What's going on in the back of your mind while shopping this holiday season? Maybe more than you think.
A marketing study conducted by Arizona State University assistant professor Christopher Lee shows that shoppers are more likely to buy gifts for themselves that are labeled "limited edition," but when it comes to shopping for others, they're far more likely to go for things deemed "best-sellers."
"[People] want to be unique. We've found that a product viewed as a 'limited edition' sort of taps into that need for uniqueness for yourself, and then on the flip side, around the holidays, when you're buying for somebody else, there's risk associated with that," explains Lee, who teaches consumer behavior and marketing at ASU's W.P. Carey School of Business. "We might be uncertain about whether the product's actually good, and, arguably more important, whether they like it.
"With our research, we've found that a cue or a product sorter like 'best seller' helps to ease that risk and the uncomfortable feeling," Lee goes on. "Because I see a product that's a best-seller and I think, 'Okay, a bunch of people have purchased this. This must be a good product that the person I'm buying it for will like.'"
Lee conducted the study with Laurie Wu, an assistant professor at Temple University, where he started the project before leaving Philadelphia to join the faculty at ASU, his alma mater. Wu was interested in what motivated people to buy certain products, so the two professors began studying search trends on Google. They found people more frequently searched for the term "limited edition" than "best-seller " — except when the word "gift" was added to the query. Searches for "best seller gift," particularly in December, exceeded those for "limited edition gift."
After the Google research, Lee and Wu ran four studies with about 100 participants each, located throughout the country. "We set up this experiment where you could, for example, see a coffee mug that was labeled as a 'best-seller' or a coffee mug that was labeled 'limited edition' and compare the difference between the two groups to determine that people tend to buy a limited edition for themselves and best sellers for other people," Lee explains.
Some deviations emerged in the research, based on product price and the gift giver's level of familiarity with the recipient. "In all these scenarios we ran, we had them envision buying for colleagues, and so we also asked them to identify how close they were with that hypothetical colleague," Lee says. "And what we find is that when we don't know the colleague very well, the 'best-seller' works. But when you know them really well, the 'best-seller' doesn't help as much, because it's like: 'I'm buying for myself. If I have a friend or colleague that I know pretty well, I have a pretty good idea of what they like and don't like.'"
Then there was the price point. "When we think of prices, a general assumption is that higher-priced items are higher quality," Lee says. "So we did a study with a bottle of wine, and we priced it at either $10 or $25. And what ends up happening is that this 'limited-edition' effect doesn't work if they lower the price. So $10 for a bottle of wine — it's hard to argue that's a limited edition, because the price point suggests a lot of people would buy it. And on the flip side, when it was a $25 bottle of wine, that 'best-seller' label that had worked in other conditions doesn't work as well — because again, it's hard to justify that a $25 bottle of wine, which is relatively expensive, is a best-selling bottle of wine."
As an example of a retailer that excels with the "best-seller" label, Lee cites Toys "R" Us. The company has a "gift finder" that allows shoppers to customize a search with filters like gender (or no gender preference), budget, interests, and categories. The items returned at the top of the search results will be the best-sellers. Lee says companies like Amazon and Gifts.com are also successful with this strategy.
But to sellers, Lee emphasizes ethics: "All of this should be done ethically. In our research, we're not suggesting you should randomly label your product as 'limited edition' or 'best-seller,' but really to look at your actual product assortment and identify the products that are actually great sellers, and really identify products that are limited edition or scarce."
For buyers, the key is awareness. Many retailers use phrases like "top gifts," which can have dubious meaning. "It's not really clear if those are the top gifts that the retailer wants to sell you, or if they're actually things that people are buying that are best-selling," Lee says. "I think there's an opportunity there for retailers to be more clear about what's best-selling, with the idea of helping [consumers]. We don't always realize it, but little words can make a big difference in how we decide how we interpret different options."
Lee and Wu published the details of their study in the most recent edition of New York University's Journal of Retailing, in an article entitled, "Limited Edition for Me and Best Seller for You: The Impact of Scarcity versus Popularity Cues on Self versus Other-Purchase Behavior."