Economist Richard Thaler developed the concept known as mental accounting which contends that individuals divide their current and future assets into separate, non-transferable portions. By subscribing to this theory, individuals assign different levels of utility to each asset group, which affects their consumption decisions and other behaviors. The importance of this theory is illustrated in its application towards the economic behavior of individuals, and thus entire populations and markets. Rather than rationally viewing every dollar as identical, mental accounting helps explain why many investors designate some of their dollars as "safety" capital which they invest in low-risk investments, while at the same time treating their "risk capital" quite differently. (Investopedia) Money is fungible, meaning that it is all the same. When budgets are not fungible, their existence can influence consumption in various ways. Frequently, retailers take advantage of consumers’ mental accounting by utilizing the principle of segregate gains which allows a sellers multi-dimensional product to be evaluated separately. In addition, several bonus items are included. One example of the segregate gains principle that comes to mind for me is the Montel Williams’ juicer called the Healthmaster. The product was advertised on television and included the following benefits: one year subscription to company for recipes (for an additional fee), payment over three months for the product so that you did not have to pay it outright, and if you called during the advertisement, you could receive a price discount of $50.00. When the sales person goes through her spill of all the additional benefits that you can receive from the juicer’s ancillary components, you have definitely spent more than the advertised original price if you take advantage of these offers. I have enjoyed the juicer; however, I never used my recipes or the other benefits that I attained and that was a wasted purchase with no utility beyond the original intended purpose for which I did not need the additional components. Additional concepts of segregate gains are rebates. Rebates are known as the silver lining principle which acts as a form of price promotion. I have purchased numerous items from best buy that frequently have a rebate promotion. However, taxes are paid on the rebate and the consumer must mail in the rebate form. The few times that I have actually carried out the task, I frequently did not receive my rebate check and by the time six to eight weeks rolled around, I forgot about the rebate. When I made the purchase, I thought that I was getting a good deal; however, in retrospect, I paid full retail price. My utility was not diminished by not having the rebate money. The automobile industry is famous for offering rebates because they suggest segregating the savings. Consumers can elect to have the rebate applied to their down payment or have the corporate headquarters mail them a check for the rebate amount. For consumers who apply the rebate towards the down payment, they see that the money is fungible. Consumers who request a rebate check use the money in mental accounting. As a marketer, one method that I would use to frame certain decisions to benefit from disparities that arise in one’s cognitive accounting is transaction utility implications. Apple does a great job of utilizing transaction utility implications by continuously refining their product so that the consumer wants the new iPhone or iPad based on the newest technology offerings. Weeks before a new product is released, we see the advertisement statements newer, better, bolder version of our current device. Mentally, we think wow that can do more than what the model I have does. As a result, people are in line to make their purchase on the launch day, prior to the stores opening so that they can have the newest hottest technology from Apple. The new technology is priced the same for new purchases; however, phone companies offer discounted rates with new plans or upgrades and consumers fall prey to an extension life that may not provide good utility. For example, AT&T, Sprint and T-Mobile all carry the iPhone 5. The carrier services are not the same though and the consumer may end up disgruntled with the purchase because he is not receiving the maximum consumption benefit based on the carrier. Regardless of the consumer utility, Apple has done their job when the purchase has been made. I would apply those same concepts to guerilla marketing to get the product sold. As a consumer, I would avoid the pitfalls of inequalities caused by cognitive accounting by treating money as fungible. I do not, nor have I ever, driven to another store to make a purchase because it is discounted at that store. My time and gas account for more than the perceived savings value. I purchase the product that I want regardless of the rebate. In-store rebates are enticing; however, if the product does not meet my utility expectations, I do not purchase them. I do save money; however, I do not save in lieu of something else. I have investment plans that I utilize for long-term planning and my consumption is aligned with what I can reasonably afford. The biggest financial instrument that I have to barter with is my time and as a result, I have to make decisions based on whether or not I will get all of the things done that I need to get done in the time frame I’ve allotted. As a result, time management takes a precedence in my mental account so that everything gets accounted for.

REFERENCES
Investopedia. Retrieved on line from: http://www.investopedia.com/terms/m/mentalaccounting.asp
Thaler, R.H. (2008). Mental accounting and consumer choice. Marketing Science, 27(1), 15–25. (ProQuest Document ID: 212257838) Retrieved online from: http://search.proquest.com.libproxy.edmc.edu/docview/212257838?accountid=34899 Thaler, R.H. (1999). Mental Accounting matters. Journal of Behavioral Decision Making, 12, 183-206. Retrieved online from: http://faculty.chicagobooth.edu/richard.thaler/research/pdf/MentalAccounting.pdf