Home / Companies / News /  A case of the IKEA effect: when labour meets love

The country’s first IKEA store opened its doors in Hyderabad in August. It wasn’t what you’d call a peaceful, orderly event. There’s a video clip that shows a huge crowd corralled behind metal barriers, surging forward when the doors open, shouting, pushing and shoving. Some people take advantage of the chaos to elbow ahead of others. A woman is seen turning around to scold a man behind her. A few uniformed IKEA employees try their best to control the mob, but they are ineffective at best; one is actually pushed backward by the pressing crowd before he manages to move forward.

Luckily, I believe, nobody was hurt. But that clip is unsettling nevertheless. There are others like it too. Check stores in the US that open for post-Thanksgiving shopping. Or check stores that stock some particularly desirable toy or knick-knack—in their time, iPhones and Cabbage Patch Dolls and Windows 3.1 have all prompted similar unruly mobs.

You might wonder, why would people behave like this just to get into a store? And I’m particularly puzzled by why an IKEA store stimulated such passion. Most of what IKEA sells, after all, is furniture. Meaning, desks and cabinets and beds and so on. Sure, they have built up a reputation for elegance. Sure, it is a famous international brand. Is that really enough for so many people to line up and shove their way into the Hyderabad store on opening day?

It may be a silly question. Brands do attract people, I know. But remember that IKEA also has made a name for itself because its furniture needs you, the customer, to put it together. In other words, you typically don’t buy a bed at IKEA. You buy a kit that, using some basic tools, you assemble into a bed. By asking you to assemble it, IKEA eliminates its labour costs. So it is able to offer you the bed at a lower price—or at least, it is able to persuade you theirs is a lower price—than beds their competition produce.

So, were Hyderabadis flocking to the store for this lower price, too?

Perhaps. But I’m going to suggest that, just maybe, there was one more factor at work in this case, one more thing that potential IKEA Hyderabad customers had at the back of their minds as they joined that crowd. Call it the IKEA effect, and it has to do with assembling something rather than buying it fully made. It has to do with what that process of assembling it does to the way you look at the thing.

An example or two might help explain what I mean.

Some years ago, someone visiting from France brought us a gift: the Eiffel Tower in kit form. There were several hundred tiny gleaming pieces and a page of diagrammed instructions, so cryptic that I thought I’d never understand them. But one day I sat down to assemble the Tower. It took some time to comprehend the instructions, and fitting the pieces together was hard. Still, after a while, I started getting the hang of it. A few hours of work later, I had a gorgeous miniature replica of the famous Tower. I was delighted, proud of myself.

Two days later, someone inadvertently knocked it over and it shattered. I was crushed. Around the same time, a nicely crafted metal model of the Tower, which we also had, started to rust badly—but that didn’t bother me at all. The model I had assembled and that was now destroyed meant far more to me.

I didn’t know it then, but you could have called mine an instance of the IKEA effect, in which you value an object that you create much higher than it is otherwise worth, purely because you created it. In 2011, three business school professors published a paper (The IKEA effect: When labor leads to love, Michael I. Norton, Daniel Mochon and Dan Ariely, Journal of Consumer Psychology, July 2012), which described this effect.

They wrote: “In four studies in which consumers assembled IKEA boxes, folded origami, and built sets of Legos, we demonstrate and investigate…the IKEA effect—the increase in valuation of self-made products. Participants saw their amateurish creations as similar in value to experts’ creations, and expected others to share their opinions."

Of course, this idea of value that comes of your own—“amateurish" as your creations might be—is not something that we learned about only in 2012.

For example, Norton et al write about instant cake mixes. When manufacturers came up with the idea in the 1950s, they did not exactly set the markets on fire. The general impression among customers seemed to be that these mixes made the task of baking a cake far too easy, and they didn’t like the cakes they produced. In fact, were these even cakes? But then, somebody hit upon a brilliant idea: Include, in the instructions, the use of an egg to be supplied by the customer. Simply making customers break an egg into the mix was enough to convince them they were now actually baking a cake. Voila: Instant cake mixes became a hit.

Take another example: The phenomenon of “responsible" tourism, often called “voluntourism". Certainly, you can take one more vacation where you stay in a comfortable resort and occasionally dip your toes in a pool. But maybe you want something a little more memorable, in which perhaps you do something while on vacation that you think actually makes a difference of some kind? Thus voluntourism, where you volunteer in some capacity on your trip: Looking after endangered animals, helping in scientific research, preserving and restoring age-old artwork. First dreamed up in the 1990s, there are now plenty of operators who specialize in such travel. One offers you the choice to volunteer with monkeys in South Africa or bears in Romania, or to help in rebuilding homes on the island of Dominica after a hurricane (“come as soon as you can"), or to coach kids at sports in India. Another agency summed it up thus for HuffPost: “When travellers return (home), they have a deeper cultural sensitivity to the challenges and the systemic issues" in the places they visited. Voila: A vacation to remember always. Maybe even one for which travellers are willing to pay a premium.

The IKEA effect, every time. Your sweat, your time, your passion—you put those into a project, it’s no surprise you fall in love with it.

How did Norton, Ariely and Mochon measure the effect? In one experiment, they asked their experimental subjects to take an IKEA kit and assemble it to produce an item of furniture. Once done, they put a price on it, as well as on the same item of IKEA furniture that came pre-assembled. They found that their subjects were willing to pay, on an average, 63% more for what they had produced than for the pre-assembled equivalents. Even if they had made mistakes in the assembly, they still placed a higher value on their creations. That 63%, by itself, can explain why IKEA sells furniture in kit form. In fact, it might explain that decision better than the possibly lower cost of the product because of savings on labour. In fact, it suggests this totally counter-intuitive notion: Passing on the responsibility of labour to the customer actually increases what the customer is willing to pay. In that sense, it has got to be an excellent sales strategy.

Clearly, though, there are limits to how much labour you can pass on. You have to be pretty sure your customer can actually finish assembling your product, or you’re likely to have an unhappy customer. I can’t think of too many people who would be pleased to buy a car in kit form, for example. Assembling a car is too complex a task for most of us—which is why we don’t commonly see such kits for sale.

Which raises the question: What are those limits? Leave aside a car; are some furniture kits in IKEA’s line-up complex enough to defeat the average customer? What happens then? Would she buy a simpler kit just so she can feel that satisfaction again? Or would she get mad at IKEA?

Mochon addressed that once in an interview with National Public Radio: “If consumers ever found out that IKEA was making them feel dumb just to sell more tables, I’m not sure what the backlash would be against IKEA."

Maybe the IKEA effect only goes so far. Still, something animated those swelling crowds at the Hyderabad store on opening day. What was it? The quiet satisfaction that assembling a new IKEA kit promises to deliver? Or the quiet satisfaction of shoving others out of the way?

Once a computer scientist, Dilip D’Souza now lives in Mumbai and writes for his dinners. His Twitter handle is @DeathEndsFun

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