- August 29, 2022
- Posted by: Manuels Effe
- Categories: Economics, Insight
Impulsive spending is a disturbing habit usually induced by unplanned buying. Our impulse in such situations drags us into buying goods or services with no previous plans in deliberate actions triggered by emotions, reactions or feelings.
It could simply be stimulated by a sale or ad, or an item seen in a store, on social media or in the hands of a good friend. They induce one into making up his or her mind to have them.
Though top impulse buys could be anything, they most often vary from food, and shoes to beauty products, with the fact remaining that whatever you buy outside your original shopping list (deliberate buying) becomes an impulse purchase that in the long run builds up and cause a detrimental effect on your savings.
How Impulse Buying is Stimulated
Even with the loud criticisms against impulse spending, it is on the rise, succumbing to the psychological elements behind it and the luring activities of the stimulators, including shopping malls, businesses of similarity, and advertising.
Advertising has a great capacity to influence and persuade, and even the most harmless, can cause changes in behaviour that may affect the consumer’s purchase intention.
Consumers are attracted by advertising and the messages they convey, affecting their behaviour and purchase intentions.
Impulse buying, studied from several perspectives, namely rational processes; emotional resources; the cognitive currents, arising from the theory of social justice; persuasive communication; and the effects of advertising on consumer behaviour, has been found to be of immense negative effects on buying, promoting an enormous desire to satisfy your most pressing needs immediately.
Increasingly in addition driving shoppers to buy instantly include the following:
The desire for a Deal
Impulse buying is not spending an entire pay cheque on fancy products, people as well buy products, feeling it could save them money in the long run.
People in some situations like sales promotions take advantage of a deal than full pay price as they impact sales, consumers being price conscious and prefer to buy products offering greater savings.
Shoppers generally buy at cheaper prices before they run out of inventory.
A key factor for driving impulse buys is physical stimuli, including such external factors as retail signage, ambience, marketing activities, and window displays aside from the internal factors- personality and psychological- extending from emotions to self-control to influence consumer behaviour.
The external factors:
Store environment – the overall atmosphere of a store, is a pleasant one at that encourages shoppers to shop around and do unplanned shopping.
Higher levels of positive feelings encourage higher levels of impulse buying.
Background music – The music playing in a store impacts customer emotions and impulse buying, for example, soft background music slows a customer’s shopping pace and encourages him or her to spend more time and buy more products.
Sales clerks – As they provide guidance, shoppers experience pleasant shopping and they are stimulated to do more, spending on impulse buying.
Good sales promotions encourage customers to buy larger quantities of products and impact impulse buying.
With you feeling a rush of emotion, such as stress, anxiety, or excitement, rational buying decisions become harder; brains battle between short-term rewards and long-term goals.
A shopper sees something they need, the logical part of the brain tries to reason with him, telling him it was better the money he would use for the purchase remains in his bank account instead of buying what he or she intends, but emotion defiles that, undermining the future and preferring instant gratification as the ultimate reward.
The sense intakes environmental cues and generates a strong response, instigating a purchase without hesitation.
Retailers take advantage of that sensation and encourage people to buy in their stores.
Products are not accidentally placed at random by retailers, a lot of work is put into it, knowing that strategic product placement entices people to buy more.
Retailers, for example, use window displays to differentiate and attract customers into their stores, knowing it to have a positive influence on impulsive buying when products are in high demand.
They create displays that generate an exciting shopping experience, lifting shoppers’ moods and encouraging impulse sales in addition to using other tactics in-store, including the following to further encourage impulse buys:
Block placement includes placing related products close to each other to possibly increase the possibility of shoppers buying the other products too. For example, placing pens and pencils near notebooks.
Vertical placement involves showing items in a vertical display. You place popular products closer to the shopper’s line of sight to attract them.
Vertical placement lets shoppers scan items from top to bottom and analyse the display.
Commercial placement refers to giving higher-value products a better shelf position than lower-value products.
Point-of-purchase displays are another placement tactic retailers use to encourage impulse buyers.
Shoppers can browse featured products while they wait in line to add them to their cart at the last minute.
Impulse buys don’t always come from promotions and strategic displays.
Sometimes it’s all about novelty or the quality of being new and original.
If products look unique and special, shoppers will notice them. Impulse buyers are known to seek novelty items hyperactively.
Product bundling is packaging complementary products in a group that shoppers can buy together.
They are often bundled together as a cross-sell or upsell and impulse buying occurs when products are sold with bundling offers for hedonic and not utilitarian goods.
Product bundling is normally a good tool to increase sales, helping customers at checkout to pull the trigger on impulse buys, and looking like a sales associate, telling customers about a bundle promotion if they add one more item to their purchase at retail shops.
It could on the whole be represented on signs throughout a store and marketing assets.
Placing Lower-priced Impulse Buys Near Checkout
The average customer isn’t going to impulsively spend without a second thought, making price one of the most important factors in choosing the right products to use for impulse displays.
Another way to keep impulse prices down is to use designated impulse purchase areas to display products that are on sale.
Combining sale prices with the urgency of a limited-time promotion is a recipe for impulse buying.
Between Impulse and Desperate Buying
Deliberate spending is done under a robust financial plan drawn up in advance to have the money easily absorbed and accounted for ahead of time, unlike impulsive spending which is a continuous effective purchase of no deliberate financial plan, but committed money outside the budget, arising from lack of solid financial plan.
Planned purchases, ‘deliberate spending’ that are exceptionally common among successful businesses, are incredibly advantageous to the average company, whether starting out now or well-established.
Most stimulating about it all is that it helps businesses to avoid deficit spending, ensures money is tracked and accounted for, makes profit margins clearly visible and avail employees prompt payment, enhances business savings where possible, and gives way to leftover cash that is put aside to make up the revenue, provides a comfortable financial cushion for companies to rely upon when needed and promotes business growth as a whole while impulsive buying remains detrimental to business success, making businesses to ever ponder on how they could ever ensure that they are not involved in impulsive spending, with the following propounded as possible panaceas:
Stick to Your List Always
Endeavour to keep to your shopping list religiously as limiting yourself to not buying anything that might lure you will help you to be more intentional and less impulsive, saving you a significant amount of money in the long-term.
Maintain a ‘Pause’ Button
As earlier stated, an impulse buy is usually triggered by some sort of emotion or reaction.
As you experience a sudden urge to purchase an unnecessary thing, take a step back and ask yourself if you need the item, or if you are impulse buying.
And you end up making a few purchases that you should keep to.
Once you feel you are spending too much, take time to reflect as most impulse buys are related to shoppers who attempt to make themselves feel better via a spot of ‘retail therapy.
If that’s the case, then it’s worth considering what other activities you can do to make you happier other than getting involved in unnecessary spending.
Go Only With the Amount of Cash You Need
Figure out how much money you need for the items you want to buy and only take that amount in cash.
You could even go a step further and leave your debit card at home so that you don’t tempt yourself to buy more with it.
If you stick to your shopping plan and don’t bring any extra money along on the trip, you can’t make an impulse buy. It’s just impossible, being the power of cash.
It’s a game changer when it comes to impulse buying. If you always compare what you have or don’t have to others, you’ll never be satisfied.
When we are comparing ourselves to other people, we’re playing a game we’ll never win.
Instead of looking at what someone else has and thinking, Oh! I need that too, take a step back and look at your life. Learn to be grateful for what you have.
If you change your perspective, you’ll find you already have a lot to be grateful for.
Let Go the Social Media
If you’re having trouble with comparisons, social media isn’t going to make it any better. If you have trouble being content when you scroll past everyone’s highlight reel, then remove the source of the problem.
You may not give up social media forever, but take off Instagram and Facebook for a week or more and observe your difference.
You may not find yourself falling into that comparison trap, the reality is that social media is one huge billboard for impulse buying. Everywhere you scroll, someone is trying to get you to spend your money.
Avoid the Apps, if you’re not there, you won’t see all the businesses with flashy sales and new products to spend your hard-earned money on.
No-spend Challenge is Essential
Desperate times call for desperate measures, hence the doctor sometimes orders a no-spend challenge. Don’t spend any money on non-essential items. While you still pay for things such as your rent or mortgage, regular bills, utilities, and groceries, among others, restrain yourself from spending on such other things as restaurants, hair salons, new shoes or a new kitchen accessory, among others.
In fact, keep away from stores unless when to buy groceries that are on your list.
Keep to Your Goals
Giving in to an impulse buy won’t do you any good, and won’t help you achieve your financial goals in particular, whether getting out of debt, paying off your mortgage, or investing for the future.
Buying on impulse and overspending will eat up any extra money you were saving for those awesome goals. So, always keep in mind those important goals you’re working toward.
Successfully gaining face, or prestige, in a social environment, can lead to impulse purchases. When someone loses face, or feels embarrassed, anxious, or rejected, they may end up buying on impulse, too.
Self-gifting, or “retail therapy,” is another form of impulse buying one uses to manage their mood.
Budget and Plan
Budgeting will ensure that your finances are orderly kept, makes you track and determine outings, restrain you from spending on a venture not budgeted for, and makes it possible for needed additional spending to be accounted for in a following month’s budget meeting.
Set Aside Petty Cash for Expenses
Petty cash should always be provided for in a monthly budget plan to permit small fortunes not provided for in an existing planned budget to be accommodated.
This, with permission or approval, will accommodate employees’ smaller activities or services, including transportation cost when required.
Generally, it conveniently absorbs expenses not initially budgeted for.
Think Properly Before Buying
Think properly about doing an unplanned buying, deeply knowing its advantages and disadvantages, in addition to ascertaining other people’s opinion about it , better shape decisions about it, and if it’s a thing that can wait, it’s left to be provided for at a following month’s meeting.
Have a Spending Plan and get Advice
Always have a plan to accommodate how you spend money you might not necessarily have. Research properly into some of the best and most affordable models of your new requirements in the market, asking a professional in the industry, or a financial advisor for the right financial decisions or even buying in your best interest second-hand or reconditioned items to save you some cash.
How About Hiring An Accountant?
For purposes of stemming impulse spending habits, an accountant could be invaluable, helping with among others personal finances and administration; guidance and advice on purchasing decisions; helping to save and invest instead of spending; and doing salary discussions and planning.
They could be much more useful to an impulsive buyer than just advising.
They in position to set your daily, weekly, or even monthly budgets to ensure that you know what to spend.
With more eye on your budget and life priorities, you get more freedom to continue buying the luxuries you desire and ultimately go from an impulse buyer to a deliberate buyer, having in their wake advisory experts of the like of SSAC Advisory and Professionals, offering expert budgeting and forecasting services for businesses, irrespective of the industry.
For SMEs and startups, SSAC works ceaselessly round the clock to ensure the success of their financial needs and deliberate spending, having it for advisory purposes.