the overlooked longevity of experiential goods · often mistaken feeling that the material purchase...
TRANSCRIPT
SEARCH
tel. +44 (0)203 031 2900
CHALLENGE US MY FAVOURITES ACCOUNT LOG OUT
HOME ABOUT IDEAS LIBRARY IDEAS BY INSTITUTIONS
Home Ideas Library The Overlooked Longevity of Experiential Goods
10.13007/351
Ideas for Leaders #351
The Overlooked Longevity of
Experiential Goods
Key Concept
When consumers feel financially constrained, they are more likely to choose
tangible material purchases over experiential purchases in the belief that
those material purchases will ‘last’ longer. This longevity factor can be
deceiving, however; material purchases can often be more frivolous (and thus
less valuable) than experiential purchases — and experiential purchases can
last longer, through memories or well-being for example, than material ones.
Idea Summary
More and more people are feeling financially constrained. In the U.S., half of
American families recently surveyed considered themselves ‘financially
fragile’. Financial constraint does not refer to income level, but to the feeling
that the income is insufficient to pay for desired discretionary purchases.
Awareness of financial constraints pushes people to reflect on the longevity of
their purchases because buying something today may mean not being able to
buy something tomorrow. For them, today’s purchase has to ‘last’ — or, more
specifically, has to have a ‘lasting effect’. In other words, the joy that a
purchase brings has to last beyond today.
Previous research has shown that experiential purchases provide greater
long-term happiness and well-being, which would indicate that financial
constraint would favour experiential purchases. But this subtle prospective
happiness is not something that most people intuitively understand.
Consumers might know that they are unhappy today, when they have to go to
work. They know they will be happy next week when they are on vacation at
the beach. They rarely consider the weeks beyond next week, when the
memories of the vacation are still with them and still bring them happiness.
Because of their short-term perspective, they underestimate the full value of
the experiential purchase.
As a result, consumers see an experiential purpose as ephemeral — ‘fleeting
by nature.’ In contrast, they see material possessions as physically present for
much longer. After all, by definition, a material purchase is tangible; you can
continue to see it, to touch it. An event or some other experiential purchase is
finite in time. And although the memories or the psychological and physical
wellness resulting from the purchase continue to exist, these non-tangible
long-term benefits are not as obvious as the physically present material
purchase.
In short:
Authors
Tully, Stephanie M.
Hershfield, Hal E.
Meyvis, Tom
Institutions
New York University Stern School of
Business
Source
Social Science Research Network Working
Paper Series
Idea conceived
March 2014
Idea posted
March 2014
DOI number
Subject
Marketing
Marketing Communication
Sales Management and Strategy
When feeling financially constrained, consumers tend to prefer material
purchases over experiential purchases.
This preference is not motivated by a need for increased status (demonstrating to the world
that the consumer is not under any financial constraint), or a need to counter depression
(caused by the financial stress).
Nor are material purchases driven by a profound desire to make sensible or justifiable
purchases. Consumers who consider themselves financially constrained continue to buy
frivolous material goods (for example, a revolving tie rack).
Financially constrained consumers are motivated to buy material purchases by longevity — the
often mistaken feeling that the material purchase will last longer than any experiential
purchase.
Business Application
Understanding the fundamental role that longevity plays in pushing
consumers to allocate their resources to material over experiential purchases
can help companies define marketing strategies that build on the concept of
longevity.
Thus, a cooking school or a gym should not only emphasize the benefits of
their services, but the longevity of those benefits. Shifting a marketing
approach from ‘learn how to cook!’ to ‘your dinners will never be the same
again!’ brings longevity into the sales pitch. If the benefit of an experiential
purchase is noticeably long-lasting to the prospective customer, the longevity
advantage of a material purchase will be disarmed.
Another longevity-based selling point for experiential purchases concerns
well-being. Research shows that the impact of experiential purchases
significantly outlasts the experience. Using the example described earlier,
while the vacation may be over, the hedonistic effects of the vacation — just
the joy of finally visiting that country you’ve dreamed of seeing, or coming
back to work recharged — are real… and long-lasting. Businesses that
feature experiential purchases will not only want to sell the experience, but the
long-lasting, beneficial effects of the experience.
Obviously there are limits to discretionary spending. Some people just cannot
afford that vacation to overseas. And perhaps the intangible benefits such as
memories and storytelling may still not be enough to persuade many people to
make that experiential purchase. This is unfortunate, for the longevity
consideration that comes from their feelings of financial constraint could be
undermining their well-being; they erroneously think that they’ll continue to
enjoy that revolving tie-rack for a much longer time than the vacation that only
lasts 10 days.
Further Reading
Making Limited Discretionary Money Last: Financial Constraints Increase
Preference for Material Purchases by Focusing Consumers on
Longevity. Stephanie M. Tully, Hal E. Hershfield & Tom Meyvis. Social
Science Research Network Working Paper Series (March 2014).
Further Relevant Resources
Hal Hershfield’s profile at New York University Stern School of Business
Tom Meyvis’s profile at New York University Stern School of Business
NYU Stern School of Business Executive Education profile at IEDP
© Copyright IEDP Ideas for Leaders 2014
About
About
People
IEDP
Partner Institutions
Legal
Terms of Use
Privacy
Disclaimer
Cookies
Help
Subscribe
Help
FAQs
Contact
Accessibility
Follow
Google+
YouTube
Site by Deeson