Tuesday, 11 October 2011
Cars and Shopping: Salience, Supermarkets and Farmers Markets
Cash is king, or so they used to say. These days, we mostly use other forms of payment – whether it’s standing orders and direct debits for regular payments or credit cards for pretty much everything else. The move away from cash is a big psychological factor underlying the growth in personal debt - spending money on credit cards is so easy, and it isn't real money, is it? It's also another reason why people prefer to shop in supermarkets rather than in real markets, like this one in Shoreham, West Sussex. It's not just that it’s easy to drive, and park, at a supermarket, but supermarkets take credit cards while real markets tend to deal in cash. Behavioural economics tells us that salience, the “noticeability” of something, is a key factor when we make decisions. Salience is why marketeer's use attention-grabbing words like 'new' and 'free.' Another type of salience comes with things that hurt - the “ouch” factor that suppliers would prefer to avoid. Cash is salient because handing over hard earned notes creates pain that we’d prefer to avoid. Unless, of course, you prefer to live within your means, pay as you go, and keep a grip on how much you’re actually spending. In which case….get yourself to a market a.s.a.p.