Context
In the post Covid economy, many consumers feel that their purchasing power has decreased and consequently feel that they should have more control over their spending: indeed, consumers continue buying necessities such as cleaning products, but no longer indulge in luxuries such as cosmetics. Overall, the economic climate seems to favor frugality among consumers. Frugality is a consumer lifestyle in which consumers are restrained in acquiring and resourcefully using economic goods and services to achieve long-term goals. This change in consumer behavior has led firms from M&S to Asos to propose steep discounts, which constitute a conundrum for frugal consumers. Indeed, because of steep discounts, frugal consumers may be torn between the desire to restrain their spending and the urge to respond to a good deal. In an article published in 2021 in the Journal of Business Research, Kapitan, Mittal, Sundie and Beal explain how those apparently paradoxical longings may be reconciled.
Research questions
The starting point for this article is the fact that steep discounts may tempt frugal consumers, which is consistent with their responsiveness to bargains but inconsistent with their need to control their spending. The authors propose that felt need for products and services may warrant the frugal consumer’s purchase, thus resolving the paradox. Therefore, they formulate the following research questions:
– Do steep discounts encourage spending among frugal consumers?
– What is the role of felt need on purchase intent towards steeply discounted goods among frugal consumers?
Method
To answer these research questions, Kapitan, Mitta, Sundie and Beal resorted to a mixed methods approach.
Study 1 consisted in a qualitative exploratory approach. The authors conducted interviews of 11 frugal consumers (students who received a 10$ reward for their participation) to better understand frugality and underlying behaviors.
Study 2 was devised based on the findings from Study 1. 306 undergraduate students (who received course credit for their participation) were asked to rate the attractiveness, felt need and purchase intent towards several products and were randomly assigned a high (60% off) or low (10% off) discount condition.
Study 3 replicated the results from Study 2 at two different points in time, to check if participants would update their perceived need for the products overtime according to the discount. 123 participants from a panel were presented with offerings and asked to rate them. One week later, they were presented with the same offerings that were randomly assigned a small (10% off) or large (60% off) discount.
Results
– The main characteristics describing frugal consumers are:
(1) their planning and control of spending,
(2) the role of functional need or usefulness of product,
(3) the fact that deals constitute temptations for these consumers,
(4) their bargain-hunting tendencies,
(5) their triumphant attitude when scoring a good deal.
In other words: frugal consumers attempt to restrain their spending and pride themselves on their tight control over spending, but, at the same time, they exhibit strong responsiveness to good deals. They tend to warrant their purchases through the perceived need for the products.
– The more frugal the consumer, the higher the felt need for a deeply discounted offering, and, in turn, the higher the purchase intentions for that offering.
– When presented with a steep discount, frugal consumers tend to update their perceived need towards the product. Put differently, a steep discount entices frugal to consumers to reconsider how much they need a product and to indulge into buying it. However, perceptions of need will only be heightened when the offering is at least moderately needed beforehand. In other words, a steep discount can push a frugal consumer’s perceptions of need from “maybe I need this product” to “I really need this product”. But a steep discount will have no effect on perceived need or purchase intent if the frugal consumer does not view the product as a necessity.
– To sum up: when a product considered as a necessity is steeply discounted, heightened perceptions of need trigger the satisfaction of warranted spending, which ultimately reconciles frugal consumers’ control over spending and responsiveness to good deals.
Why is this article relevant for researchers?
This article is particularly relevant for researchers because it sheds new light on the frugal consumer’s behavior. Usually, frugality is studied in respect with unplanned spending, materialistic values, status consumption or trait characteristics. This paper is original is the sense that it investigates the psychological process that may explain the paradox between two characteristics of frugal behavior. However, the authors recommend that results be checked “in the field”.
This research opens avenues for research on the frugal consumer’s behavior. First, this article investigates the role of steep discounts in the case of an individual consumption. However, frugality may be studied in the case of social consumption: for instance, will a steep discount encourage frugal consumers to spend more at a party or with friends? Moreover, the present findings seem to advocate for the validity of steep discounts on utilitarian products, because consumers already have a need for them. Future articles may investigate which levers may create heightened need perceptions for hedonic products among frugal consumers, since steep discounts fail to trigger them.
Why is this article relevant for professionals?
As mentioned in the introduction, these findings are particularly relevant in a post-covid economy, at a time when frugality is gaining ground among consumers. The present results highlight the efficiency of steep discounts among frugal consumers in the case of products with a utilitarian value. This is particularly interesting, since many industries have attempted to use discounts to gain consumers post-Covid. However, this article suggests that in some sectors, such as luxury or fashion, resorting to steep discounts – which is a widespread practice – may be counterproductive, since they are considered as luxuries rather than necessities by frugal consumers.
More broadly, by proving the importance of perceived necessity of the offerings, the authors recommend that managers highlight the need for the product by communicating on the quality, the characteristics, the scarcity of the product – or, more generally everything that may heighten the frugal consumer’s perceptions of need.