Jane received an awesome deal during her iPhone 13 purchase on Black Friday at the local Target store. For activating the cellphone plan with AT&T unlimited, she received a $150 Target gift card. She received a 150-dollar discount on her new purchase. She was thrilled.
A month later, she went to Target for groceries. She had a $150 gift card; she’d hoped to use. By the time she checked out, her total bill was $300 of which she paid half out of her pocket. She didn’t realize; besides groceries, she’d picked a dress and some cosmetics on the way.
This is a story of an average American. We often buy into things we’d never thought of buying before our trip to the store. Whether we realize it or not, most of us impulse buy while shopping.
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What is impulse buying?
Impulse buying is the act of buying a product or service that you never intended to buy. The decision to buy during an impulse purchase is rather emotional than the recognized use of the service or product in advance. The act is both spontaneous and persistent urge to buy with no planned purpose.
Jane’s story is one of the impulse buy examples. It happens to everyone.
Do you remember the last time you went for groceries and came home with lots of chips and candies?
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Have you been to the store to buy one pair of shoes and brought home two because the another was half off?
Do you remember your trip to Sephora to buy a night cream turns into beauty product shopping?
These are all examples of impulse purchases. Everyone has been a victim of an impulse purchase at least once in their life.
Difference between unplanned buying vs impulse buying
Unplanned buying is purchasing a product while it was not on your shopping list. You needed the product but had no plans to buy the item yet. You add the item anyway in your cart while shopping. Unplanned purchase is driven by smart marketing techniques.
On contrary, impulse shopping happens when you neither realized that you’ll use the product nor had any intention to buy it during shopping. The decision is more like a spur of the moment. The instantaneous need for the product leads to impulse buying.
Consumer impulse buying behavior
Slick deals performed a survey of 2,000 online American shoppers and published data. It shows people are impulse buying more in the year 2021 than in 2020.
Based on the research, Americans are impulse buying highest on Food and Groceries. Household items, toilet papers, and cleaning products were among the product that Americans were panic buying as evident during COVID-19 Pandemic.
The following table shows the summary of consumer spending habits based on the research.
US consumer’s impulse purchase behavior by year
Psychological factors that influence consumer buying behavior
You might have been impulse shopping and chances are you don’t even realize it. These are human psychological reactions, often impulsive, to the environment or advertisements.
If you’ve ever wondered “why do I impulse buy”, I’ve listed five psychological factors that influence consumer buying behavior.
1. Human emotion
Fear of missing out, the excitement of getting a cheap price, and feeling accomplished for striking a deal are some of the human emotions that lead to impulse purchases. Some of the impulse buys are purely for pleasure and escape from a bad day. You just want to buy it because it’s been a long day.
Lack of self-control is the next big factor that determines one’s buying decision. You saw a product and wanted to buy it simply because you want it. You didn’t care about its impact on your budget.
2. Sense of getting a deal
Buy one get one free, buy one and get another half price, clearance sale, everything must go, promotions, discounts are some of the tactics used by businesses to lure customers for impulse buys and upsells. These deals are too good to be passed on because they make sense.
Or do they?
Most of these offers are only promoting bulk buy. The product prices are adjusted accordingly for profits. Therefore, customers end up buying more items than they needed.
3. Try to Impress or impersonate
Everybody likes to impress people be it their friends or family members. Oftentimes, we buy into products and services to impress rather than for their value.
Impersonating someone who you admire is another reason for impulse buys. We buy similar items that our role models (idols) have just to feel closure. Most of the impulse purchases are word of a mouth. These occur through Influencers or role models.
I don’t think I’ve to say much about what happened to Bitcoin and Dodge coin every time Elon Musk sends a tweet.
4. Instant gratification
After all, you’ve worked so hard for the whole week, you need something to feel good about. Unfortunately, for most people, the sense of instant gratification comes from material things that they never intend to buy. They consider it a reward for their hard work.
The reward could be a nice massage, fine dine or shopping. If you’re on a shopping spree, you never buy just the items you needed. You bring home all the other things.
Impulse buying marketing to push sales
Businesses use human temptation to push sales. The happens in every industry.
Impulse buying is, in a way, good for businesses. It drives their sales. It helps move their slow inventory. Therefore, they use this consumer behavior to their advantage.
Retailers analyze customer behavior and encourage upsell through methodical strategies. Following are 3 strategies businesses use to encourage consumer’s impulse buying behavior:
1. Cheap but desirable items at checkout stations
We have seen this in every store. Candies, chocolates, gums, chips, sodas, and other cheap desirable items are placed near checkout stations. The purpose is to stimulate customers’ desire for these products and trigger impulse purchases.
Customers usually have to wait at the checkout station. Sometimes checkout pathways or alleys are created that displays everyday-use items to lure customers. Everyone who goes to checkout will eye on these items and some will pick extra one of two items.
Smart product placement is one of the good marketing techniques to push sales.
2. Offer samples, discounts, and free returns
Samples, discounts, and free returns are used by every business nowadays. This is a must-have marketing strategy for retailers to increase sales.
If you go to some retailers these days like JC Penny, Macy’s, you’ll have no idea what’s the actual price of any product in the store. The stores usually have big signs that real x% discounts and a list showing retail price vs discounted prices per discount percent. I find it annoying, but the strategy seems to work.
3. Use shopping associates to educate & recommend customers
If you’ve been to Victoria’s Secret, Ultra Beauty, or Micro Center then you know what I’m talking about here. They’ve associates on the floor to help customers educate and sometimes upsell products.
It works in favor of the customer most of the time, but a recommendation from these expert associates can potentially influence customers for an impulse purchase.
Why impulse buying is bad
The consequence of impulse buying is spending money that you could have used for something else. An impulse purchase is associated with spending money on the things you’ve intended to buy. The following are the two main reasons why impulse buying is bad and everyone show stay away from it.
1. Waste of time & money
You’ve so hard to earn money. It is also connected to your hours spent to earn that dollar. Spending it on things you’ve never intended to buy is a complete waste. It might present you instant gratification but in long run, you’d regret buying the item.
Luckily, most of the retail items, except consumed goods are returnable within 30 days. Impulse buyer has the option to return it if not used. Running back to the store to return it if not used will waste your time but it will very least help get your money back.
Returns are only good if you do not end up making another impulse purchase on your trip to return merchandise.
Most of the consumable impulse purchases are unhealthy foods. Overindulgence in these unhealthy foods can result in serious health issues.
The financial health implication of overspending on impulse buys is obvious while we also need to understand it can affect our relationship with our spouse and family members.
How to stop impulse buying
Now you know impulse buying is bad, you should learn ways to stop impulse buying. You must stop spending money on impulse buys if you want to become a wise consumer. The following are the 5 effective ways to get rid of impulsive consumption. These steps will help you control and eventually stop impulse buying.
1. Assign the task to your every dollar
You’ll hear this advice in almost every personal finance blog. The reason is – it works. It might seem cumbersome at the start but once you get the idea, it is a lot easier than you think. Assigning a task to every dollar requires setting up multiple bank accounts (I suggest internet banks) and sending money to these accounts automatically every month.
Related post: Learn to manage your money wisely
Assigning a task to your every dollar will help you be intentional about money. You’d know exactly how much you can spend on your impulses. Your emergency account, investment portfolio, and checking account are also funded every month.
2. Analysis of your every purchase
Analyzing every purchase to determine if it is necessary will help eliminate impulse purchases. We make impulse purchases because we forget to think carefully about our spending. Stopping and thinking about the purchase for a minute or two will prevent you from making a wrong decision about your money.
Also, dig into your past purchases and analyze where you’ve been overspending. It does not require an advanced spreadsheet to analyze your past spending habit. Just log in to your credit cards and look for the purchases that do and do not make sense. It will provide insights and help curb future impulse spending.
3. Create and stick to a shopping list before heading to store
I, personally, follow this every day while shopping. I, together with my wife, have a shared note where we list every item we need to purchase. Both can review and recommend the intended purchase. When we shop, we stick to the items on our shopping list.
Sticking to a shopping list will prevent impulse purchases. If you wish to buy anything additional during shopping, you simply add that item to the shopping list for a future shopping trip. Since you didn’t immediately buy the product, you have time to review and eliminate any potential impulse buys before the second shopping trip.
4. Use your brain instead of “TikTok” advice
Due to the rise of social media, people often rely on them for information. While some of the information is good, most are recirculated advice. The only intention is to grab the viewer’s attention. They’ll either encourage you to click on their affiliate link to make a purchase or will advise you to sign up.
TikTok is the king of one-minute-long viral videos. Being less than a minute long, it ought to be catchy to grab the user’s attention. The impulse buys suggest in these videos are baby dresses, home improvement products, women’s dresses, and appealing makeup kits.
Use your brain instead of social media content before impulse buys. Try to avoid impulse buying advice. Whenever you see any amazon related recommendations, they are certainly affiliate links.
5. Practice buying everything at full price
Almost everything is available at a fraction of the cost to American consumers. They do not need to pay full price for vehicles, appliances, cellphones, mattresses, beds, and other furniture. Also, most of these come with extended warranty or service plans. It’s easier to convince buyers with $30-$50 monthly installments than $1,000 full price.
Practice buying everything at full price. If you can’t pay full price, you probably can’t afford the product. Zero interest rates and low monthly pays are not worth it if you can’t afford it. They are tempting; however, you must buy everything at full price.
We spend a lot of money on impulse purchase that hurts our wallet and ultimately our financial goals. We all should avoid spending money on impulse buys. Impulse buys are high during the holiday season.
Make a shopping list and work with a budget for every purchase to refrain from impulse buying. Learn how to become a wise consumer and follow through. Impulse purchases are encouraged with the use of credit cards therefore, practice paying with cash.
Do you have a problem with impulse buys or know effective ways to get rid of impulsive coming? Are you resistant to impulse purchases? What’s your secret? Let us know in the comments below.