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CONSUMER FINANCE

A shopping tip: Know yourself well

Accurately assessing your skills allows you to buy products that are more appropriate.

July 15, 2007|Gregory Karp | Morning Call

Are you a good golfer? An above-average cook? Do you consider yourself an expert photographer? Are you an intermediate speaker of Spanish? How well do you play tennis? Are you confident you can do your own tax return?

Consumers regularly have to assess their own skills to make purchasing decisions. It's a huge part of the buying process.

Unfortunately, we are really lousy at it, research shows.

"People have a bad idea of how they compare to other people," said Katherine Burson, an assistant professor of marketing at the University of Michigan who has studied consumers' self-assessments of skill. "They can end up in a real mess, buying the wrong products for the wrong reasons."

Assessing skill often determines how sophisticated a product you buy. Someone who fancies himself an expert photographer will probably buy a more sophisticated and feature-rich camera. The more skilled you think you are, the more money you are likely to spend because high-skill products usually cost more.

The problem is, we're poor judges of our skill level relative to other consumers and relative to the array of product offerings.

We're continually making bad purchasing decisions, buying items that are beyond our skill level or well below it, according to research by Burson and other academics.

Here are tips to better assess your skills and buy more appropriate products:

* Compare yourself with others, not the task's difficulty.

Burson's experimental research showed, not surprisingly, that people putting a golf ball on an indoor green from three feet away made lots of putts. They thought they were good golfers and were willing to pay more for higher-quality golf balls to match their perceived high-skill level. Meanwhile, those who putted from 10 feet -- and missed many putts -- had a much lower assessment of their skill and opted for lower-priced balls.

"If a consumer can collect one piece of information that would really improve his chances of buying the right product, it would be answering the question, 'How does the average person do at this task?' " Burson said.

* Seek objective help.

A benevolent sales representative can help because he or she sees the wide variety of customer skill levels coming through the store. You might have the most luck talking with a store owner who is concerned about matching you with an appropriate product so you will be satisfied and return as a customer. You also can seek help from highly skilled friends and relatives who could steer you toward an appropriate product level.

* Become familiar with the range of products and prices.

Many product lines have an array of choices aimed at skill levels, from beginner to expert. But not all stores carry the full array. A person who views himself as an average photographer will probably buy a mid-price camera. But a mid-price camera at a specialty store might cost $600, while the mid-price camera at Wal-Mart might be very different and cost $150. "Because people make inferences from what they see in front of them, they can be led astray," Burson said.

* Don't confuse confidence with skill.

Many overconfident people have a skewed view of their capabilities. Similarly, meek, under-confident people might have inaccurately low perceptions of their abilities.

* Examine your motivation.

Be honest about whether you are buying a full-featured -- and more expensive -- product based on your skill or for the misguided reason of keeping up with the Joneses. Also, resist buying an upscale product so you have room to grow into it.

* Watch retailers.

"Even if they don't intend to, marketers tend to inflate people's perceptions of their abilities," Burson said. "There's the implicit belief that you should make customers feel good about themselves."

The result might be dissatisfaction with your purchase. Other times a marketer will want to trample your confidence. For example, a tax preparation service is likely best served by convincing you that doing your own taxes is too difficult.

* If uncertain, buy used.

If you remain confused about your skill level, consider buying an item secondhand. That helps in two ways. First, it limits the money you have to spend while discovering your true skill level. Second, if the item is inappropriate, you can quickly resell it for little or no loss. For example, if you buy a 2-year-old tennis racket and own it for a month, you can sell it for about the same price as you paid.

A store's liberal return policy also could encourage you to buy and return items until you find an appropriate one.

--

Gregory Karp is a personal finance writer for the Morning Call, a Tribune Co. newspaper in Allentown, Pa.

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