EXECUTIVE SUMMARY
This report summarizes the articles about the Shopaholism in the light of Consumer Behaviour. It starts with a research about the Consumer behaviour which points out what external (group, cultural and family influences) and internal factors influence a consumer decision and what are the steps that comprise a consumer decision making process. Then there is a research summarized about what are shopaholics, what motivates them to indulge in this excessive shopping, how they are different from normal shoppers in terms of utility and purchase behaviours, how retail outlets supply the goods and services to satisfy the addiction and what are the positive and negative externalities of this behaviour. The research also points out that in long term this addiction turns out to be harmful but in the short term in is quite fruitful and this is what turns the normal shoppers into shopaholics.
After addressing the above mentioned issues the report moves to explaining what is shopping addiction, a psychological disorder or just a past time, how it is linked to other addictions, what are some of the symptoms of this disorder, what problems arise when someone starts indulging in this excessive shopping behaviour both financial and social problems and then the general personality characteristics of shopaholics are discussed like shopaholics seek other’s approval, they have low self esteem, they have emotional problems, they face difficulty in controlling their impulses, they fantasize everything around them, they are materialistic and finally in conclusion the report discusses some of the measures that can be taken to overcome this problem for example by exercising control on one’s impulses one can control and curb this addiction to some extent, use of credit cards is strictly forbidden because you end up buying more then you intend to when you are using them as no actual cash is going out of your pocket at that time also it is advised to take financial help if Shopaholism has resulted in heavy debts.
UNDERSTANDING CONSUMER BEHAVIOUR:
Laura Trice, a medical student was having problems related to tasting sweets so in order to overcome this problem she came across a new cookie recipe that satisfied her sweet tooth. In 2001 Laura along with her business partner(a vegetarian chef expert) developed “Laura’ s Whole some junk food” in which all possible snacks that tasted exactly like junk food were to be provided to consumers. In 2002 energy bars were introduced in the market and immediately one of the machine company and a coffee chain placed their orders. In the beginning they gave samples in small plastic packed tubs which were later on named as “BITE LETTES”. They were highly loved by the consumers but Laura and her partner were not sure whether they would be successful or not in future. So in order to find out they first tried to understand the consumer behavior. They did so by listening to the requests, created a new portion controlled concept and then scrapped the full sized energy bars which lead the BITE LETTE to be sold in 180 stores nationwide in 2005.
INTERNAL FACTORS
Feelings, attitudes, thoughts and patterns are the main functions that drive a consumer to what to buy, when to buy and how to use it.
CONSUMER MOTIVATION
Marketers need to find out that what can motivate a consumer and indulge him into purchasing. Motivation is the first step of a consumer’s consumption behaviour. Overt behaviours are physiological needs. Obscure behaviours are gaining social appraisals.
Qualitative techniques are preferred more than quantitative in order know about the consumers thoughts and feelings. The best qualitative approaches are focus groups and in depth interviews.
Values are also one of the reasons that can lead to consumer motivation as values are the broad life goals.
CONSUMER INFORMATION PROCESSING
It basically understands the mental activities that people use in interpreting and integrating the environment and this process initiates with external stimuli that links to one of the sensory receptors such as fast food stores and supermarkets. Selectivity let consumers choose those products that may be related and helps them to interpret the environment and to themselves. For example just a decision to go to Florida makes a consumer highly involve in searching the ads, airline promotions related to it.
For consumer’s product information is not that easy as it seems to because for some consumers it can last for short time, can be long term remembered or can be forgotten which can be dangerous for a brand to reach to its success.
That information which has lasted in the minds of the consumers consists of nodes and links. When Laura’s co. was founded her main aim was to change the thinking of the consumer’s knowledge related to the healthful treat. When the whole network is brought to the mind it is termed as Product Schema. Laura’s unique positioning was “WHOLESOME JUNK FOOD”. After positioning, ads are developed. With the passage of time a brand can become faded and for this reason repositioning takes place.
ATTITUDE FORMATION AND CHANGE
It’s an evaluation of an object, idea or action. For example "I love Ben & Jerry's Vanilla Toffee Crunch" is a strong, positively valence attitude and "I dislike the new Toyota ad" is a weak, negatively valence attitude toward an advertisement.
There are three components:
Cognitive: knowledge about the object
Affective: reflect behavior
Conative: behavioral tendency
EXTERNAL FACTORS
With the help of social factors, it is easy for the marketers to identify groups who think different in their own way.
GROUP INFLUENCES ON INDIVIDUAL CONSUMER BEHAVIOR
A number of influences such as information, comparative, normative influences are exerted on consumers and they vary from group to group and person to person.
FAMILY INFLUENCES ON CONSUMER BEHAVIOR
It changes from time to time like for example singles tend to buy those products that define self definition but when they get married they tend to purchase those products that can be shared by everyone in the house.
CULTURAL AND SUBCULTURAL INFLUENCES ON CONSUMER BEHAVIOR
Consumers living in a society share common values, beliefs and norms but every individual has a different background and differ in needs for example in USA, promotion of independence is high but internal attribute of each consumer is unique but in China promotion of interdependent is high.
By subcultures it is meant that there are different groups living in one society and they share common values and they are identified on the basis of demographics, geographic, ethnicity or age and lifestyles.
The expansion of lifestyles especially in the food choices began in 21st century such as WHOLE FOODS MARKET.
Internet has played a vital role in coming across the understanding of subculture segments. For example iVillage.com, Hispanic.com
THE CONSUMER DECISION MAKING PROCESS
There are five stages that help a consumer to think before entering into purchasing decision 1. Need recognition: difference between ideal and actual states 2. Information search 3. Alternative evaluation 4. Purchase decision 5. Post purchase decision
It is not necessary to go in sequence, steps can be skipped.
GRASPING THE MIND OF A SHOPAHOLIC:
This research was an attempt to understand why people engage in excessive shopping that transfers their normal act of shopping into abnormal, what is the difference between shopaholics and normal shoppers, opportunity costs faced by these two groups, market failures caused by shopaholics and finally the government interventions.
DEFINING SHOPAHOLICS
Shopaholics are compulsive shoppers who derive a significant amount of utility from engaging in the act of shopping. This behaviour is a form of addiction because shopaholics have a compulsion to shop, they are unable to stop and are prone to continue even if it brings about adverse consequences such as debts, hoarding and failed relationships. The certain hormones produced as a result of the happiness generated due to shopping changes this normal consumption habit into an addiction and a person finds himself unable to stop. This addiction is also likely to increase if there is a positive correlation between the past and current consumptions means that if the person has found pleasure in consuming the product the first time than he is more likely to indulge in excessive consumption of it. The momentary lift in their mood that is a result of purchasing new goods can compel them to replicate the act over and over again. MOTIVATION BEHIND SHOPAHOLISM: Utility is the benefit or fulfilment that a person receives from consuming goods or services. The assumption in consumer theory is that rational consumers seek to seek to maximise their utility and are constrained by scarcity of their resources. Regular shoppers derive utility from the consumption of the goods and services they desire but do not add to their utility by engaging in the act of shopping. Further a shopper’s opportunity cost relies on two variables – posted price and search cost. Since regular shoppers do not spend much time shopping, they are more likely to fail in identifying opportunities in market where the posted price of goods are relatively advantageous. Thus, although their search cost is lower, but not zero as every purchase requires some search, since they seek to minimize these to begin with, they will end up paying a higher price.
As the addiction would increase the time spent for searching would also increase and they will comfort themselves by the thought that they are making an optimal use of their resources by purchasing things at the lowest price possible and also making the best purchase at the same time. Therefore in the beginning this would be a positive utility for them but as the addiction will increase the frequently needed euphoria leads to a negative utility because of the uncontrolled increase in the time spent on shopping, willingness to withstand all the troubles of filling the member application form, linger in the outlet to enjoy chats with salespersons or collect stamps via re-purchase coupons; just because they derive utility out of the act of shopping, regardless of whether they would buy or not. Thus, search cost for them are higher and because search still entails an opportunity cost for shopaholics and consequences such as debts and reduction in work productivity will eventually have a toll on them.
While addicts usually are unable to rationalize themselves and actualize their future and tend to continue blindly in their addiction, shopaholics are aware of the addiction they are indulged into and the consequences of it. They however talk themselves out of it by convincing themselves of the short term benefits.
SUPPLY OF GOODS TO SATISFY ADDICTION:
The supply of goods to satisfy a shopaholic’s addiction arguably comes from retail outlets that present shopping opportunities. These retail outlets are monopolistically competitive because they offer similar yet differentiated products and compete using a strategy of price discrimination by determining the price elasticities of their consumers.
When search cost and time spent on shopping is low, high street retailers have the upper hand. Reason is because; they are capable of differentiating consumer classes and understand that shoppers that choose to shop at their place are either rich or would not like to spend too much time on shopping. Hence, they can raise their price of goods and provide premium services to quickly service the customers thereby maximising shoppers’ utility. On the other point, when search cost and time spent on shopping is high, retailers in malls would ace. These retailers know that shoppers are walking around for comparison; therefore, schemes such as seasonal sales, re-purchase discounts, member loyalty card or post-purchase services will attract and retain shoppers. Competitions in malls are also higher than high street retailers indicating the need for retailers in mall to be creative in their outlet’s outlook that leads to thousands of dollars being spent on colourful posters and perfectly dressed mannequins. This is not only to stimulate curiosity on shoppers but also to arouse a sense of longing. POSITIVE AND NEGATIVE EXTERNALITIES OF SHOPAHOLISM:
Shopaholism can result in both positive and negative outcomes. The positive externality is that they can compel the retailers to improve their marketing activities in terms of customer service and retail presentation and their well informed purchases prevent retailers from overcharging and misinforming about a particular purchase. The negative externalities include retailers investing in unnecessary marketing expenditures to attract them instead of investing in improving the quality of the products. This not only hurts the market efficiency but also drive away the pool of regular shoppers. Apart from these issues, shopaholics are arguably more likely to be imposing a negative externality on the health of financial markets. They exacerbate the demand for easy credit and may be distorting the terms on which credit cards and store cards might be issued. Bankers may realize that shopaholics might abstain from shopping if the availability of credit cards is tightly regulated and may, therefore, resort to two-way pricing strategies. Since the profitability of a credit card issuer relies on two variables - the cost of card purchase (PC) and interest on repayments (iP). The increase in the interest rate may be seen a negative externality on regular shoppers.
Government intervention to ameliorate the social-welfare effects of shopaholics is minimal. At most, governments could intervene through motivational campaigns to educate its civilians on budgeted spending. They might also regulate the financial industry more heavily in forcing them to increase their standards on the availability of credit. Nevertheless, governments face dual incentives in doing so. While a government may conduct programs to eradicate bankruptcy occurrence among shoppers, they also seek economic growth which is assisted by shopaholics.
WHAT IS SHOPPING ADDICTION?
A term named “OMNIOMANIA” is considered to be the most important reinforcement towards behavioral addictions. Through advertising, consumers are encouraged to make a purchase which benefits the economy as well.
In past few years, there has been an increment in consumerism but no such shopping addiction has been changed since its recognition i.e. 19th century which was considered to be a psychiatric disorder in 20th century. In U. S, only 6% population is addicted to shopping. When a consumer enters its adulthood, shopping behavior depends on its mood.
NORMAL SHOPPING VERSUS SHOPPING ADDICTION
The common thing between the both shopping is that it helps to reduce stress and compels them to make excessive purchases. Even it affects finance and relationships as a consumer who is addicted to shopping won’t care while spending wildly.
DISAGREEMENT OF SHOPPING ADDICTION
According to few experts, once a consumer starts to spend wildly, it becomes an addiction which leads to symptoms like physical tolerance.
Professionals disagree to a point that shopping addiction is an Obsessive Compulsive Order, impulse control disorder and mood disorder.
IN WHAT WAY SHOPPING ADDICTION IS LINKED TO OTHER ADDICTIONS?
A number of characteristics indicate that shopping addiction is linked to other addictions such as spending, true devotion of time and money. When a person is just engaged into window shopping, it is not the actual addiction. Actual addiction occurs when there is a real process of spending money. Besides this one characteristic includes the thought process of shopping (plan, act).
As mentioned above that shopping addictors mainly try to reduce stress but this can be only done for a short time period and because of this they plan for the next shopping trip either alone or in a group.
WHAT IF I HAVE A SHOPPING ADDICTION?
According to the research responses, three-quarters of shopping addiction consumers accept that whenever they are into shopping, it is mainly because of problems. There are few solutions to improve shopping addiction like medicines, self help groups and help books, counseling and cognitive behavioral therapy. One of the solutions can also be that those who do not like shopping too much, is to shop with them. This will enable a consumer to minimize the spending. Diversion can also be a solution.
SHOPPING SPREE OR ADDICTION?
Shopping is much more than a fun pastime, and in some cases, it is a real and vicious addiction that can turn into a financial disaster. This is called compulsive shopping, or shopoholism. Compulsive shopping and spending are defined as inappropriate, unnecessary, and out of control. Shopping addiction can cause chaos in a person's life. No one knows what causes addictive behaviors, like shopping, alcoholism, drug abuse, and gambling.
There are several characteristics that shopping addiction shares with other addictions. As with other addictions, shopping addicts become preoccupied with spending, and give significant time and money to the activity. Actual spending is important to the process of shopping addiction; window shopping does not constitute an addiction, and the addictive pattern is actually driven by the process of spending money.
As with other addictions, shopping addicts follows a typical pattern of thoughts about shopping, planning shopping trips, and the shopping act itself, often described as pleasurable, ecstatic even, and as providing relief from depression. And then, after spending much more than he/she can afford, the shopper crashes, with feelings of disappointment, particularly with himself/herself.
PROBLEMS FROM SHOPPING ADDICTION:
The following are some behaviors that concerned family members or friends should look for when they think shopping has become a problem. * Spending over budget. Often times a person will spend over their budget and get into deep financial trouble, spending well above their income. * Compulsive buying. When a person with a shopping addiction goes shopping, they often impulsively buy, meaning they go for one pair of shoes and come out with 10. * It's a chronic problem. A shopping addiction is a continuous problem. It's more than two or three months of the year, and more than a once-a-year Christmas spree. * Hiding the problem. Shopoholics will hide their purchases because they don't want their loved ones to know they bought it because they'll be criticized. They may have secret credit card accounts, too. Because this problem affects mostly women, as alcoholism affects mostly men, husbands will all of sudden be told their wife is $20,000-$30,000 in debt and they are responsible, and many times, this comes out in divorce. * A vicious circle. Some people will take their purchases back because they feel guilty. That guilt can trigger another shopping spree, so it's a vicious circle. And in these people, debt may not be an issue because they're consistently returning clothes out of guilt, but a problem still exists. * Impaired relationships. Impairment in relationships can occur because the person spends time away from home to shop, lies about their debt, and emotionally and physically starts to isolate themselves from others as they become preoccupied with their behavior. * Clear consequences. Shopoholism has everything to do with consequences. If there is a pattern or a trend or consequences that occur with excessive shopping then the person may be a problem spender, the hallmark is still loss of control. If they are no longer in control of their shopping but their shopping is in control of them, they've crossed the line.
Compulsive shoppers use shopping as a way of escaping negative feelings, such as depression, anxiety, boredom, and anger. Unfortunately, the escape is short-lived. The purchases are often simply hoarded unused and compulsive shoppers will then begin to plan the next spending spree. Most addicts shop alone, as they feel embarrassed to shop with people who don’t share this type of enthusiasm for shopping
Some of the new evidence suggests that some people, may have a genetic tendency to an addictive behavior, together with an environment in which the particular behavior is triggered, but no one really knows why. Individuals will get some kind of high from an addictive behavior like shopping, meaning that endorphins and dopamine, naturally occurring opiate receptor sites in the brain, get switched on, and the person feels good, and if it feels good they are more likely to do it, and it's reinforced and the behavior is repeated.
The following are steps that experts recommend shopaholics should take to stop this addiction. * Admit that you are a compulsive spender, which is half the battle * Get rid of checkbooks and credit cards, which fuel the problem * Don't shop by yourself because most compulsive shoppers shop alone and if you are with someone you are much less likely to be spend * Find other meaningful ways to spend time
Shopoholism is as serious as any other addiction, and shopaholics need to quit before it wreaks havoc on their financial and personal life.
INSIDE THE MIND OF A SHOPAHOLIC:
The shopaholics have found to have displayed following personality characteristics:
THE SHOPAHOLIC SEEKS APPROVAL FROM OTHERS
Kind hearted, sympathetic, and not rude to others, these are the some personality traits that have been found out in a typical shopaholic. Shopaholics are always lonely and isolated, so they use shopping as a way for positive interaction with people specially salespeople and it also gives them the hope that what they have bought will improve their relationship with others. They have a tendency to get influenced by others easily. If a shopaholic has agreeable behavior, it makes it easier for them to establish good the europatic relations and to get influenced by the positive attitude of others.
THE SHOPAHOLIC HAS LOW SELF ESTEEM
Shopaholics are found to have a low self esteem. They try to improve their low self esteem by the way of shopping particularly when the desired object is associated with an image of what the shopper wants to be. It is also possible that low self esteem is a result of shopping addiction.
With deeper self reflection, they can realize with the help of a therapist that there is a much to truly value about you.
THE SHOPAHOLIC HAS EMOTIONAL PROBLEMS
Studies have found that shopping addicts often suffer from anxiety and depression and they use shopping as a way to temporarily get rid of these spirits. Both anxiety and depression can be treated with psychological therapies and medication if necessary.
THE SHOPAHOLIC HAS DIFFICULTY CONTROLLING IMPULSES
Impulses are natural -- a sudden, intense urge to do something grips you, and you feel the need to act. Most people are able to control their impulses easily but on the other hand Shopaholics find impulses, particularly impulses that involve buying something, both overwhelming and irresistible.
It is possible to gain control over your impulse to spend, particularly if you deal with the other underlying problems.
THE SHOPAHOLIC INDULGES IN FANTASY
The ability to fantasize is stronger in shopaholics than it usually is in other people. These fantasies reinforce to buy too much, for example; they can imagine all the positive consequences of buying the desired object. They also escape into a fantasy world to escape the harsh realities of life. This strong capacity for imagination can be extremely beneficial during addictions treatment.
THE SHOPAHOLIC IS MATERIALISTIC
Research shows that shopaholics are more materialistic than other buyers, but their this materialism is a bit difficult to understand because they are surprisingly uninterested in owning things and are actually less driven to acquire material possessions than other buyers and that is the reason why shopaholics buy things that they don’t use or need. So what makes them more realistic is envy and non-generosity and these are the weaknesses of the shopaholic. They are much more envious and much less generous than others. This is surprising, given the fact that gifts are a common purchase of shopaholics, but this seems to be an attempt to "buy" love, and increase social status, rather than a genuine act of generosity.
By increasing their self esteem, and ability to connect with others in a genuine way, they will lose their belief that affection and admiration can be bought.
CONCLUSION AND RECOMMENDATION:
Shopaholic behaviour can result in many problems including financial and social problems. A person indulged in this addiction is likely to end up in severe debts and isolation from his family and friends so there are some suggestions and techniques to ward off from this addiction: 1. KNOW WHAT YOU HAVE
Before going to shopping one must have a look in wardrobe and around the house to see what is already present in the house and what needs to be purchased. If something is already present and is in your possession than there is no need of buying it again.
2. CARRY A SHOPPING LIST
Make a list of what you plan to buy and what you plan to spend on each item before you shop. This should help stop impulse buys.
3. PUT ITEMS THAT YOU WANT TO BUY “ON HOLD”
In order to curb the “impulsive shopping” and to prevent yourself from indulging into excessive purchasing, you must keep those items on hold that you want this will help you get a control of yourself. Ask the shopkeeper to hold them for you for a day or two. Go back home and only come back for it if you really want it and need it.
4. DON'T BE A SUCKER FOR SALES
This goes down to thinking that there will be other sales and not falling for each sales no matter how good they are. As soon as you think that you have purchased whatever you wanted some store slashes down their prices. If you already have what they are offering then ignore the sales.
5. BRING CASH, LEAVE THE PLASTIC
While shopping one must use the cash or debit card to keep the track of amount spend. Credit cards do not require cash payment till a particular date so you always end up spending more with them then you intend to. If you have a stack of credit cards at home then you not only change the way you shop but also how you handle your finances. 6. TRACK WHAT YOU SPEND
Face it. Don't fudge it. Write down everything that you bought this week, this month, and how much you spent. Don’t round the numbers down. Put down the exact price. You need to see where your money is going. 7. CUT UP YOUR CREDIT CARDS
If you’re in credit card debt, you don’t need to be tempted to spend more on credit. Use cash, checks or a debit card. Online shoppers who don’t want to put purchases on a debit card. You need a charge card that forces you to pay the full balance each month.
8. PAY OFF CREDIT CARD DEBT
Make a list of all of your credit cards, the balance due, minimum payment due and interest rate. Put the card with highest interest rate at the top. Plan to pay off that balance first. Talk to creditors about lowering the interest rate if you promise to make payments above the minimum amount due every month. If they agree, call other creditors and see if they’ll do the same.
9. SEEK FINANCIAL ADVICE
Talk to a financial advisor or credit counselor. Big spenders aren't usually good savers. You may be jeopardizing your retirement and other financial goals with your spending. Work out a plan to balance paying down your debt and saving for the future.
REFERENCES: * Grasping the Mind of a Shopaholic
Mehzabin Chhavniwala, Li Ean Gan, Racha Ghazali & Ghananathan Rajasingam
