

How you pay – credit card vs. cash – actually affects how you think about the products you are buying, according to new research published in the Journal of Consumer Research. That, in turn, means that marketers need to review how they are marketing to credit and cash customers. Although it’s been a maxim in the retail business that credit card customers are more free spending than cash customers due to the reduced pain of paying (not to mention availability of funds), the new study finds that the two payment methods are accompanied by a very different product focus. Specifically, credit card customers focus on the benefits that the product will deliver, while cash customers pay more attention to the product’s price, including related topics like delivery time, shipping and installation costs, etc.

As described in Do Payment Mechanisms Change the Way Consumers Perceive Products, researchers Promothesh Chatterjee and Randall L. Rose primed subjects with either credit card or cash cues, and exposed them to product information. They then tested the subjects to see what they recalled. Those primed with credit card cues were likely to recall benefits, but forgot more of the cost data. Cash-primed subjects performed just the opposite.

Show Me The Money

The Neuromarketing takeaway is that if you are selling mainly to credit card customers, focus your advertising and sales efforts on benefits. These customers will be less sensitive to details about price, shipping fees, etc. But for your cash customers, you should work to demonstrate that your offer is cost-competitive and a bargain, e.g., lower price, lower installed cost, free shipping, etc.

This divide is far from absolute. Credit card customers still care about price. (Personally, I comparison shop even though most of my purchases are by credit card. I’m also a sucker for free shipping offers.) Cash customers obviously care about benefits, too – they wouldn’t buy the product otherwise.

Nevertheless, if you can tailor your pitch to one group or the other, be sure to play up either the product’s benefits or its competitive cost.