Blame it on momentum!

The recently celebrated Aadi festival in Tamil Nadu deserves some pondering. Aadi, a month in the Tamil calendar, is considered inauspicious for events such as wedding and housewarming. Due to the lack of festive occasions to boost sales during this supposedly inauspicious month, shops offer discounts to lure customers. This was how it originally began, but has taken a totally different form today wherein sales promotions start way ahead of the actual month to cater to a larger crowd and thus increase sales. The month is a nightmare for commuters caught in traffic snarls and cops who try to control them. Though usually I try and stay away from the commercial zones during this period, I give in at times, wondering how these sellers instigate the shopping bud in people.
Often I go to a store merely to explore the new collections and end up coming out with a huge cart –more often than not, the shop would have had nothing new to offer. There have been instances when I went to a departmental store to buy wheat flour, but came back home with a roti maker, with or without the flour. I googled to check whether I was a “shopaholic” or if there was a deeper reason behind this urge. Apparently Yale scientists describe this as “shopping momentum”, which occurs when an initial purchase provides a psychological impulse that drives the purchase of a second, unrelated product. Eminent psychologist Gollwitzer defines two important mindsets--deliberative and implemental. A deliberative mindset weighs the pros and cons of pursuing a specific action, whereas an implementation mindset focuses on the timing and sequencing of goal-oriented actions. In a purchase context, “shopping momentum” can be viewed as a switch to “implementation” that is propelled by the first purchase which is deliberative. A few examples in our shopping behavior to cite the relevance of this theory are:
 We invariably end up visiting a store which has a better window display, or a display containing items that interest us. This acts as a deliberative trigger forcing us to consider the purchase of the same, if the cost fairly matches the value. In the process, we also look for other items the store has to offer and end up buying more than what was initially thought; this explains the implementation mindset.
 In the purchase of high value goods (e.g., car), it is the initial analysis that acts as the “deliberation”. We conduct a detailed study of the pros and cons of various models. But once the decision is made, we do not spend as much time to finalize the accessories – alloys, music system, interiors, etc., which also come at a high price.
 When gifted with a Landmark or a Lifestyle voucher for Rs.500 or Rs.1000, the initial barrier is already broken, as this came at no cost to us. How many of us would restrict our bill to the said amount? One would directly assume the implemental mindset and splurge into a purchase worth much more than the face value of this voucher. Had the gift voucher not landed out of the blue, the need for that article would have never arisen in the first place.
Shopping momentum arises from the idea that shopping has an inertial quality, that there is a mental hurdle in the shift from browsing to shopping, which once crossed makes further purchases more likely. The rate with which this hurdle is broken accelerates when there is a free product offered with a purchase of one extra item. With a couple of shirts, you get a trouser free; with a camera, you get a memory stick and pouch free; with 2 best-selling books, you get a subscription to a best-selling magazine free; and the worst of it all, a garlic bread combo with 2 pizzas. One may just end up buying two shirts even if one needed only one, or buying a camera even if all one needed was just a pouch or devouring a cheesy meal even if one’s stomach could have accommodated just a few nibbles. Neither the wealth nor the health is spared. Those bitten by guilt discern the ‘necessary’ from the baits. The rest blame it on shopping momentum.


Go green
An offshoot from the previous piece: How many of us have felt we were better-off with a lower pay in the past than what we currently earn? The discussions that my colleagues indulge in--and which inadvertently fall into my ears--assure me that I am not the only one to think that way. Is it an insatiable human need to find an expenditure channel for every new source of income, where with every additional penny earned, the penny lost is exponentially larger? The credit cards associated with the level of income justify the equation, or ‘inequation’ thereof.

Some behavioral concepts to explain the proliferation of credit spending are as follows:
1. Decoupling: A possible reason behind the use of cards is decoupling, which means separating payment from consumption. Human beings are possessive about their belongings and any other self-earned goods (for instance, cash). And when one pays cash, the immediate sense of parting is being felt and the brain starts to evaluate if the deal gives as much pleasure in return for the sacrifice made. Plastic is totally devoid of this aspect, and swiping it ruthlessly at stores registers nothing emotionally except for the piling debt that the hard-earned paper has to make up for at a later date, in most cases, with interest. Moreover, with credit cards the connection between specific purchases and specific payments gets obscured, resulting in further decoupling of payment from purchase.
2. Irrational spending: An expense seems far bigger when it’s looked at separately, but appears smaller when it is part of a much larger payment, so when an expense of Rs.500 is added to a credit card bill of Rs.5000, it looks smaller than how it would seem on its own. Grouping transactions in credit card bills, therefore, reduces the perceived size of individual expenditures, resulting in increased spending. Rational behavior would never attribute different values for the same 500 rupee note.
3. Retrospective evaluation: It refers to how much the past memory of spending affects future purchases. A deep hole in the pocket caused by past purchases tends to caution us the next time we enter a store or stand in the bill counter, making us to rethink. Credit card purchases are mostly forgotten and we never realize the actual cumulated amount outstanding until the statement is received.

Nothing could be worse than people having multiple cards with different billing cycles to facilitate the effective management of finances, or the lack of it. They receive a rude shock when each of the cards delivers the statement at periodic intervals; quite often they strain their grey cells to recollect when, where and how all the money was blown away. Stricken by guilt, sometimes I decide to leave three of the four cards at home and carry just one, in case an emergency should crop up. It is quite astounding to see how the power of credit beats human logic and rationale.
Various other spending patterns are explained by “mental accounting”, a term coined by Richard Thaler, Professor of Economics and Behavioral Science at the Graduate School of Business, University of Chicago. It affects how, when and how much we choose to spend and has enormous ramifications in our daily life. It primarily deals with how one chooses to treat money differently depending on the source of money and circumstances. Some examples are:
 Extravagant expenditure from a windfall gain like bonus or lottery, while a similar extent of expenditure would have never been a possibility with the monthly paychecks
 The tendency to exceed the budgeted limit while using a debit card instead of ready cash, and to further exceed the limit while using credit instead of debit
 A parsimonious bargain for a Rs.20 discount in a Rs.100 deal, while casually letting go a few grands in a deal worth a few lacs. The absolute worth of money in both instances is the same.
Of all the lessons learnt from such spending patterns, credit spending is best learnt when the fingers are burnt. To conclude, ‘if’ you have the slightest doubt of giving in to the temptations that lurk around, stay green and say no to plastic. Do not think you are being smart by being card rich, for you fail to realize that you are playing with a multi-billion dollar industry that’ll outsmart you.

For a cause

Most of us appreciate and understand the value of charity. The level of selflessness goes to the extent that we preach it to the world but seldom practice it for ourselves. Day in and day out our inbox gets filled with pangs for help to save deprived souls from some clueless, hapless part of the planet. Those who do something about it, take shelter under the roof of pride and justify that small droplets go on to make an ocean. Those who choose to don the pragmatic hat, justify by saying that one small bit would do no good to muster the massive sum required by some anonymous soul whose physical existence cannot be ascertained. For all we know, this could be yet another hoax spamming through the net. In all other real circumstances, why is it that we dither when approached by a genuine need for help? It could probably be explained by the fact that we feel the pinch of the immediate loss of money from our pockets more when we least anticipate it, and for a cause/person least associated with our daily lives. All of a sudden a cloud of total bankruptcy shadows us where we clearly see a very high opportunity cost for the amount that we are asked to part with. There have also been occasions where the decision to step forward and contribute was promptly put on hold by our left brain when the actual moment arrived. For those who have not experienced any of the above when confronted with such a situation, and yet chose to do nothing about it, the only plausible reason could have been indolence. I have undergone all the above stages of supposed rational thinking. You may read further if you see yourself in a similar boat that I sail in. I am not sure how many of us are aware of the Giveindia program. It offers an easy way to ensure we don’t feel the credit crunch associated with charity. An amount specified by us in advance, would get deducted similar to TDS every month. When a substantial sum gets accumulated, we can choose to donate it towards any of the umpteen available causes - in a country like ours which has a plethora to offer we can never run out of attractive options. Apart from the sense of satisfaction derived at the end of the day, it also provides tax benefits, though not quite significant. Visit www.giveindia.org for further details.

Disclaimer: Amounts accumulated against your credit do not earn interest and cannot be withdrawn

24 on 24

this one shall pass too

2 weeks

Why is it that women end up making decisions at the first instance, except for shopping and men think a million times for the same? I'm not sure if all hasty decisions are bad. But I believe most hasty decisions backed by gut feel are not so bad indeed. A well thought over choice could be a good choice. But I would still prefer a choice by instinct, simply for the fear that, by the time i make the choice, the choice could cease to exist. If I live for just 1 day, I would like to live it to the fullest.. rather than fretting over missed opportunities.

the descend

"Desperately, helplessly, longingly, I cried;
Quietly, patiently, lovingly, God replied.
I pled and I wept for a clue to my fate . . .
And the Master so gently said, "Wait."

"Wait? you say wait?" my indignant reply.
"Lord, I need answers, I need to know why!
Is your hand shortened? Or have you not heard?
By faith I have asked, and I'm claiming your Word.

"My future and all to which I relate
Hangs in the balance, and you tell me to wait?
I'm needing a 'yes', a go-ahead sign,
Or even a 'no' to which I can resign.

"You promised, dear Lord, that if we believe,
We need but to ask, and we shall receive.
And Lord I've been asking, and this is my cry:
I'm weary of asking! I need a reply."

Then quietly, softly, I learned of my fate,
As my Master replied again, "Wait."
So I slumped in my chair, defeated and taut,
And grumbled to God, "So, I'm waiting for what?"

He seemed then to kneel, and His eyes met with mine . . .
and He tenderly said, "I could give you a sign.
I could shake the heavens and darken the sun.
I could raise the dead and cause mountains to run.

"I could give all you seek and pleased you would be.
You'd have what you want, but you wouldn't know Me.
You'd not know the depth of my love for each saint.
You'd not know the power that I give to the faint.

"You'd not learn to see through clouds of despair;
You'd not learn to trust just by knowing I'm there.
You'd not know the joy of resting in Me
When darkness and silence are all you can see.

"You'd never experience the fullness of love
When the peace of My spirit Descends like a dove.
You would know that I give, and I save, for a start,
But you'd not know the depth of the beat of My heart.

"The glow of my comfort late into the night,
The faith that I give when you walk without sight.
The depth that's beyond getting just what you ask
From an infinite God who makes what you have last.

"You'd never know, should your pain quickly flee,
What it means that My grace is sufficient for thee.
Yes, your dearest dreams overnight would come true,
But, oh, the loss, if you missed what I'm doing in you.

"So, be silent, my child, and in time you will see
That the greatest of gifts is to truly know me.
And though oft My answers seem terribly late,
My most precious answer of all is still . . . Wait."


p.s. borrowed text and own thought

Faking it, moley

Hello Everyone. It's been really long since I blogged. The fact that it is taking me ten minutes to think of a subject or a starter line says it all. Well for those who blog or read blogs or are aware of what blogs are, the Fake IPL blog is surely on their bookmarks.
The day is incomplete if I don't register a hit on that site. Maybe the owner is actually a KKR member like he professes, or maybe he is fake, also like he professes, maybe he is like the anonymous entity in one night @ a call center. But for those who chanced to read his posts, his identity is least relevant as long as the posts keep coming. They just wouldn't care less. I do not know what he wanted to achieve by starting something like this, but the timing or content of the posts is so gripping and perfect that he/she/it has won the attention of audience from across the milky way. We learn so much about market segmenting, targeting or positioning (STP.. not STD mind you), but this guy seems to have taught Kotler the lessons precisely. It spread so much like a disease across groups and organizations that in no time half the computer screens in the office had this page on. The IPL began as a huge dampener, with less than 10% of the cheering/audience/ambience that was present last year. To compensate for the washed out matches and the lacklustre games, this blog has created enough and more vibes. Summon the FBI or CIA to trace the mole, but as Austin Powers would have it:

Mole. Bloody mole. We aren't supposed to talk about the bloody mole, but there's a bloody mole winking me in the face. I want to c-u-u-t it off, ch-o-o-p it off, and make guacamole.

Nice to mole you... meet you. Nice to meet you, Mole.

Silver Jubilee

My almamater will be celebrating its silver jubilee this year.. couldnt care less.

I will be celebrating my silver jubilee too. Did I just say celebrating? I feel like I have vegetated for half of my productive life... considering the first five a pain for people around, the last five to be a greater pain (hopefully not). Looking forward to the other half... would you like to place your bet on a cabbage? My take is potato. A couch potato :)

Cheers

I pray

God grant me the serenity
to accept the things I cannot change,
the courage to change the things I can,


and the wisdom to know the difference.

Get your fundamentals in place I say

Its recession. Take a recess break while the HRs pull up their stocks.. oops socks I meant. Buy low sell high they say. Am not sure if people are buying stocks now but the vice versa is true. Time for the recruiters to rope in the best brains at fundamentals before the technicals start acting. Gone are the days that brand determines the price (At least I would like to believe so for the next few months). You get paid for what you are worth... its a hobson's choice. You take the blue pill or the red pill - you survive only if you are fit.

9 months

Its exactly nine months since I started work :O

Could have had a baby instead

2009

2008 has been a mixed one. . . I'd wish to say it sure was one of the most successful for me- miles to go though.
Am blank now. What next? 2009? Come in... take your seat.. What can I do for you?
I do not intend to make any resolutions but would definitely work on one thing...
Say NO when it matters - not before , not after.