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The Power Of Touch
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Mar 2, 2009 by Mark MaierI recently sat down with some local car dealers who are really feeling the effects to the recession. It's not just the credit markets (less than 60% of those that want to buy can get financed), new manufacturer requirements (forcing them to take inventory moving their inventory on lot to over 400 days supply while increasing flooring costs), or leakage out of the 40,000 person market I live in ($48 million dollars "leaked" in 2008), they are fighting a battle of perception. That perception is that they charge more for vehicles on their lot than dealers in larger markets, the truth is that if you compare "apples to apples", they won't let themselves be beat on price for new vehicles, they admit that used vehicles are a bit tougher to compete on but they want the chance.
Fighting that perception has gotten in the way of prospects "touching" the merchandise and advancing the buying cycle. Science Daily recently posted "You Can Look--But Don't Touch" with the conclusion that you don't want consumers to touch is all wrong, especially in the Automobile business....
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Researchers from Ohio State University and Illinois State University tested how touching an item before buying affects how much they are willing to pay for an item. A simple experiment with an inexpensive coffee mug revealed that in many cases, simply touching the coffee mug for a few seconds created an attachment that led people to pay more for the item.
The results, which were published recently in the journal Judgment and Decision Making, found that people become personally attached to the mug within the first 30 seconds of contact.
People who held the coffee mug longer than a few seconds seemed not only more compelled to outbid others in an auction setting, but they were also more willing to bid more than the retail price for that item.
?The amazing part of this study is that people can become almost immediately attached to something as insignificant as a mug,? said lead author of the study James Wolf, who started the work while he was a doctoral student at Ohio State.
?By simply touching the mug and feeling it in their hands, many people begin to feel like the mug is, in fact, their mug. Once they begin to feel it is theirs, they are willing to go to greater lengths to keep it.?
Previous research had documented that many people begin to feel ownership of an item long before they actually acquire it. But this is the first study to demonstrate that strong feelings of ownership can begin in as little as 30 seconds after initial contact, said Wolf, who is now an assistant professor of information systems at Illinois State University.
To explain how touch can affect a person?s valuation of an object, the researchers tested 144 people at a large university. People were asked to bid on mugs in either an open or closed auction after inspecting a coffee mug firsthand for various lengths of time.
Participants were given the mug at the beginning of both experiments. People in the short-duration treatments were asked to inspect a coffee mug for 10 seconds, while those in the longer treatments were asked to inspect it for 30 seconds.
After inspection, they were asked to bid on the mug. Those in closed auctions were asked to write down their maximum bid on a piece of paper for a mug worth $3.95 at the nearby university bookstore. They then flipped the paper over so no one could see their bid during the auction.
Those in the open auctions, on the other hand, were allowed to see other bids. Participants in open auctions placed their bids for a mug worth $4.95 through a computer-based auction similar to eBay, where they could see the current high bid and time remaining in the auction.
The open auctions had ?soft? ending times, meaning the length of the auction was extended every time a bid was placed in the last 15 seconds of the auction. Soft ending times were used to reduce the effects of last-second bidding.
All participants were told the retail value of the coffee mug before the auction began. They were also informed that several identical mugs were available for purchase at the campus bookstore adjacent to the testing location.
All participants received $10 for participating in the experiment; they were told that the winning bidders would have their bid amount taken out of their payment if they agreed.
The results showed that people who held the item for 30 seconds bid significantly higher than people who touched the mug for 10 seconds. The average bid in the open auctions was $2.44 for people who touched the mug for 10 seconds and $3.91 for those in the 30 second experiments. This finding was also consistent for those in silent auctions, with people in the 10 and 30 second experiments bidding $2.24 and $3.07, respectively.
The higher bids were particularly significant given the fact that the researchers used seemingly insignificant, inexpensive mugs, said co-author Hal Arkes.
?We took the most minimal type of attachment; not a new car or a suit, but a mug. And we found significant differences in consumer valuations that begin in a matter of seconds,? said Arkes, who is a professor emeritus of psychology at Ohio State.
Those differences continued when the researchers looked at how often the winning bid exceeded the retail price of the mug.
All participants were told the price of the mug before bidding started. But people who held their mug for 30 seconds bid more than the retail price four out of seven times. Although the mugs were valued at $4.49, bids went as high as $10 on two different occasions for those in longer duration experiments.
In contrast, the winning bid for people in the 10 second group exceeded the retail price only once.
Co-author Waleed Muhanna, who is an associate professor of management information systems at Ohio State, said the tendency for participants who held the mugs longer to bid over the retail price may come down to the strength of their attachment.
?The strength of this attachment seems to increase with greater physical contact. And one explanation is loss aversion; that is, the longer people have an object, the stronger their attachment and their eagerness to keep it. People become attached and they are willing to pay much more to avoid losing that object,? Muhanna said.
While this research may help researchers understand the buying behaviors of consumers, many retailers have been using the try-then-buy tactic for years, Wolf said. Car dealers often tell people to drive cars home and pet stores encourage shoppers to play with puppies because they know the attachment makes consumers more willing to buy their products."
The lesson here is to urge your clients to let their customers "try before they buy". I was recently at the Shot Show in Orlando, Florida with a client and the people who really understood consumer behavior and selling put the merchandise in my hands and I remember those goods well after the trip was over. This goes back to the old "Expo" experience that many of us have been involved in, put your audience in direct contact with merchandise and displays to urge the buying cycle forward. With technology you can now do a virtual expo online but the research isn't in yet on what kind of effect that has compared to touching the merchandise.
