Monday, September 26, 2011

The IKEA Effect

The Neoacademic blog highlighted an interesting new piece of research last week regarding the IKEA effect.    For years, experts have pointed out that consumers love IKEA products in part because they have to exert effort to put the items together.  Many experts also have recounted the story of the launch of cake mix products in the 1950s.  Originally, the mixes did not require much effort at all on the part of the consumer.   However, when manufacturers changed the mixes to require some effort (adding eggs, vegetable oil, etc.), the mixes began to sell quite well.

In a new study published in the Journal of Consumer Psychology, scholars Michael Norton, Daniel Mochon, and Dan Ariely examined whether they could provide more concrete evidence supporting the IKEA effect.   In other words, do people value  things that they have created for themselves more highly than if others created it for them?   The scholars conducted a series of experimental studies.   For instance, in one experiment, subjects bid on IKEA items that they had either built themselves or simply examined.   The subjects bid over 60% more for the items that they had constructed themselves.  

The results have interesting implications for many brick-and-mortar retailers in my view.  Many of these retailers face the serious threat of losing sales to internet firms.  Could the brick-and-mortar retailers retain more customers by making their shopping experience more interactive and engaging, including the use of mas customization techniques?  Many have argued that they could.  Now we have another reason why an interactive shopping experience could yield better results.  If that interactivity involves "constructing" one's own product, perhaps through a customization experience, then retailers may increase buyer willingness-to-pay.    Customization, then, may have multiple benefits.   From IKEA to Build-a-Bear, we have plenty of examples that support this notion. 

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