Don’t follow discounts blindly; do your research3 min read . Updated: 09 Nov 2015, 12:15 AM IST
Mental health professional and behavioural economist Dr Rajendra Barve says during the festival season, many people get bonuses and are in a better financial position to spend
Tempted as you might be by all the discounts and offers, it’s important to resist cluttering your house and depleting your bank account with unnecessary purchases. Dr Rajendra Barve, a mental health professional and behavioural economist, who runs a clinic named Parivartan in Mumbai, talks about why it is difficult to walk away from discounts and how retailers influence one’s buying decisions.
Many customers wait for festival discounts to make their purchases. Is it rational to wait to get maximum value, or do discounts trigger a shopping spree?
People going on shopping sprees during this time has more to do with the traditional way of celebrating festivals. During festivals such as Diwali, people like to give gifts to one another. So, regardless of the discounts, people tend to make many purchases. Apart from this, many get bonuses and are financially in a good place to buy. Discounts push people to buy more; often, even things they don’t want. But they still buy because it gives them the sense of satisfaction of having saved money. The reality is that they end up spending more because they buy things on discount which they wouldn’t buy otherwise. For instance even though a person may have budgeted for a 32-inch television, she will stretch the budget to upgrade to a 40-inch television to cash in on the discount.
Which aspect of behavioural science do retailers use to attract customers?
Retailers know that during this time, customers are upbeat and in festive spirits. So, when they enter a shop or browse websites, they will most probably end up buying something. Therefore, sellers make a child out of a rational adult. They try to influence the minds of customers through comparison, competition, confusion and corruption, based on the theory described in the book Games People Play (by Dr Eric Berne).
When you enter a shop, the seller will show you products and give you comparisons of how one product is superior to others. So, even if you may not really want an upgraded and, hence, expensive version, you end up buying it because it looks comparatively better. Then there is competition. Sellers subtly exert peer pressure by telling you what people of your stature would buy.
If you buy into the comparisons and competition, you are likely to get confused, and what you will ultimately buy is a product that the seller wants to sell and not what you wanted to buy. Discounts further corrupt your decision by encouraging you to buy a product that you may not need or not have understood fully.
How can people deal with the shopping mania?
Be a hard-nosed shopper, to begin with. Don’t follow discounts blindly; do your research. In fact, research has become much easier with the Internet. Second, decide what you need to buy, decide your budget and stay within that. Understate your budget so that even if you stretch, you still remain within the limits.
The other most significant step is to not commodify relationships. Don’t buy things just for the sake of buying something to express love or gratitude. Instead, involve your family and spouse in your purchase decisions so that you can have a sensible dialogue about what you plan to buy and if it makes sense. Many people go on a spending spree without weighing need versus cash flows. And given the upbeat mood, these purchases make them happy but later, once the festive mood wears off, they realise they could have put their money to better use.
People then start realising that all the extra stuff is cluttering the house. This results in friction between couples or families.
Resist peer pressure. At your work places or among friends, you will find many people flaunting their purchases and that puts pressure on you to buy things for show-and-tell. But you must realise and appreciate the fact that discounts don’t increase your needs; they only help you get a good deal on what you need. So, identify your needs, draw up a budget, involve your family in this exercise, research a bit and then buy only what you need.