How to Harness the IKEA Effect in Your Business | by Sina Sadrzadeh | Dec, 2021

If you don’t already know, when you buy IKEA furniture, you have to build it yourself.

There may be a very good reason for this, besides the ease of storage and supply chain cost savings, and that reason is psychology.

IKEA understands human behaviour and how highly humans value productivity. In experiments conducted by psychologists in 2012, two groups were given IKEA boxes. One group given fully-assembled versions, and the other given unassembled boxes, which they were told to put together.

They were then asked how much they would pay for the boxes.

The assumption is that due to the lower effort and time exerted by the users, they would pay more for the ready-assembled box.

But, no. According to the results, “The group that built their own boxes were willing to pay much more for their box during the bidding process than those with pre-assembled boxes.”

This phenomenon is observed across the board, from restaurant self-BBQs, make your own pizza, to cake baking kits, and IKEA is a fantastic example of this effect in action.

Put simply, if you make your customers build your product or have some element of ownership, chances are, they’ll likely pay more for it.

Research has pointed to the centrality of labour to people’s happiness, with the feeling of productivity standing as a crucial goal for many. In creating the product, the consumer feels added ownership and this endowment effect, where people value goods greater just because they own them, kicks in.

These are extreme human irrationalities, but ones that IKEA has exploited spellbindingly.

This is The IKEA Effect.

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