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Working Paper

There Is More to Planned Purchases Than Knowing What You Want: Dynamic Planning and Learning in a Repeated Multi-store Price Search Task

Yanliu Huang and J. Wesley Hutchinson, 2010 [10-106]

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When people move to a new area or suddenly need to purchase items they never have needed to purchase in the past, they must become acquainted with the stores in the local areas that sell the needed items so they can find the best deals. Understanding how people develop plans to achieve that goal has important implications for marketers, policy makers, and the public at large, but to date research on consumer planning has focused largely on questions relating to planned versus unplanned purchases rather than on the nature of consumers’ plans.

Through two lab experiments and one field experiment, researchers Yanliu Huang and J. Wesley Hutchinson explore whether people’s shopping performance can be improved by requiring them to articulate and defend the effectiveness of a shopping plan that would help them achieve their shopping goals. They hypothesize, broadly, that the effort expended in creating and then justifying the plan will improve people’s shopping outcomes and that the learning that comes from this process can then be transferred to future shopping experiences.

Lab experiments
For the lab experiments, which are conducted via computer, participants engage in two shopping tasks, both set in fictional countries, each with three stores—a “ripoff” store whose price is always very high, a “bargain” store whose price is always low, and a hi-lo store whose price ranges from high or higher than the ripoff store’s to low or lower than the bargain store’s. For the first task, participants receive a sum of the fictional country’s currency and are told they must make eight shopping trips, and on each trip, they must purchase a shirt from one of the three stores. Each journey to a store has a small cost associated with it, and participants are told that at the end of the experiment, their leftover fictional money will be converted into real money.

Participants are assigned to one of three conditions. In the control condition, they are simply given the shopping instructions; in the planning condition, they are asked to formulate and justify a shopping plan; in an upper-benchmark condition, they are instructed on the best way to conduct their search. The second task repeats the first, but in a new fictional country with a different fictional currency and with no participants receiving explicit guidance. Thus, the second task allows the researchers to see if the learning from the first task is transferred to the second.

The second experiment replicates the first, except that the control condition is identical to the planning condition—minus the justification element. This allows the second experiment to capture the special benefits of justification.

The results support the researchers’ hypotheses: participants who are asked to create and justify their shopping plans do better on their shopping tasks than the control group and perform almost as well as those who are instructed about the best shopping strategy. In addition, those who are asked to create a plan without justification do not perform better than the control condition where no planning is done at all. Furthermore, participants do better on the second task than on the first, showing that they are successfully transferring their learning from the first task.

Field experiment
To see if their findings hold up in a real-world situation, the researchers conduct a field experiment at a shopping mall, eight days before Christmas. Shoppers at the mall are asked what their shopping goals are and are then asked either to describe their detailed plan for the day’s shopping and why they think their plan will help them achieve their shopping goals (the planning-and-justification condition), or to describe why they have chosen to shop at that specific mall (the control condition). All participants are instructed to come back after two hours to take an exit survey and receive a gift card.

The results of the field experiment bear out the results of the lab experiments: those who formulate and justify shopping plans spend more time shopping, visit more stores, and spend less money than those in the control condition, making both fewer unplanned purchases and spending less on planned purchases.

Implications
While the findings of the study are primarily of benefit to consumers, manufacturers can also benefit by providing customers with messages and promotions that fit customer planning (e.g., “using coupons helps you remember what you want and saves you money”)—a strategy that, in turn, may increase customer satisfaction.

Yanliu Huang is Assistant Professor of Marketing at LeBow College of Business, Drexel University. J. Wesley Hutchinson is Stephen J. Heyman Professor and Professor of Marketing at the Wharton School, University of Pennsylvania. The data reported for experiments 1 and 2 were part of the first author’s doctoral dissertation under the supervision of the second author at the University of Pennsylvania.

Acknowledgments

The authors thank the Wharton Behavioral Laboratory and the Marketing Science Institute for support in data collection and David Bell, Barbara Kahn, Patti Williams, Gal Zauberman, and Meng Zhang for comments on prior versions of this manuscript.

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