Inaction Inertia Effect

Missing an offer means you're less likely to buy in the future

Foregoing a very attractive opportunity decreases our willingness to go for subsequent opportunities.

van Putten, M et al. (2013) How consumers deal with missed discounts: Transaction decoupling, action orientation and inaction inertia

We humans are unique in having the capacity to reflect upon the past. Such thinking can provide insight as to how to best prepare for future decisions. This then provides the basis for a phenomenon known as ‘counterfactual thinking‘ (otherwise known as ‘what-if’ thinking), where we look back on our decisions and choices throughout life and imagine how things would have turned out differently if other decisions had been taken (Kray et al., 2010).

In the example above regarding a missed opportunity, regret (McCrea, 2008) and counterfactual thinking play out in full effect, rendering us unwilling to grab that same product after we miss the discount. The discount has reduced the perceived value of the product, and our expectation over its value is set at a new, lower baseline. Knowing this info and faced with the choice of buying it at full price, the study shows it’s highly unlikely that we’ll bite.

Takeaways for Decision-Makers

  1. Think carefully about your price and discounting strategy, especially during short-term price wars. You risk consumers setting a new, inflexible expectation regarding too great a bargain (Arkesa, Kung & Hutzel, 2002).
  2. Think about the appropriate duration and ability to obtain the discount. Moreover, think carefully about how to encourage latter-stage uptake of the opportunity - the risk of not doing so is high.
  3. You may want to avoid product price comparison by changing the product characteristics accordingly (size, seasonal etc).
© Coglode Ltd

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