretch out on a long trans-Atlantic flight may be well worth it for some fliers (especially when someone else is paying for the ticket). But in other cases, the higher price for the upgraded choice may not be justified. When mixed with Coke and smothered in ice cubes, a cheap rail rum that costs $2 per shot may be equally tasty and produce the same mellowness as a 50-year old Appleton Estate reserve rum costing $300/shot. The key is to pay attention and think through the value each option provides in relative terms, which few shoppers tend to do. Many times, the good option may be good enough.


Utpal M. Dholakia, Ph.D., is the George R. Brown Professor of Marketing at Rice University.

I teach marketing and pricing to MBA students at Rice University. You can find more information about me on my website or follow me on LinkedIn, Facebook, or Twitter @ud.

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Do We Form Similarly Close Relationship With Brands As With Our Loved One?

Are brands addictive?

Image result for brands

Source: Do We Form Similarly Close Relationship With Brands As With Our Loved One?

Martin Reimann

For human relationships it is known that after an initial electrifying honeymoon period, excitement for the loved partner often goes down and is maintained at a lower level. At the same time, however, we include our partner in our “self,” which—for the fortunate among us—leads to a strong, long-lasting bond (despite levels of decreased excitement). Check out Art Aron’s exciting work on this topic.

A question that remains is whether we form relationships with brands in a similar way? This is a relevant question because we are surrounded by brands every day, we wear them, we eat them, and we work with them.

A recent research project on how we form close relationship with brands, which I completed with three dear colleagues, found that over the brand relationship span, consumers get less and lesser aroused by their brands, but—at the same time—inclusion of the brand into the self increases over time.

A brain imaging study revealed a strong tie between deeply loved brands and activation of the ‘insula,’ a brain area previously found to be a crucial mechanism in diverse but related psychological phenomena such as urging, addiction, loss aversion, and interpersonal love.

While it certainly is too early to clearly answer this question, I speculate that intensely loved brand relationships are addictive to a certain extent. Our finding of insula activation for close brands gives rise to this speculation. Earlier studies have implicated the insula in addiction to alcohol and nicotine, raising the question of whether close brands share a similar mechanism. Here, future investigations could further differentiate a simple urge for loved brands (for example, being committed to a specific brand) from more intense addiction to loved brands (for example, being devoted to a specific brand).


Reimann, Martin, Raquel Castaño, Judith L. Zaichkowsky, and Antoine Bechara (2012), “How we relate to brands: Psychological and neurophysiological insights into close consumer-brand relationships,” Journal of Consumer Psychology, forthcoming.

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Why Image Is Everything

Recent research reveals that image and emotion beat fact and logic

Source: Why Image Is Everything

Douglas Van Praet

If you think you purchase the goods and services you do based upon rational thinking, think again. Have you ever wondered why ads feature beautiful models, adorable puppies, cute babies and hilarious gags? Recent research reveals, we make brand purchase decisions based on the associations and feelings as opposed to the facts and stats. This conditioning can happen without your knowing. And it is a tendency so strong that it can make you purchase products that are actually inferior to the competition.

To demonstrate this effect Melanie Dempsey of Ryerson University and Andrew A. Mitchell of the University of Toronto conducted a remarkable experiment that randomly presented several hypothetical brands with hundreds of images and words on a computer screen that were either negative or positive. After seeing a long series of the images and brands, participants were not able to recall which associations were connected to which brands – but they developed a preference for the brands that had been positively emotionally conditioned. The researchers called it the “I like it, but I don’t know why” effect.

“On any given day a consumer is repeatedly exposed to brands that are paired with various images in one form or another — from logos on the sides of buildings to televised commercials,” write Dempsey and Mitchell, the authors of the research study. “Although the consumer may not be able to recall brand claims or even the brand name itself, the consumer might have been left with a positive feeling, one which he or she may not even be consciously aware.”

In subsequent research these participants were shown rational information to contradict the prior conditioning — logical evidence that indicated that their brand preferences were, in fact, inferior. But they still choose the brands that they had been conditioned to like by pairing the brand with positive imagery. Even those participants that were highly motivated were unable to undo the prior conditioning.

The authors of the study concluded, “Choice decisions of consumers are not only determined by evaluations of rational information (product attributes) but are also driven by forces that are generally outside of rational control.”

Every day our decisions are being molded by our media environments. There is an increasing number of on-screen images, words and pictures that sometimes even follow you around the Internet. Some of these associations you may not remember but they are busy influencing your purchases, especially in the face of more and more information online that is sometimes conflicting. The tendency to make knee jerk shortcuts based on feeling is tempting and easy, but it also can be deceptive and costly. Becoming more aware of the “I like it, but I don’t know why effect” in everything we encounter in our daily lives, is the first step to making better purchase decisions.

To learn more about the many ways you are being swayed without your knowing, check out my book Unconscious Branding or my other articles, and follow me on Twitter.

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A psychologist explains why materialism is making you unhappy

You can have stuff upon stuff, but it still won’t fix everything.

Source: A psychologist explains why materialism is making you unhappy


Materialists lead unhappier lives — and are worse to the people around them. And it seems that social media might be fueling materialistic attitudes, too. This is all according to a fascinating interview the American Psychological Association posted in 2014 with Knox College psychologist Tim Kasser, whose research focuses on materialism and well-being.

Here are the best bits.

Materialists are sad, terrible people:

We know from research that materialism tends to be associated with treating others in more competitive, manipulative and selfish ways, as well as with being less empathetic …

Materialism is associated with lower levels of well-being, less pro-social interpersonal behavior, more ecologically destructive behavior, and worse academic outcomes. It also is associated with more spending problems and debt …

We found that the more highly people endorsed materialistic values, the more they experienced unpleasant emotions, depression and anxiety, the more they reported physical health problems, such as stomachaches and headaches, and the less they experienced pleasant emotions and felt satisfied with their lives.

People become more materialistic when they feel insecure:

Research shows two sets of factors that lead people to have materialistic values. First, people are more materialistic when they are exposed to messages that suggest such pursuits are important … Second, and somewhat less obvious — people are more materialistic when they feel insecure or threatened, whether because of rejection, economic fears or thoughts of their own death.

Materialism is linked to media exposure and national-advertising expenditures:

The research shows that the more that people watch television, the more materialistic their values are … A study I recently published with psychologist Jean Twenge … found that the extent to which a given year’s class of high school seniors cared about materialistic pursuits was predictable on the basis of how much of the U.S. economy came from advertising and marketing expenditures — the more that advertising dominated the economy, the more materialistic youth were.

Materialism is linked to social media use, too:

One study of American and Arab youth found that materialism is higher as social media use increases … That makes sense, since most social media messages also contain advertising, which is how the social media companies make a profit.

Many psychologists think that materialists are unhappy because these people neglect their real psychological needs:

Materialistic values are associated with living one’s life in ways that do a relatively poor job of satisfying psychological needs to feel free, competent and connected to other people. When people do not have their needs well-satisfied, they report lower levels of well-being and happiness, as well as more distress.

Check out the whole interview at the APA’s website.


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