Nothing personal -- Study shows how caring sentiments can affect business sense
Imagine you are selling a used car on eBay. You will demand a higher price for the car if your toddler is sitting on your lap, says surprising new research from the December issue of the Journal of Consumer Research. Researchers from the University of Toronto found that simply thinking about a personal relationship causes sellers to set a higher price, even if the relationship is not directly related to the transaction.
"Relationships are like the lenses that guide our view, not just in that particular relationship or with the relationship partner, but in other unrelated circumstances as well," says Pankaj Aggarwal, who authored the piece with doctoral student Meng Zhang.
The study is the first to examine how relationships affect our feelings of loss aversion. When selling an item we own, we tend to demand a price that is higher than what we are willing to pay for it. Personal interactions cause us to feel like parting with the item would be more of a loss by evoking sentiments about how the value of an item is more than just monetary – and thus leading to a higher asking price.
"This research has some important implications, not just for marketing managers, but also for consumers," write the authors.
They explain, "The next time you are negotiating with a person when buying a used car, it might be worthwhile not to call him at home – calling him at work may get you a better price!"
Based on their findings, Aggarwal and Zhang also point out that resale businesses (including eBay) may want to encourage consumers to think in exchange rather than communal terms.
Pankaj Aggarwal and Meng Zhang, "The Moderating Effect of Relationship Norm Salience on Consumers’ Loss Aversion." Journal of Consumer Research: December 2006.
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