An Anchoring and Adjustment Model of

How do consumers decide how many units to buy? This is a key issue for researchers, retailers, and manufacturers. While past research has focused on purchase incidence and brand choice, this research focuses on the psychological process behind the purchase quantity decision and shows how marketers can exert influence. We propose that a simple anchoring and adjustment judgment model describes how consumers make purchase quantity decisions. This process also suggests ways in which simple point-of-purchase (POP) materials can be employed to affect the quantity decision. Two field experiments and three lab studies show that external anchors have a powerful impact on quantity decisions whether presented in the form of multiple unit prices, purchase quantity limits, suggestive selling anchors, or even irrelevant anchors. A final study provides more direct evidence of the underlying judgment process and shows that people can be encouraged to retrieve alternative internal anchors that either expand or contract purchase intentions, eliminating the external anchor effect. An Anchoring and Adjustment Model of Purchase Quantity Decisions Most research investigating purchase behavior, behavioral or quantitative, has focused on purchase incidence and brand choice, what Gupta (1988) refers to as the “when” and “what” questions. Far less effort has been spent on understanding the psychology of the purchase quantity decision, the “how much” question. For many brands, a myopic focus on brand choice and switchers is self-limiting; instead firms may better leverage their resources by spending some marketing dollars encouraging users to buy more of the brand and/or use it more frequently. In this paper, we offer a model that focuses directly on how consumers answer the “how much” question. Why is the quantity decision important? The average consumer regularly shops multiple stores and makes a significant number of unplanned, discretionary purchases (Drèze, Hoch, and Purk 1994; Hoch, Drèze, and Purk 1995). Many retailers and manufacturers will prefer guaranteed multiple unit sales from a customer today over probabilistic sales in the future, except when the item is loss leader priced to generate traffic. For retailers, the more units sold on any shopping trip, the greater the share of short-run grocery dollars. For manufacturers, the same logic holds; selling more units now (witness multiple unit coupons and packaging) may avoid consumer stockouts and/or preclude buyers from purchasing a competing product. We suspect that managers prefer selling an individual customer larger than smaller quantities when doing so: (1) takes buyers out of the market; (2) facilitates repeated consumption that leads to habit formation (pseudo loyalty via linear learning); (3) encourages promotion-driven stockpilers to switch stores or brands (Jeuland and Narasimhan 1985); (4) passes inventory holding costs onto consumers (Blattberg, Eppen, and Lieberman 1981; Krishna 1994); or (5) enables accelerated consumption in new situations (Wansink and Ray 1996) or in place of other product categories (Wansink 1994). We do not wish, however, to overstate the economic significance of stockpiling for retailers and manufacturers. A complete analysis of the benefits and costs of stockpiling requires a dynamic approach that considers multi-period consequences. Our intent is much narrower -simply to illuminate the internal judgment process driving quantity decisions and show how marketers can