How Real-Time Feedback Influences Spending

December 19, 2018

Key Takeaways

With feedback, consumers changed the type of products they bought and how much they were willing to spend. Budget shoppers spent more with feedback, and non-budget shoppers spent less.

Available for use by faculty, graduate students, post-doctoral students and research assistants, Gatton’s Behavioral Research Lab (BRL) is a unique, controlled setting designed to facilitate marketing research. In addition to 32 workstations, with Biopac Physiological Measurement capabilities and Tobii stationary and mobile eye tracking capabilities, the lab also includes a retail and food area that is used to collect mock grocery store data and conduct food-related research. 

According to marketing professor Dan Sheehan, the lab’s retail section is one of its most valuable aspects. “We can bring students in and try to mimic that they're at Kroger or at a convenience store making real choices that they would make in those settings,” he said. “This realism lets us see how people act in their day-to-day lives instead of a more artificial, experimental setting.”

Sheehan and his colleagues in the marketing department have done plenty of research on smart shopping carts, customer-facing technologies and customer engagement during shopping trips, and they’ve gathered valuable data about those experiences. 

One study in particular focused on a technology called smart shopping carts or real-time spending feedback. Sheehan explained, “If you think about most times that you go to the grocery store, you don't really know how much you're spending. You walk into the store, you start to make purchases, you put them in your cart. And some grocery stores are starting to implement (real-time spending technology) to make sure that consumers know how much they're spending at different points.”

Consumers who participated in the study tended to change the type of products they bought and how much they were willing to spend over the whole shopping trip when spending feedback was present. Interestingly, they found that budget shoppers actually spent more than they normally did when feedback was present, and non-budget shoppers spent less. 

Sheehan and his co-authors also saw a shift in the type of products consumers purchased.  “We found that non-budget shoppers would actually start buying fewer products. Whereas budget shoppers would not buy more products, but they would buy nicer products. They would switch from buying store brand products to buying more nationally branded or more indulgent products.”

So what are the implications for store managers? “If you're a store that has a lot of budget shoppers, (using this technology) is going to increase the amount of money people spend in your store because telling them how much they're spending sort of alleviates the worry about overspending. 

If you have a lot of non-budget shoppers, this could reduce their spending, which might not be a great thing, but you might have more happy customers because they know exactly how much they're spending.”

Sheehan maintains that any time consumers have more information and feel that retailers are looking out for them, it creates opportunities to better serve and meet those customers' needs, which will in turn create higher levels of customer satisfaction. 

“The research we're doing here has broad implications for consumers, for retailers, and for managers about how they should guide their decisions,” he said. 

Listen to Tom Martin's interview with Dan Sheehan here. The interview also aired on WEKU-88.9 FM during "Morning Edition" and "All Things Considered" and a text version was published in the Lexington Herald-Leader’s "Business Monday" section

Smart Shopping Carts: How Real-Time Feedback Influences Spending

Authors:

Daniel Sheehan, Assistant Professor of Marketing and Supply Chain, Gatton College of Business and Economics at the University of Kentucky

Koert van Ittersum, University of Groningen

Brian Wansink, Cornell University

Joost M. E. Pennings, Maastricht University

Publication:

Journal of Marketing, Vol. 77, Issue 6, pages 21-36, July 2013

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