Less may be more when shopping for gifts this holiday season, according to new research.
A study by Kimberlee Weaver, Ph.D., of Virginia Tech University and Drs. Stephen Garcia and Norbert Schwarz, psychologists at the University of Michigan, reveals that bundling a less expensive gift with a more expensive gift actually reduces the impact of the nicer gift.
“Suppose you’re trying to impress a loved one with a generous gift. One option is to buy them a luxury cashmere sweater. A second option is to buy them the same luxury cashmere sweater and to add a $10 gift card to their favorite coffee house,” said Weaver, assistant professor of marketing at Virginia Tech.
“If their budget allows, most gift givers prefer the second option — after all, the package includes a very generous ‘big’ gift plus a mildly generous ‘little’ gift. Ironically, however, the loved one who receives the gift is likely to perceive the luxury cashmere sweater alone as more generous than the combination of the same luxury sweater plus a gift card.”
This “presenter’s paradox” happens because gift givers and those receiving the gifts have different perspectives, she said. The gift recipient looks at the overall package as a whole. If the package consists of a luxury sweater, it makes for a very generous “big” gift. Adding a not-so-generous “little” gift makes a less generous total package, researchers say.
The researchers conducted a series of studies to illustrate the presenter’s paradox with a variety of products, from bundles of music and hotel advertisements to scholarships and the design of penalty structures.
They found that people who evaluate a bundle follow an averaging strategy, which leads to less favorable judgments when mildly favorable pieces (the gift card) are added to highly favorable pieces (the sweater). The gift giver, however, fails to anticipate this averaging effect.
“Unfortunately, this strategy backfires because the addition of mildly favorable information dilutes the impact of highly favorable information in the eyes of evaluators,” said Garcia. “Hence, presenters of information would be better off if they limited their presentation to their most favorable information — just as gift-givers would be better off to limit their present to their most favorite gift.”
According to the researchers, discrepancies between the perspectives of gift givers and gift recipients result from their different tasks, which elicit different information-processing styles.
Assembling a bundle of goods focuses presenters on the individual components and their contributions, so from this piecemeal perspective, more is better. In contrast, they said, evaluators evaluate the bundle as a whole. This leads to an averaging strategy — and mildly favorable pieces dilute the impact of the extremely favorable pieces, thwarting the presenter’s intentions.
The “presenter’s paradox” sheds new light on how to best present information, said Weaver.
“Whether it is a public relations expert pondering which reviews to include on a book jacket, a music producer considering which songs to include in a music album, or a legal team building up arguments for a case, they all face the important task of deciding what information to include in their presentations. So do consumers who apply for a job and homeowners who try to sell their house,” she said.
All of them, Weaver said, run the risk of inadvertently diluting the message they seek to convey by their efforts to strengthen it. “Fortunately, there is a simple remedy: Take the perspective of the evaluator and ask yourself how the bundle will appear to someone who will average across its components. Doing so will alert you to the fact that others will not always share your sense that more is better.”
The research is slated to be published in the Journal of Consumer Research.
Source: University of Michigan