mm-ii pp1

7/25/2019 MM-ii pp1

1/13

Electron Commerce Res (2007) 7: 367379DOI 10.1007/s10660-007-9011-8

Factors influencing impulse buying during an online

purchase

Scott A. Jeffrey Rebecca Hodge

Published online: 24 October 2007 Springer Science+Business Media, LLC 2007

Abstract Using actual purchasing behavior by visitors to a High School Reunion

web store, this study examines the factors that lead to an increased willingness by on-

line consumers to purchase impulse items. Consistent with mental accounting and the

psychophysics of prices, we find that peoples purchase of the impulse item increases

with the total amount spent on other items. We also find that linking a US $1 donation

to the impulse item, thereby providing a reason to purchase, increases the frequency

of the impulse purchase.

Keywords Impulse buying E-commerce Reason based choice Mental

accounting

Between 1945 and 1959 impulse purchases, those purchases which a shopper makes

but did not plan in advance, rose from 38.2 percent to 50.9 percent of the total pur-

chases in supermarkets [1]. In the late 1970s researchers found that impulse purchases

accounted for between 27 and 62 percent of purchases in department stores [2]. Morerecently, Annie Seeley, a Food Commission nutritionist stated that seventy percent

of confectionary is bought on impulse [3, p. 23]. A more extreme result was found

by the POPAI (point of purchase industry body) which indicated that 75 percent of

buying decisions are made in-store [4]. Since a large portion of spending can be cat-

egorized as unplanned or impulse, understanding the psychological drivers of this

behavior is of critical importance.

S.A. Jeffrey ()

Department of Management Sciences, University of Waterloo, 200 University Ave. West, Waterloo,ON N2L 3G1, Canadae-mail: [email protected]

R. HodgeE-XYN Web Solutions, P.O. Box 1042, Guelph, ON N1H 6N1, Canadae-mail: [email protected]

7/25/2019 MM-ii pp1

2/13

368 S.A. Jeffrey, R. Hodge

Previous research on impulse purchasing has led to improvements in point-of-sale

displays at the checkout, better location of products on shelves, and an increase in

understanding of product packaging and bundling to appeal to the impulse drive.

While there has been significant research on impulse purchasing in traditional brick

and mortar stores, very little research exists on impulse purchases in e-commerce.This is an important gap to address, because consumer expenditure on the world

wide web (WWW) has grown from US $15B in 1999 to US $69B in 2004; a CAGR

of over 40% [5,6]. While the growth is expected to slow, the short term forecasts are

for 20% to 25% increases over the next few years. This is far above the anticipated

growth in overall retail figures [6]. If online retailers could gain a better understanding

of the factors that encourage impulse purchases online, even a 1 percent increase

in sales from impulse purchases would lead to an additional US $690 million in

revenues. With such a lucrative opportunity available to online retailers it is difficult

to understand why little rigorous research in this field exists. We hope this studyprovides a first step towards addressing this gap in the literature, and encourages

other scholars to study this field.

1 Impulse purchases

Stern [1] wrote that impulse buying is synonymous with unplanned buying and de-

fined it as any purchase which a shopper makes but has not planned in advance.

This definition is fairly consistent among other impulse purchasing literature [7,8].More recently, researchers have extended this definition beyond a simple unplanned

purchase to include an emotional element or an urge to make the purchase. Rook [ 9,

p. 191] defined impulse buying as when a consumer experiences a sudden, often

powerful and persistent urge to buy something immediately. Piron [10] conducted a

thorough survey of impulse purchasing literature and proposed a more specific and

comprehensive definition for impulse buying that includes four components: the pur-

chase is unplanned, it is the result of an exposure to stimulus, it is decided on-

the-spot, and it involves an emotional and/or cognitive reaction. This is the working

definition that will be used for this study. In this paper, we will use the terms impulsebuying and impulse purchase interchangeably.

Previous research has classified impulse purchasing into four types: pure, sugges-

tion, reminder, and planned [1,4]. Pure impulse buying signifies a situation where

the purchase is outside of the normal purchase behavior and is initiated by emotional

appeal. For example, a consumer who rarely buys magazines might see a People

magazine at the checkout while waiting in line at the grocery store and want it based

on the cover story or pictures. In this case, the purchase of the magazine would be

considered pure impulse because it is outside of the normal purchase behavior and

it satisfies an immediate desire initiated by an emotional appeal. Suggestion impulse

buying occurs when the consumer sees the product, visualizes an application for it,

and decides that they need it. This is not a pure impulse purchase because the user

has determined a rational or functional purpose for the item, whereas during the pure

impulse transaction the user is fulfilling an emotional desire. It is these two types of

impulse buying we will consider in this study.

7/25/2019 MM-ii pp1

3/13

Factors influencing impulse buying during an online purchase 369

We will not consider reminder impulse buying which occurs when a purchase

is made based upon something reminding the consumer to make the purchase. In

contrast to a pure impulse purchase, the item is something that the user normally

purchases but is not necessarily on their current shopping list. For example, a shopper

might walk down the cereal isle and realize that they are almost out of Cheerios. If this

consumer chose to purchase cheerios, it would technically be an impulse purchase as

it was unplanned, but it something that is generally purchased by the shopper. We will

also not consider planned impulse buying which occurs when the consumer buys a

product based on price and/or product specials. For example, someone who consumes

a great deal of orange juice may see a special price on it and buy them, even if it was

not an intended purchase for that trip to the market.

As mentioned earlier, most existing research on impulse buying has focused on

brick-and-mortar stores [7,8,1115] and television infomercials [16]. Previous re-search on e-commerce has traditionally focused on improving the user experience

[17], advertising [18,19], and identifying factors that lead to an initial purchase on

a web site [20]. Only limited work has been done on impulse purchases in an online

environment and any results with respect to impulse purchases were inconclusive [21,

22]. In addition, most of the previously studied antecedents to impulse purchases have

been emotional. In this paper we take a more cognitive approach by analyzing how

the concept of purchase justification plays a role in impulse decision.

Before discussing our contribution to this literature, we analyze the other an-tecedents to impulse purchases. Previous research has mostly discussed emotional

antecedents to impulse purchases, in particular, the effect of mood and positive vs.

negative affect. Rook and Gardener [23] looked at moods and found that they drove

overt behavior. Pleasure, arousal, and dominance are all associated with the encour-

aging or suppression of impulse purchases. Positive affect can encourage increase

browsing behavior which was also found to lead to higher levels of impulse purchases

[23,24].

Exploratory research by Madhavaram and Laverie [22] showed a number of self-

reported stimuli that led their subjects to purchase impulse items on the Internet.

Consistent with research on brick and mortar purchases, many of the same visceral

influences led to impulse purchases such as appeal of the product, advertisements,

and compelling presentation. In addition, their participants also confirmed that those

people in a good mood were more likely to purchase impulse items and doing recre-

ational browsing.

Rather than examine the more emotional antecedents, we want to explore a more

cognitive process that might lead people to purchase impulse items; that of ease of

justification of the purchase. While we are not discounting the fact that the creationof an impulse to buy is generally emotional, we believe that only if cognitive forces

impinge on the decision, will the actual purchase be made. In this paper, we will

analyze how mental accounting [2527] and providing a reason to purchase increase

the likelihood that someone will make an impulse purchase.

7/25/2019 MM-ii pp1

4/13


2 Cognitive factors leading to impulse purchases

As has been shown in previous research [28], people like to have reasons to do things.

This is particularly true for the purchase of items viewed as more frivolous [ 29]. In

this section, we will propose two potential justifications for purchasing an impulseitem on the web. Specifically, we will look at the role mental accounting plays in

diminishing peoples sensitivity to additional purchases as well as the provision of a

specific reason to purchase.

2.1 Mental accounting and impulse purchases

Rather than treating money as a fungible commodity, consumers often segregate dif-

ferent sources and uses of cash into various mental accounts [2527,30,31]. These

accounts generally have relative firm barriers between them, making it a non-trivialprocess to reassign expenses to a different account. Rather than choosing the items

that maximize overall expected utility, people often base their consumption decisions

on the total amount budgeted and the amount remaining in these mental accounts.

This implies that someone may buy clothing rather than tickets to a movie even if

the movie would be more enjoyable, simply because there is some budget left for

clothing but no more money left to spend in the entertainment account.

Beyond the categorization system, mental accounting has its own specific arith-

metic system for tabulating the accounts. This arithmetic is based on the Prospect

Theory value function [32]. Rather than looking at overall wealth states, people eval-uate income and expenditures as gains and losses from a neutral reference point. This

neutral reference point is often current wealth, but can be a target amount, or any

other salient basis of comparison. Next, income and expenditures are affected by di-

minishing sensitivity to these changes. For example, the 100th dollar spent in a store,

feels like less of an expenditure than the 10th dollar spent.

To illustrate, consider a situation where a consumer is making a US $39,000 ve-

hicle purchase and wants to add a new stereo to this vehicle. When the consumer is

already spending US $39,000, an additional US $500 for the stereo relative to the to-

tal purchase seems insignificant. If the consumer purchases the car stereo with the US$39,000 car, then the US $500 is added to the car account which already contains

the US $39,000 the car purchase amount. Spending just another $500.00 or 1.3%

seems like a small purchase due to diminishing sensitivity. If however, the consumer

purchased the car stereo by itself at an electronics store, the spending of this $500

would feel quite different; it would feel like a bigger amount of money than when

it was paired with the purchase of the vehicle. If the car stereo were purchased on its

own, it would be the first $500 the consumer spent and in terms of mental accounting,

the US $500 would be allocated to a stereo account rather than the car account.

As a result, upon making this purchase, the value of this category starts at $0 and

moves to $500 instead of moving from $39,000 to $39,500. When consumers aggre-

gate spending, diminishing sensitivity makes it much less painful to spend additional

funds in the presence of a more expensive item.

We believe that consumers aggregate all purchases in a single online purchasing

event, very similar to a visit to a brick and mortar store. Thus, the more someone is

7/25/2019 MM-ii pp1

5/13


spending on a website, the less painful additional spending will be. Thus, higherspending in advance of seeing the impulse item will lead to a higher likelihood ofpurchasing the impulse item.

2.2 Specific reason to purchase

Research on reason based choice has shown that people like to have good reasonsfor their purchase decisions. For example, researchers asked people to either choosewhich of two options to receive or which of two options to reject. They found thatan enriched option, the item with more extreme attribute values, was more likelyto be chosen and rejected than an option with less extreme attribute values [28].They claimed that this phenomenon occurred because when deciding which optionto accept, people were seeking reasons to choose but when deciding which option toreject, decision makers were seeking reasons to reject.

Other marketing research has shown that the existence of a compromise choicewill lead consumers to be more willing to make a choice rather than wait for moreinformation [33]. The existence of a compromise item provides a reason to choosethe middle option. Research on asymmetric dominance is another example of havinga reason to purchase [34]. These researchers provided a choice between product X(lower price, lower quality) and product Y (higher price, higher quality). Participantswere then told about a 3rd product (the decoy) that would be dominated by one ofthe two products but not the other. The research showed that the market share of thetarget (the item which dominated the decoy) rose depending on which item the decoy

targeted. These researchers claimed that the provision of a dominated alternative gavea reason to purchase the item that was better on both attributes, since the non-targetedoption still required trade-offs.

Recent research by Strahilevitz and Myers [35] showed another way to providepeople a reason to purchase items and to encourage shoppers to visit a store. In theirresearch, they tied the purchase of specific items to a donation to charity. They pro-posed that the donation provided a reason to purchase an item that would otherwisenot be purchased due to justification concerns. In line with this research, we believethat the provision of a reason to purchase an impulse item during an online purchasingtransaction will increase the likelihood that item will be purchased.

3 Data

We tested our hypotheses by offering real consumers the opportunity to purchase animpulse item during the checkout process of a real on-line purchasing transaction.Visitors to the official website of the Huntsville High School (HHS) 100th reunionused this site to get information about the reunion, purchase their passes to the re-union, and purchase souvenirs. Items available were clothing, household, and sport-ing goods items which ranged between US $6 for a glass coffee mug and US $45 fora hooded sweatshirt. All items were marked with the Huntsville High School reunionlogo. We believe that consumers making purchases on the HHS Reunion websitewere placing these purchases in a single Reunion expense category and thereforeall purchases each person makes on this website would be evaluated in an aggregatemanner.

7/25/2019 MM-ii pp1

6/13


3.1 Procedure

Visitors to the site initiated a transaction by placing the products they wanted in a

virtual shopping cart by clicking the Buy Now button. If a chosen product had

attributes (e.g. color and size for a T-shirt), the users had to specify their choices.When done shopping, the visitors proceeded to the checkout by clicking the Check-

out button. The system then asked the customers to either sign in to an existing ac-

count or create a new account by entering contact information on a single page. Once

signed in, the checkout page showed a summary of contact information, shopping

cart contents and the total amount owed.

When the users viewed the checkout page they were offered the opportunity to

purchase one of three add-on impulse items all costing US $5.00: a mouse pad,

eyeglass clips, or a box of chocolate truffles. This price point allowed for the flexi-

bility to offer quality products at an amount high enough to have different impactson the expected sales amounts of US $30, $60 and $110. The US $5 price for our

impulse items represented a 16.7 percent increase in amount spent for a consumer

who bought the US $30 blue pass, an 8.3 percent increase in the amount spent for

a consumer who bought the US $60 gold pass and a 4.5 percent increase in amount

spent for a consumer who bought the US $110 principles pass. These items were not

offered in the souvenirs section of the website, therefore this item should not have

been part of the initial mental budget, making it a true additional impulse buy.

The consumer confirmed the content of the shopping cart and accuracy of the con-

tact information by clicking on the Checkout button again and proceeded to pay for

the order. Following payment the user was asked to answer demographic questions.

To encourage participants to enter their demographic information, we offered them

an entry into a lottery for HHS Reunion souvenirs.

To test for the effect of providing a reason to purchase, a randomization script

assigned participants to either a donation condition or a control condition (no dona-

tion). Those in the donation condition a saw that a US $1.00 donation to the stepping

stone foundation1 would accompany the purchase of the impulse item, while the other

group of participants saw only the items for sale. Note that price of the item was still

US $5.00, in the donation condition. If the customer purchased the impulse offer, it

was added to the shopping cart, the checkout page was refreshed, and the same dona-tion condition was generated again. While it could be argued that people purchased

the item just so that they could make a donation, we ruled out this alternative expla-

nation by providing a separate place on the website to make a donation without an

attached purchase.

3.2 Measures

The dependent variable for this experiment was whether or not visitors to the web-

site purchased an impulse item. To test this, we collected information regarding howmuch was spent prior to seeing the impulse item, as well as whether or not a donation

1The stepping stone foundation was organized by Huntsville High School to give university scholarshipsto needy and deserving HHS students, making it a highly salient donation for alumni of the school.

7/25/2019 MM-ii pp1

7/13


was linked to the purchase. Because other factors might affect the willingness to pur-

chase an impulse item, we also gathered information regarding household income,

age, and gender information. We believed that higher income visitors would be more

likely to purchase an impulse item because of the additional disposable income they

have available. We expected no effect for age or gender.

4 Results

Data were collected on actual purchase transactions on the HHS Reunion website

from March 13, 2004 to May 19, 2004. During this period 60,413 pages were viewed,

3,488 unique visitors attended the site and 771 transactions were approved and

processed. Of these, 349 orders were submitted in person or by mail and processed

using a separate interface and therefore were not exposed to the impulse item. Of the

422 remaining purchase transactions, two of these transactions were test transactions

that were performed to confirm that the data collection and online payment process-

ing were functioning properly. As a result, these two records were removed from the

data set leaving 420 records.

To test for the effect of money spent, we required demographic information, par-

ticularly regarding income. One hundred and eight consumers visiting the site did not

reply to the demographic questions which reduced the number of usable data points

to 312.2 Upon further inspection of the demographic responses, one visitor indicated

that he was age 18 or less with 47 children under the age of 12 and 74 people liv-

ing in the household on an income of under US $20,000. This record was eliminated

from the data set for the first hypothesis leaving 311 purchase transactions which

were used in the final data analysis. Table1shows the mean, standard deviation, and

correlations of the control variables for the final data set.

Table 1 Descriptive statistics and correlations of independent variables

Variable Mean Standard Amount Age Household

deviation spent income

Amount spent 90.8 48.36

Age 48.4 9.80 0.282

Household income 77.0 21.17 0.164 0.075

Gender Malen = 128 0.210 0.111 0.236

Femalen = 183

p < 0.05

p < 0.01 p < 0.001

2There was no difference in the frequency of impulse purchase between those who responded to the de-

mographic questions and those who did not,t (420) = 0.93, p = 0.35.

7/25/2019 MM-ii pp1

8/13


4.1 Responsiveness to money spent

We used a logistic regression to test the effects of prior spending on the likelihood of

impulse purchase. The empirical model shown as (1) is

log

p

1 p

= + 1 amount spent+

T control variables+ , (1)

where p represents the probability of purchasing the impulse item, amount spent is

the amount of money spent on purchases prior to being exposed to the impulse item,

and the control variables are age, income, and gender as outlined above.

The initial model reported in Table 2is the full model with all of the variables

included while the final model retains only the coefficients significant at p < 0.05. In

the final model, the amount spent prior to seeing the impulse item had a significant

and a positive effect on the likelihood to purchase, = 0.0114,t (308) = 2.79, p

mm-ii pp1

Documents