Monday, June 18, 2007

Creatures of Habit

It's hard to teach an old consumer new tricks, and a new Canadian study explains why.

People like to buy the same products at the same familiar stores simply because it's easier, the paper shows, despite the best efforts of marketers to sell them on better options. From economists to Bill Gates, everyone predicted the Internet would lead to consumers buying wherever they found the best products and prices, says Kyle Murray, an assistant marketing professor at the University of Western Ontario's Richard Ivey School of Business. Instead, they continue to flock to the same Web sites, stores and products they always have. His paper, in the June issue of the Journal of Consumer Research, determined why.

"People learn to use something like an Amazon, and they become more comfortable with it, they become better at using it, they're more efficient with it," Murray says. "They develop some shopping habits that mean they don't shop around, even though it would [take] maybe 15 seconds to find a lower price somewhere else." He and co-author Gerald Haubl at the University of Alberta conducted experiments that approximated online shopping, but the findings apply to stores, electronics or any product people become skilled with over time, Murray says.

Customers often shop on auto-pilot, getting familiar products from familiar stores or Web sites, though a bit more effort and exploration could mean more savings.

One experiment revealed that even if two retailers or products are the same in every way, when consumers are given the chance to use one repeatedly, the familiar option becomes vastly more attractive.

A second experiment demonstrated that consumers are not being duped into thinking their usual choice is better -- it's simply easier for them to get what they want quickly when they've had practice (a phenomenon familiar to anyone who beelines straight for the right aisle to find a specific product in their grocery store).

"The vast majority of what we do day-to-day is habitual or automatic, and it's only the occasional decision that we put a lot of thought into the way marketers think we think about all products," Murray says.

This is known as "cognitive lock-in" and it amounts to a very strong form of product loyalty, he says. "Lock-in" is normally an economic term that refers to the financial cost of switching from one product to another -- the penalty fees cellphone companies charge for breaking a contract are one example -- Murray says. But his study showed there is a "thinking penalty" that may keep people using the same MP3 player, online bookstore or grocery store simply because of the learning curve involved in switching to a new one.

For Loblaw Companies Ltd., the popular President's Choice brand is both a signature that sets them apart from other chains and a constant in their 1,100 Canadian stores, which include No Frills, Real Canadian Superstore, Dominion and Independent.

"It's that balance of making sure that people come back and those things they look for every week are there, and at the same time offering them a few surprises," says Elizabeth Margles, vice-president of communications.

Murray conducted a third experiment that offers some hope for businesses hoping to woo customers away from the competition. Habitual consumer behaviour is "goal-specific," the study showed, meaning people cling to their old standbys for familiar tasks but are more willing to try something else if there's a new task at hand. A customer habitually visiting the same grocery store to buy orange juice and eggs, for instance, might try the one down the street if they're suddenly in search of a birthday cake, Murray says.

Products that undergo redesign and retailers that overhaul their Web sites or stores risk "break[ing] the habits" of their usual customers, he says, because what they used to do on auto-pilot is now unfamiliar -- and that makes switching to the competition an easier proposition.
Gap Inc. is currently engaged in that balancing act, with radical redesigns transforming their stores into sleeker, more intimate spaces. Renovations are underway in Toronto, Edmonton, Ottawa, Winnipeg, Victoria and Red Deer, with the rest of the chain's 157 Canadian locations to follow.

Tara Wickwire, senior manager public relations, says the aim is "innovating and changing to the point where it's new and interesting for customers, yet there's a strain of familiarity."

Ultimately, consumers are creatures of habit. How can you use this to get people back to your store and prevent them from going to your competitor?

Source: Shannon Proudfoot, CanWest News Service

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