Last weekend, I met up with a friend, who works in the Insurance industry. It was an exciting day with a tightly planned sports schedule, which included watching three great but distinct sporting encounters – a Premier League football match between Liverpool and Everton, a one off Twenty20 cricket match between India and Australia and a World Cup rugby final between England and South Africa in three different pubs.
To add to this, we managed to squeeze out time to scoff some Appams and Kadla Curry, a South Indian delicacy in an obscure Indian Restaurant in East London. Nevertheless, among our regular pub banter, he was explaining to me about typical profiles of consumers. His thoughts are based on the newly discovered topic in Economic Psychology – Identity based decision making.
Identity in economic psychology as academic scholars would define is an individual’s sense or self. In other words, it is the individual’s ability and proclivity to influence decision making. As such, people are generally classified into three different categories:
- Aggregator
- Maximiser
- Satisficer
Aggregator is one, who aggregates the price of a product from several different sources before he chooses to buy the product from one of these sources. A maximiser is much similar to an aggregator, but is more deliberative due to his subjective evaluation of the sources. This often leads, maximisers to contact one of the many different sources they inquire with an intention to negotiate a price suitable to their expectations. Satisficers are individuals who have no intentions of optimising the opportunities and would settle for the first available option, if it meets their threshold criteria. Advantages and disadvantages of these traits are qualitatively different for each alternative.
Ruminating on which of these three psycho-economical profiles of decision making I would fit into, I realised that I am a bit of an aggregator, partly skewed towards a maximiser. But, subconsciously like every one else, I have experienced each of these different psycho-economic phases at some point. I recount the experience of buying my mobile phone as characterising the attribute of an aggregator. Every year, when my mobile phone contract is up for renewal, I check with various websites to see what they have on offer and find the best deal based on my threshold expectations and base my decisions on this. Cheeky me!
However, when I was planning my summer vacation in India, I checked with many travel websites to seek out the best price I could get for a return flight from London to Bangalore as I found the prices on Airline websites a bit too expensive in comparison. British Airways was offering considerably cheaper prices than other available airlines and one of the travel websites offered the lowest British Airways fare. But my maximising attitudes lead me to check for the same flight dates and times with British Airways website itself, where I saved £50 on my ticket. But there are certain disadvantages of being a maximiser, first and foremost of which is the time involved in decision making. Secondly, after their purchase if they spot a better deal elsewhere, it is sure to evoke a feeling of regret. However, maximisers have this uncanny ability of finding a way to return the product citing various reasons with an intention to buy the next best offer. Of course there is the inherent problem of too many choices which leads maximisers to be a bit insecure in their purchasing decisions. Unfortunately for me, I didn’t call up British Airways to claim refunds on my ticket for the simple reason of not finding a cheaper alternative. Hehe…
Finally, my experience of identifying my last psycho-economic profile relates to my recent purchase of a Sony Vaio VGN-FZ21E Laptop for Shipra. I had a threshold on price, configuration and brand, walked straight into a Sony Store in Brent Cross, paid for the Laptop and am completely satisfied with my purchase (Well…until now). But if you search for the same model on Sony on the Internet, it is possible to buy the product for at least £60 cheaper (Damn it…why didn’t I switch profiles?). This is the portrait of a satisficer. The merit of these decisions is of course based on individual perceptions. However, identity based consumer profiling has spawned the growth of a variety of online services, from gadgets and groceries to financial products to cater to the aggregating and maximising community. For example, there are many price comparison sites such as Price Grabber, My Super Market, Travel Supermarket, Money Supermarket etc and many forums such as Money Expert, Money Saving Expert and Hot UK Deals (Am not at embarrassed to say I use some of these sites infrequently). Businesses have started taking notice of this kind of consumer profiling and am sure will have ramifications across many industries.
Reflecting on this, it would be interesting to seek out the profile of a typical flower buyer from our company, Arena Flowers. Not that we are unaware of who our customers are and their demographic profiles. It’s just a matter of thought on how the florist industry is different from an industry such as Insurance. Fresh flowers are unfinished and perishable products which needs the skills of an expert florist to make the arrangements attractive. Although you may find blooms of similar names with many florists, no bouquet is similar to each other, with prices and with the arrangement. As such, none of these price aggregating sites can offer comparison of flower arrangements. Fortunately for us, the aggregating and satisficing communities will have little impact on the florist industry, unless customers choose just flowers over the quality of flowers. However, it is the maximising community, which will benefit. For example, when an online florist runs a promotional campaign, it is sure to get picked up by forums which the maximisers are known to frequently visit. We have had a few instances already and it affects us negatively. Unfortunately, I cannot discuss this in much detail as I do not want to be sued by my company for letting our competitors read about what we do. But these issues do raise quite a few thoughts…
But as an individual, am happy to find cheaper deals to buy stuff!!!
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