Why we fall for bargain sales

A full-price shirt at Rs 1,500 does not give us the same excitement as a discounted shirt for the same price; the problem is that our excitement for such bargain-buys fades fast.



The other day, my wife mentioned that she did not have enough shirts to match her jeans. That came as a surprise to me because her closet typically overflows! Then I realised the problem. We typically buy clothes we think we like. But soon, our liking for most of our clothes declines.

So, we end up wearing the same set of clothes. And that gives us a feeling that we do not have enough clothes to wear! So, why do we buy clothes that we do not wear?

The answer lies in our purchase decisions. As humans, we have a natural craving for bargains. This prompts us to some times buy clothes because the price is attractive, not because the product is useful! But there is more.

Hot-and-cold state

Suppose a shirt retails for Rs 3,500. You will most likely buy the shirt if it were available at a bargain sale for Rs 1,500. You may even overlook the fact that the shirt has two broken buttons!

Interestingly, you may be unwilling to buy the shirt if its full price were Rs 1,500, even if the buttons were not broken! Why?

The pre-frontal cortex (your brain's excel sheet!) and nucleus accumbens, the brain's reward centre, light up when you see a bargain. A full-price shirt at Rs 1,500 does not give you the same excitement as a discounted shirt for the same price!

The problem is that our excitement for such bargain-buys fades fast. That is why bargain clothes, which were attractive only because of the prices, end up at the back of our closet after a while!

Then, there is the hold-and-cold state. You visit a bargain sale but promise yourself not to indulge because you already have many clothes you do not wear.

But once inside the store, you yield to temptation and buy a cart-load of clothes. Behavioural economists call this the hot-cold empathy gap. It refers to our inability in the “cold” state to gauge how we would behave in the “hot” state.

Pre-, post-purchase utility

The problem kicks in after you yield to the “hot state” and purchase the clothes. As economists state, often our post-purchase utility is lower than our pre-purchase expected utility.

That is, the satisfaction we derive from consuming a product is often lower than the satisfaction we hoped to get when we bought the product. Naturally then, the clothes you buy end up gathering dust in your closet.

So remember this if nothing else: do not visit bargain sales unless you really need clothes. For, casual visits to such sales may prompt you to fill your closet mostly with clothes that you may never use!

(The author is the founder of Navera Consulting. He can be reached at enhancek@gmail.com.)

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