Gift-giving, a thriving industry even during the COVID-19 pandemic, reveals intriguing consumer behaviours. People often spend more on wealthy recipients, driven by both altruistic motives (better gift-liking) and egoistic motives (status signalling). Relationship dynamics also influence spending, reducing the impact of these two motives to an extent. Sellers and marketers can use insights on these motives and buyer-recipient relationships to guide buyers, emphasising gift appeal and status to boost sales.
Gift-giving is not just an art but also a major industry that thrived even during the COVID-19
pandemic. Consumers spent an average of €203 on winter holiday gifts in Europe, with the UK topping the list at €336 in 2019. Similarly, US consumers spent an average of $658 in 2020 and $21.8 billion on Valentine’s gifts in 2021. Gift-giving drives substantial retail revenue, and many consumers even incur debt for it. Naturally, there has been much research into drivers of consumer spending on gift-giving. A study looks at this subject from a new angle to answer: How and why does the financial status of the recipient affect gift purchase decisions?
The study found that gift-givers tend to spend more on wealthy recipients than unwealthy
recipients. Examples of such gifts could be healthier/organic foods instead of cheap and unhealthy foods, branded clothing instead of generic clothing, and “smart” appliances instead of regular ones. The study also found that two factors drive this choice and, contrary to expectations, one is altruistic while the other is egoistic.
The first reason behind choosing pricier gifts for relatively wealthier recipients is the other-
oriented or altruistic factor of recipient gift-liking. Gift givers want their gifts to be well-liked by recipients. They also believe that more expensive gifts will be liked better than less expensive ones by wealthy people as they have higher standards. Therefore, they prefer to buy higher-priced gifts for rich recipients in the expectation of greater recipient gift-liking.
Altruism and gift-giving have a complex relationship, which can affect donations. This post discusses how charity organisations can use gift-framing to maximise their fundraising.
The other reason behind this unexpected gift-giving behaviour is the self-oriented or
egoistic factor of status signalling. Gift givers want their gifts to signal high financial status to the recipients, to receive greater respect, more interpersonal influence, and higher self-esteem. This desire is stronger when the recipient is wealthy. Therefore, they feel the need to buy costlier gifts for wealthy recipients.
However, the relationship between the giver and receiver of the gifts also plays a role in
determining the value of the gift. If the giver has a negative relationship with a wealthy recipient, the tendency to buy them an expensive gift is less pronounced. Similarly, a positive relationship with a less wealthy recipient reduces the tendency to buy them a cheaper gift. For example, one might buy a smaller bottle of wine (rather than a large one) for a disliked wealthy relative or a watch from an economical brand (rather than an unbranded one) for a well-liked, unwealthy colleague.
This study has practical implications for sellers and marketers of gift items. Salespeople can
probe gift buyers to gauge the wealth status of and the nature of their relationship with the recipient. They can then guide buyers towards products they will find more attractive based on these factors. They can also communicate with buyers about the gift-liking and status-signalling properties of the gifts when guiding them. Finally, marketers can convey the same two traits in their public communications for different gifts to boost their sales and bottom line.
Consumer purchase and spending depend on many other factors, including perceived product scarcity. Click here to discover why this happens and how to make it work for you.
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