Monday, 22 October 2012

The IKEA Effect

Have you been to IKEA or some other flat pack emporium? The popularity of these stores and IKEA in particular has attracted the attention of Mike Norton, Daniel Mochon and Dan Ariely. They have an article in The Journal of Consumer Psychology which might offer an explanation for this very successful business model.

Their research suggests that the act of building something, putting your own blood, sweat and tears into the flat packed shelves (while following vague instructions that seem equally vague when held right side up or upside down), seemed to give the item a sense of value beyond its inherent quality.

This was dubbed the “IKEA effect.” In one study, participants who built a simple IKEA storage box themselves were willing to pay much more for the box than a group of participants who merely inspected a fully built box. The phrase 'labour of love" is quite apt.

There may be some lessons for business here. If you can get clients involved in the actual construction of the product, get them to feel it is built by them, then they may appreciate and value it more. Some might call this 'buy in'

An example would be where a web developer gives a client a content management system where they can upload their own content, images on their website rather than having to go back to the web developer with requests. In a restaurant, you may get the client to help in their own food preparation or in a pub pull their own pint. In consultancy, get the client to come up with or contribute to some of your papers, they may value the resulting findings a bit more.

Getting back to the IKEA shelves, there is a downside for the guy who put the shelves together. He will never be able to sell them for what he thinks they are worth as the value he puts on them is more than we would be willing to pay. If you are buying off a supplier that makes his own product, then be prepared for a hard negotiation. If you are buying off a supplier who is a middle man, he may have a more rational view.

There is a chance that because I've researched and written this post, I might value it a bit more than you, but hope you enjoyed it anyway.

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