January 4, 2012

Q&A, Kathleen Vohs, marketing professor

Posted by: in North America

In her research into consumer behavior, Kathleen Vohs has studied impulse spending and issues around self-regulation, and how this affects consumer behavior. We asked the associate professor of marketing at the University of Minnesota’s Carlson School of Management to talk about her research and how it relates to consumers’ need to spend after four years of recessionary living. Vohs says that while people have come to terms with a new economic reality, this hasn’t curbed their desire to “Live a Little,” one of our 10 Trends for 2012.

What differences are you seeing in consumer behavior between 2008 and now?

In 2008 the frustration was acute. The economy was a major problem. And now the psychology is different. There’s a lot of sighing, it still hurts. But it’s almost like consumers have learned to live with the pain.

So consumers have accepted the economic situation?

They may be accepting it, but it doesn’t really make it any better. In 2008 people thought the depressed economy was a temporary state; in 2011 there’s more of a steady state, but there doesn’t seem to be a lot of optimism. People are thinking, “We’ve been doing this for several years, it’s not going to get any better, and I guess this is the new normal.”

Are consumers saying, “To heck with this—I’ve got some money, and I need to spend it on something”?

In the last couple of years, consumers really had it together. They’ve done a really good job of saving. But at some point that level starts to feel normal, and it doesn’t surprise me that people start to relax a little bit.

So why is it so hard for people not to spend when they know they should save?

Typically what that means is that someone feels there is some standard that’s not being met—like, “Other people are spending, and I’m going to spend. And I want to have better shoes again.” But I think it means that other people are coming out of the recession, other people are buying shoes.

What are people spending on?

There is a big distinction in marketing between public and private consumption; for example, cars are a public purchase, while appliances are private. We’ve been in cocoons for a while, waiting for the economy to get better. When people are just coming out from their cocoons, after dealing with all the restrictions from the past three, four, five years, they will make public purchases. When they get really comfortable with their finances and their prediction of the future, they’ll make more private purchases, like a mattress or a Jacuzzi tub for their bathroom.

What is the impulse—why would people make any purchases right now?

There is a lot of data that shows it feels good to spend. The research we’ve done in our lab reveals that when people want to spend money but they don’t want to feel bad about it, they spend it on other people. It’s a nice way to release some of that tension without feeling guilt. It wouldn’t surprise me, if we did some further analysis, to learn that people were spending on others as an excuse to spend.

Have you seen a difference in how brands are marketing to stressed-out consumers?

What works best for consumers right now is anything that conveys the “You deserve a break today” message. Consumers feel overworked, overtaxed, they aren’t getting any raises, they’re paying more for a lot of things. The message is that “You’re entitled to this because you earned it.”

The danger is, if people start feeling as if they deserve a break all the time, we’d be in a world of hurt. And we have already been there.

Is the act of spending a way for people to feel they have some control over their lives?

In some lab studies we did, we saw how people view money as a source of control. If they feel they have control in other ways, they are less likely to view money that way. But once they feel they don’t have control in other parts of their life, they start grasping.

1 Response to "Q&A, Kathleen Vohs, marketing professor"

1 | James Forrester

January 11th, 2012 at 3:33 pm

Avatar

I see a trend in Fundraising in schools. Do you think people want better quality and lower prices or lower prices and sub standard quality doesn’t matter. We need more marketing research on fundraising in schools.

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