November

2011

Literature Review for Impulse Buying

Udhay Mahajan
This paper explores the concept of impulse buying/unplanned buying and the consumers impulse buying behavior in the apparel industry. This paper focuses on the term impulse buying as a whole and its role in the apparel industry. Primarily, six journals and reports have been reviewed for this literature review and a lot of topics such as role of store environment, consumer psychology, online impulse buying and types of impulse buying will also be discussed in this review.

P e a r l A c a d e m y o f F a s h i o n , M A F M G 2 0 1 1

Research has found an upward trend in impulse buying in general, and impulse buying is frequently foreseen among mall shoppers. Impulse purchases account for over $4 billion in annual sales in the US (Mogelonsky, 1998). Retail merchants know that a certain percentage of their sales are made to consumers who buy in response to a sudden impulse. (Clover, 1950). Brick-and-mortar stores are no longer the only retail sales channel. With the advent of the World Wide Web and the development of the technology to allow the user to interact and communicate with a website, online stores are emerging and having an increasing impact on the retail market. The internet serves as a convenient shopping channel, and can be seen as an alternative impulsive (Jones , Reynolds , Weun, & Beatty, 2003) channel (Phau and Lo, 2004). Marketers and retailers recognized the significance of impulse buying in brick-and-mortar stores many years ago, and have used various psychological strategies and techniques to increase sales. In order to encourage and elicit an impulse purchase, brick-and-mortar stores position point-of-sale displays at the checkout, know the optimal location of product placement on shelves, and understand how to bundle products to appeal to customers. In grocery stores, retailers strategically place low- cost hedonic items1, such as gum, candy and magazines at the checkout. McDonalds has been capitalizing on impulse buying for decades through bundling products by instructing ca (Rao, 2010; Dholakia, 2000; Han, Morgan, Kotsiopulos, & Kang-Park, 1991)shiers to ask, Would you like an apple pie with that? after the customer has ordered a burger, pop and fries (Hodge, 2004). IMPULSE BUYING A planned purchase is characterized by deliberate, thoughtful search and evaluation that normally results in rational, accurate and better decisions. Contrary to a planned purchase, "impulse buying" is a spontaneous and immediate purchase where the consumer is not actively looking for a product and has no prior plans to purchase. Beyond spontaneity, impulse buying may also be described as an intense, exciting urge to buy without regard to the consequences of the purchase decision. Impulse buying is more emotional than rational. Impulse purchase or impulse buying describes any purchase which a shopper makes but has not planned in advance (Baumeister, 2002; Stern, 1962). Engel and Blackwell (1982) define an impulse purchase as "a

buying action undertaken without a problem previously having been consciously recognised or a buying intention formed prior to entering the store". Phillips and Bradshaw focused on point-of-sale interaction: Intent to purchase is far from fixed and can continue to be modified right up to the point of purchase. According to the website moneystuff.com, Impulse buying happens when people get caught up in the hype of a situation and buy something without thinking much about it. Impulse items may be new products, samples or well-established products at unexpected low prices. Situations that play on shoppers impulsiveness include: items on sale tables that advertise 'huge bargains' or '10% off all items' or the enticement of announcements that something is half price for the next 5 minutes. Impulse buying occurs when a consumer experiences a sudden, often powerful and persistent urge to buy something immediately (Rook, 1987). Impulse buying may be consequent to consumer perceived environmental cognitions or experienced internal states or traits, which can evoke positive reactions from shoppers that lead to profit gains (Newman & Patel, 2004). When buying on impulse, the consumer makes an unintended, unreflective, and immediate purchase (Jones et al. 2003). In other words, the decision to buy the product is made inside the store, with no preshopping plans to buy the item (and with no shopping tasks for that type of product, either), and immediately after seeing the product. The consumer experiences a sudden, often powerful and persistent urge to buy the product immediately, and usually does not reflect much on the consequences of buying the product (Beatty & Ferrell 1998; Rook 1987, 191). Beatty and Ferrell (1998) state that Impulse buying is a sudden and immediate purchase with no pre-shopping intentions either to buy the specific product category or to fulfill a specific buying task. The behavior occurs after experiencing an urge to buy and it tends to be spontaneous and without a lot of reflection (i.e. it is impulsive). It does not include the purchase of a simple reminder item, which is an item that is simply out-of- stock at home CLASSIFICATION OF IMPULSE BUYING Rao, 2010 cites four types of impulse purchases: 1) Pure impulse: A novelty or escape purchase, which breaks a normal buying pattern. 2) Suggestion impulse: A shopper having no pervious knowledge of a

product sees the item for the first time and visualizes a need for it. 3) Reminder impulse: A shopper sees an item and is reminded that the stock at home needs replenishing or recalls, an advertisement or other information about the item and a pervious decision to purchase. 4) Planned impulse: A shopper enters the store with the expectations and intention of making some purchasers on the basis of price specials, coupons, and the like. According to Han et al. (1991), impulse buying was classified as four types: 1. 2. 3. 4. Planned impulse buying; Reminded impulse buying; Fashion-oriented impulse buying*; and Pure impulse buying.

CHARACTERISTICS OF AN IMPULSE PURCHASE Rook (1987) describes impulse buying as exhibiting a number of characteristics: - The feeling of an overwhelming force from the product; - An intense feeling of having to buy the product immediately; - Ignoring of any negative consequences from the purchase; - Feelings of excitement, even euphoria; - The conflict between control and indulgence. This description suggests emotion overpowering a more cautious and considered approach to a purchase. Rook and Fisher (1995) note "Impulsive behavior has a long history of being associated with immaturity, primitivism, foolishness, defects of the will, lower intelligence, and even social deviance and criminality". WHAT TRIGGERS AN IMPULSE PURCHASE Many different factors have been suggested as triggering the impulse to purchase. By and large, triggers are divided into two types external cues and internal cues (Wansink 1994). External cues are specific triggers associated with buying or shopping. They involve marketer-controlled environmental and sensory factors. Internal cues refer to consumers self-feelings, moods, and emotional states. Many studies on impulse buying more or less directly concern causes or antecedents of an impulse purchase. Based on previous research, variables that cause an impulse purchase can be categorized to person-related,

product-related, shopping-environment related, and situational (cf. Dholakia 2000; Verplanken & Herabadi 2001, 72). Person-related causes Impulsiveness as a trait has gained a lot of attention in impulse buying research. The origins of this thinking are in psychology, as a persons general impulsivity is seen as affecting also impulse purchases. The basic assumption behind these studies is that individuals vary in their proclivity to buy on impulse (Jones et al. 2003; Weun et al. 1998). This impulse buying tendency, measured usually using a quantitative scale, has been seen as one factor in triggering consumers into impulse buying (Beatty & Ferrell 1998). The higher the consumers impulse buying tendency, the more likely an impulse purchase will be. Product-related causes Some products or product categories have been found to be more susceptible to an impulse purchase. Already in 1962 Stern suggested that those products with a low price or a short product life will be more likely to be bought on impulse. Also Bellenger et al. (1978) proposed that impulse buying varies by product. This view, suggesting that product-inherent attributes as such would encourage impulse buying, has been later criticized, and currently it has been presented that it is the consumer-product links that are more important than the product itself. According to a social psychological viewpoint, those goods that project a persons self- image are especially likely to be bought on impulse (Dittmar & Beattie 1998). In addition, the consumers impulse buying tendency has been found to vary according to different product categories (Jones et al. 2003). In this model, also consumers involvement with the product category affects impulse buying tendency. Shopping environment-related causes There are many ways an impulse purchase can be induced by the factors in the shopping environment. In general, in-store browsing increases the likelihood of an impulse purchase, i.e. the longer the consumers browse the store, the more likely it is that they end up buying on impulse (see e.g. Beatty & Ferrell 1998). Therefore, the

so-called atmospherics of a store are important in attracting consumers to stay in longer. When inside the store, consumers confront many marketing stimuli that are used to encourage impulse buying. For example, product presentation aspects such as special displays, end-of aisles displays, shelf signs, tempting graphics or copy, or sales promotions can affect impulse buying (see e.g. Abratt & Goodey, 1990). When applied to an online shopping environment, for example the media format used to present the product information may have an affect on impulse purchase intentions (Adelaar et al. 2003). Situational causes Also many situational factors seem to have an effect on the occurrence of an impulse purchase. For example, the more perceived money and time available consumer has, the more likely an impulse purchase is (Beatty & Ferrell 1998). Also other situational variables such the availability of credit or the consumer being confronted with a too good a bargain to pass up have been described as part of the impulse buying experience (Dittmar & Drury 2000). Impulse buying is a pervasive phenomenon in the North American lifestyle (Rook, 1987) It has been estimated that 50% of the money spent at supermarkets and mass merchandisers in the U.S. is unplanned; Wood, 1998). The impulse to buy constitutes a particularly salient problem in todays society, perhaps due to marketing innovations such as credit cards, cash machines, home shopping networks, and Internet shopping, which make it easier than ever for consumers to purchase on a whim (Rook, 1987). In addition, many retailers now view unplanned and impulse buying as important additions to their overall business and actively create retail environments to encourage this type of buying behavior (Wood, 1998). Unfortunately, impulse buying can result in detrimental consequences. PERSONALITY FACTORS POTENTIALLY RELATED TO IMPULSE BUYING Lack of Control (Impulsivity). Control relates to the individuals characteristic mode of monitoring impulse. The underlying continuum is conceived of as representing

excessive containment of impulse and delay of gratification versus an insufficient modulation of impulse and an inability to delay gratification. Controllers are reflective, cautious, careful, rational, and sensible. They like to plan their activities (Tellegen 1982). Impulse buying may be one manifestation of this personality trait representing a lack of control. Absorption Absorption is a tendency to become immersed in self-involving experiences triggered by engaging external and internal stimuli (Tellegen and Waller, in press). Highly absorptive persons are more likely to have unusual and unconventional thinking and to be able to suspend disbelief. More specifically, they: 1) are emotionally responsive to engaging sights and sounds; 2) are readily captured by entrancing stimuli; 3) think in images and synesthetic and other cross modal experiences; 4) become absorbed in vivid and compelling recollections and imaginings; and 5) experience episodes of expanded awareness and altered states. Absorption is an interesting construct for consumer research because it can play a role in how people respond to environmental and sensory cues, including those that influence the purchase and consumption of products. Stress Reaction. Stress reaction represents systematic individual differences in the frequency and intensity of responding to situational cues with negative emotional states (i.e., anxiety, anger, distress, and guilt). This negative emotionality is experienced under daily hassles or everyday life conditions rather than intense pressures such as death or divorce (Bar-Tal, Cohen-Mansfield, and Golander 1998). Stress reaction is characterized by salient themes such as tension, jumpiness, and worry-proneness. Highly stress-reactive people may view their own emotional responses as unwarranted overreactions or even as inexplicable. ROLE OF SHOPPING ENVIRONMENT IN A CONSUMERS IMPULSE BUYING DECISION The in-store shopping environment is a very important determinant of impulsive buying. It is constituted by micro variables that are specific to

particular shopping situations and confined to a specific geographic space. Factors such as in-store background music, store display, scent, in-store promotions, prices, shop cleanliness, shop density or congestion and store personnel all make up the in- store shopping environment, among others. Zhou and Wong (2004) categorized the in-store shopping environment into 2 separate effects of in-store point-of-purchase (POP) posters on shoppers impulse behavior in a supermarket setting. The first is the promotional effect, which includes stimuli such as promotional discounts (coupons, multiple-item discounts and gifts) and cheaper prices. The second was termed the atmospheric engagement effect (enjoyment and attractiveness) conveyed by the POP posters. Factors with a promotional, informative and economic effect Coupons The effect of coupons is very much closely linked to moods, emotions and psychological cognitions (Heilman et al., 2002). Of particular importance to this study were the effects of in-store instant coupons. Heilman et al. (20- 02) referred to these coupons as surprise coupons and described them as unanticipated coupons encountered while in the shop and are intended to be used for that particular shopping trip. Windfall or unanticipated gains are spent more readily than gains that were anticipated according to Heilman et al. (2002). This tends to violate the fundamental economic assumption that posits that funds are fungible - that the source of money should make no difference in its consumption. The authors con- tend that the increased purchasing due to the coupon windfall gains was assumed to be a result of psychological income effect. By decreasing the amount of money a consumer had originally planned to spend in the store, the surprise coupon could have a psychological income effect that would allow for more unplanned purchases on that trip. Unexpected cheaper prices and discounts/sales/specials The effect of unexpected cheaper prices on impulse buying is almost similar to the effect of instant coupons since they also present a windfall gain to the consumer. One effect of unexpected price discounts is that of causing a generalized affective effect on consumers (Janakiraman et al., 2006). Therefore, Millman (1986) as cited by Janakiraman et al. (2006) had earlier argued that negative affect

induced by unexpected price hikes might suppress spending by limiting purchase consideration of other goods, while positive affect induced by unexpected price drops might increase spending by expanding consideration of other goods. The consumer mental accounting activity concept can also explain price-induced accounting activity concept can also explain price-induced impulse buying according to Janakiraman et al. (2006). The concept is of the idea that an increase or decrease in the amount spent for an essential item on a given shopping trip would increase or decrease the amount that is perceived to be available to spend on other goods, producing a congruent spillover effect. (Arkes et al. 1994) as cited by Janakiraman et al. (2006) acknowledged that the unexpected price discount results in higher expressions of willingness to pay for unrelated discretionary items. Factors with an atmospheric, entertaining experiential and hedonic effect In-store displays The most important aspect of successful in-store displays is for retailers to understand their customers and their habits according to Terrazas (2006). Strategic displays can then be devised that help to increase sales especially through unplanned purchases by consumers. One strategy may be to identify the commonality of goods bought by list-buyers and then attractively display complementary products next to these common products. Displaying the most popular products purchased by your clients in the back of the store could be another strategy - this forces the client to walk past and be confronted by as many other items first. It is also common practice to separate popular items (strategic display). Bread and milk, for in- stance, will most likely be displayed at the 2 most opposite ends of the store which will force the consumer past a host of products encouraging impulsive buying en route to the other essential product (Terrazas, 2006). Shopping trolleys designed to accommodate kids require strategic trolley height displays that will catch the childrens attention because children play a big role in shopping trends (Terrazas, 2006). Sales people Consumers tend to enjoy a shopping experience with supportive and

friendly shop assistants. Salespeople can really make the shopping experience fun and enjoyable by providing extraordinary service. Consumers enjoy shopping more without the presence of an overbearing salesperson although they do, however, appreciate when a sales- person is nearby and helpful (Jones, 1999). Shop congestion/crowding/shop density Crowding is generally perceived as an unpleasant expe- rience in shopping situations (Bateson and Hui, 1987) as cited by Michon et al. (2005). Consumers adjust to higher retail densities by reducing shopping time, deviating from their shopping plans, buying less to enter express check- out lanes, postponing purchases, relying more on shop- ping lists, reducing interpersonal communications and re- fraining from exploratory behaviours (Michon et al., 20- 05). All these behaviours might militate against consumer im-pulsive buying. FASHION-ORIENTED IMPULSE BUYING* Consumer impulse buying is an important concept along with product involvement as they are involved with a specific product (Jones et al. , 2003). For clothing, fashion-oriented impulse buying refers to a person's awareness or perception of fashionability attributed to an innovative design or style. That is, fashion-oriented impulse buying occurs when consumers see a new fashion product and buy it because they are motivated by the suggestion to buy new products (Han et al. , 1991). Early research into impulse buying behavior concentrated on the typology of impulse buying and understanding the role of fashion involvement in predicting fashion-oriented impulse buying. According to Han et al. (1991), impulse buying was classified as four types: 1. 2. 3. 4. Planned impulse buying; Reminded impulse buying; Fashion-oriented impulse buying; and Pure impulse buying.

They found high evidence of fashion-oriented impulse buying for college students majoring in textiles and clothing compared to students in other majors. Their findings suggested that fashion-oriented impulse buying might be related more significantly to students with majors having high fashion involvement. Subsequent research focused on impulse buying behavior that was based on consumer decision-making process. Ko (1993) found apparel impulse buying was distinguished from reasonable

unplanned buying that was based on emotional preference or objective evaluation rather than rational evaluation. Ko's finding implied that emotional factors (i.e. positive feelings) might lead to fashion-oriented impulse buying when shopping. Limited studies have reported that consumers are likely to be motivated to impulse purchase by high involvement and emotional preference of products. The lack of research focused on the experiential aspects of consumption underscore the need to understand how fashion-oriented impulse buying relates to hedonic consumption tendency or the emotional factor in retail environments. ONLINE IMPULSE BUYING Brick-and-mortar stores are no longer the only retail sales channels. With the advent of the World Wide Web and the development of the technology to allow the user to interact and communicate with a website, online stores are emerging and having an increasing impact on the retail market (Hodge, 2004). According to a recent report, 48.9% of U.S. Internet users made at least one online purchase in 2001, and more than three-quarters say they made 1-10 purchase per year (UCLA internet report 2001). Moreover, consumers respond that 43% of their purchases are impulsive or incremental (Ernst & Young, 2000). Since Internet gives consumers complete access to virtually any product, its always considered a tailor- made tool to trigger impulse purchase. The introduction of online retailing and diffusion of marketing innovations (Rook 1987; Rook and Gardner 1993) such as 24-hour retailing, telemarketing cash machines, instant credit, and home shopping networks make it increasingly easy for consumers to purchase products. As Stern (1962) pointed out, ease of buying is likely to increase impulse purchasing. How does impulse purchase happen online? Both The Yankee Group and Ernst & Young conducted surveys where they asked people why they would make impulse purchase on the Web. According to The Yankee Group (Nov. 2000), 75% of survey respondents indicated that a special sale price would motivate them to make a spontaneous purchase. The second most influential factor was free shipping (49% of respondents). Ernst & Young (Jan. 2000) reported 88% of impulse purchases were because shoppers found products that were offered at good price or on sale. According to these

surveys the common wisdom is clear: impulse buys are price-driven and not because of any specific design or architecture of the web site. Online shopping has been the fastest growing channel of shopping for more than a decade with sales growing at an annual rate of 25 percent. In 2006, online sales reached $136.2 billion, almost a 26 percent increase from 2005 (Brohan, 2007). The future of online retail sales is very optimistic. By 2010, it is predicted that online sales will account for 15 to 20 percent of all retail sales in the US (The Economist, 2000). Online apparel products consistently rank among the most popular product categories sold over the internet (DesMarteau, 2004). One study linked attributes of a web site such as promotion to impulse buying behavior of apparel merchandise (Rhee, 2006). Given the rapid growth of online shopping and the characteristics of online shopping that encourage impuse buying (e.g. open 24/7), impulse buying online is likely to be prevalent. A typical online shopper spends about 30 seconds viewing a web site before they decide to click away or view the merchandise on a web site (Brohan, 1999). This makes creating an enticing web site ever important in drawing shoppers buying attention. Also, impulse buying behavior is primarily stimulus driven (Rook and Fisher, 1995). Thus the effective use of marketing strategies on retail web sites are likely to promote impulse buying. Many online retailers are implementing impulse buying strategies that employ an array of promotional and personalization strategies to entice shoppers impulse purchases (Brohan, 1999). FURTHER STUDY From the literature reviewed it is pretty evident that despite years and years of research on the topic impulse buying, there still lacks a proper definition of impulse purchasing. Many researchers argue that it is triggered in a consumers head through clever marketing while others claim that it has nothing to do with marketing whereas it is the consumer himself that decides whether to buy on impulse or not. For future study, to determine exactly whether and where exactly does impulse/ unplanned buying lie, accurate and extensive experiments need to be conducted to get an exact answer. However for my future study, I would like to study the Indian consumer and evaluate how the middle-class consumer reacts to promotional offers and whether his purchase is actually on impulse or planned.

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