Compulsive Buying Behaviour

Compulsive Buying Behaviour:

                   A Marketing Perspective

Theory and Hypothesis:

Compulsive buying is more likely to manifest in people who are prone to depression, mood swings, anxiety, it can be genetic thereby indicating it runs in the family, and it is beyond the power of a buyer to control. Studies (Black DW, 2007) suggest that compulsive buyers are more likely to return their products and are in fact caught in a vicious cycle of purchasing and returning the items thereby stuck in the loop of purchasing and purging. Thus shopping bulimia is on the rise and is popularly called ‘Binge and Purge Buying’. There are various ways in which marketers thrive upon the vulnerability of a buyer exhibiting the traits of a compulsive shopper.

Sales promotion consist of a collection of incentives tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade (Kotler and Kettler. 2006, p.543). The marketing strategies like coupons, sales and promotion techniques like ‘Buy one get one”, etc are all examples of such stimli, we will study the relation between these and compulsive buying which leads us to our first hypotheses:

H1: Compulsive buying is positively correlated to promotional offers and discounts.

Studies show that store environments have a significant influence on these consumers’ emotional states, including pleasure and arousal, which in turn influence consumers’ impulse buying behaviors in the  store (Yingjiao Xu,2007). Store layout, a study of how the placement of products in horizontal and vertical fashion affects the consumer behaviour and is critical towards the creation of the store image. Consumers may not or may abandon the store based on the interior design of it. We want to ascertain how the design patterns of the store influences consumers’ buying behaviour.

H2: Compulsive buying is positively correlated with the store layout.

Use of Internet banking and credit cards have increased over times. Also, people get more cautious and responsible while spending, when they have the currency at hand. This may not be the case if you are using digital currency. User base of E-wallets such as Paytm and Freecharge have also increased over time. This leads us to our third hypotheses.

H3: Compulsive buying is positively correlated with cashless payments.

India has an internet user base of about 450 million as of July 2017, 40% of the population. The penetration of e-commerce is growing at an unprecedented rate, adding around 6 million new entrants every month. The ease and feel of shopping online and also the advantage of shopping on the go can lead to higher amount of spending. Flipkart’s Big Billion days and Amazon’s Great Indian Festival Sale have also lead to increased sales. This leads us to our fourth hypotheses.

H4: Compulsive buying is positively correlated with the advent of E-commerce.

Successful customer communications are the foundation of all sales (Steve W. Martin,2010), sales linguistic is an important tool for facilitating the decision making  process between prospective customers and salesperson. The ability of a salesperson to understand the needs and buying behaviour of customers ensures that the product is actually sold. Since sales linguistic significantly impacts the buying decisions, it led to our next hypothesis to study the impact of persuasion tactics on compulsive buyers.

H5: In-store staff persuasion is positively related to compulsive buying.

Proximity to shopping malls is a criterion which many urban dwellers consider while selecting their residence (Rajagopal, 2009). Studies suggest that shopping behaviour and distance to shopping mall are related (Rajagopal,2009). This led us to our next hypotheses where we will explore the relationship between compulsive buying and distance to the mall.

H6: Proximity to shopping malls is positively related to compulsive buying.

Studies suggest that crowd can significantly affect the buying behaviour and this has been called the ‘Herd Behaviour’ and it is a situational factor. Herding is defined to include any behaviour similarity /dissimilarity brought about by the interaction between individuals (David Hirshleifer and Siew Hong Teoh, 2001). These factors led us to our next hypotheses where we will explore the relationship between compulsive buying and herd behaviour.

H7: Compulsive buying is positively correlated to crowd.

The option of credit card as a payment mode can lead to splurging behaviour in the customers, studies have shown that credit card usage increases the probability of spending (Prelec & Simester, 2001; Soman, 2001; Soman & Cheem, 2002) and that the spending amount increases as well (Prelec & Simester, 2001; Soman, 2001). Feinberg (1986) suggests that the “credit card stimuli” nurture behaviors that intensify spending impulses, amount spent, increase predisposition for spending, and diminish the decision time to spend. This led to our next hypotheses which will find the relation between credit card option as payment mode and compulsive buying.

H8: Credit card option as payment mode is positively correlated to compulsive buying.

Methodology Used:

Data Collection Method:

We are using two-step process; our first goal is to come up with a set of consumers who are affected by compulsive buying behaviour. For that we are using a Clinical Screener for Classifying for Compulsive Consumers by Faber and O’Guinn 1989, 1992). Questionnaire is given in the Appendix at the end of this paper. It will send in the form of mail survey.We will be sending our first questionnaire to people from tier 1 and tier 2 cities so that we can get sufficient number of compulsive buyers. Respondents are most likely to be well educated. After we come up with consumers who indulge in compulsive buying, we will do our second survey again in the form of mail questionnaire (given in the Appendix at the end of this paper) on these consumers only.