Okay, here's a question for you: You're at a fine restaurant. It's getting late, and after a terrific appetizer and main plate, you're feeling kind of filled. There's maybe a half glass worth of wine left in the bottle and your companion obligingly informs you that it's your's for the taking. So now the big decision - to dessert or not to dessert. Oh yeah, I almost forgot the question. Does it matter whether they simply list the name of the dessert on the menu, show a picture of the dessert, or bring the dessert cart around? I mean, if you want dessert, and you trust the restaurant, you're going to throw caution to the wind, order the dessert, and be on your merry way. Should it really matter how you are informed about the dessert selection? This scenario kind of reminds me of when I was living in Philadelphia, PA many years ago and had to cope with buying alcohol in the State Stores. Other than a few bottles on display, your choice of wine, beer, or spirits came down to that long list of barely readable options in a flyer placed on the counter separating the goods from the clientele. Out of sight, out of mind. In essence, these situations allude to a more general question, which is 'Does the form in which an item is presented to consumers matter, and if so, does it have an impact on the amount of money people are willing to pay for it? The relevance of these questions has never been more apparent, as companies that have relied so heavily on brick & mortar retail selling continue to shift their strategies to the digital marketplace. As Barnes & Noble bookstores gradually fade from our collective memories, what are the implications for consumer behavior and sales?
An article published in the September issue of the journal American Economic Review ("Pavlovian Processes in Consumer Choice: The Physical Presence of a Good Increases Willingness-to-pay") provides some valuable insight into these questions. Led by professor of neuroscience and economics Antonio Rangel, a team of researchers at Caltech recognized that form of presentation may not matter - that is, some models of consumer decision making posit that choices among offerings should not vary with their descriptions or by the procedure by which the choice is made. The researchers had different ideas, however, and the results of their experiments clearly show that the form in which objects are presented matters a great deal, and has a significant impact in monetary terms. Their experiments were straightforward: in the first study, they presented food to hungry research subjects in one of three forms--a text-only format, a high-resolution photo, or a tray placed in front of the participants--and then asked how much people were willing to pay for the food. It turns out that subjects placed on average a 50% higher value on the food on the tray in front of them, whereas there was no difference in bids placed on the food presented in the other two formats. According to one member of the research team, grad student Benjamin Bushong, this was pretty counter-intuitive:
"We were quite surprised to find that the text display and the image display led to similar bids. Initially, we thought people would bid more in the face of more information or seemingly emotional content. This finding could explain why we don't see more pictorial menus in restaurants--they simply aren't worth the cost!"
Well, Bushong should take a stroll through the Latin Quarter here in Paris, where one Greek souvlaki restaurant after another Turkish gyro establishment present full-color pictorials of their horrendous offerings in window and sidewalk displays. And when I see them, one phrase pops into my mind, as if by rote: 'cheap dump.' So obviously there were a number of variables not factored into the Caltech studies. But some were. For example, by now you may have thought, 'well, having that dessert tray in front of me that you were talking about earlier, my guess is that the smell of the items would serve as a stimulant, increasing the desirability of the items and tempting me to go for it, regardless of price.' And I would agree that is a pretty astute observation. However, the Caltech researchers also thought of this and so repeated their food experiment with different 'goods' (a variety of trinkets from the Caltech bookstore), with identical results. Subjects were indeed willing to pay 50% more for items they could reach out and touch. In a third experiment, the researchers separated the items for bid from subjects by erecting a plexiglass barrier, thereby eliminating the possibility of physical contact with the items. In this case, the value given to the physically present items dropped to the same level as the text- and picture-based items. Rangel explains what appears to be going on here: "Behavioral
neuroscience suggests that when I put something appetizing in front of
you, your brain activates motor programs that lead you to your making
contact with that item and consuming it." But take away the possibility of physical contact, the effect is lost. Kind of explains how I felt about the prom queen back in high school.
If we think about the implications of the Caltech findings for the future of brick & mortar stores, well, maybe it's a bit too soon for the likes of Barnes and Noble to be packing up shop. Although we shouldn't underestimate the power of technology. Already, some e-tailers are experimenting with ways to make the online shopping experience more similar to the offline experience. For example, as early as 2007, Brookstone experimented with an online 3-D virtual store. Go ahead, pick up and browse that online book you're thinking of buying. Factor in the unconscious transference of human processes that I discussed in my previous installment and whatever innovations await us in the near future (product holograms emanating from our portable device screens?), before you know it, we'll be shelling out more money than we had intended to get whatever it is that struck our fancy.
Finally, if you need any further evidence of the importance of touch for consumers, check out this Sept. 1st New York Times article about how consumers naturally take to touchable gadgets, like the new Sony Reader Touch edition. The shift from the pen to the typewriter back in the late 1800s was dramatic - people were asked to put words on paper in a way that was previously inconceivable. But the shift from the PC to portable touch screen devices is a piece of cake, you know, that cake on the tray in front of you.