Volvo Cognitive Dissonance

1. What else could Volvo do to reduce the cognitive dissonance felt by

customers?
Cognitive dissonance is the psychological discomfort we experience
when our belief clashes with contradictory information. This unsettling state of
anguish, in turn, motivates us to reconcile the difference, either by changing our
behaviour or altering the importance of conflicting/dissonant beliefs.
Tips to reduce cognitive dissonance:
A. Do a bit of research: - before you buy – okay, that’s not always possible, but don’t just
believe the marketing rubbish you read. In my defense, the restaurant looked quite swish and
the menu was good, but if I’d looked at a couple of online reviews I would have thought twice
about ordering a takeaway.
B. Don’t get too carried away with your expectations: - when people say “Sky+ changed my
life”, they are exaggerating and shouldn’t be taken literally – as in if you were to cross the
road today and walk down the other side of the road to normal you will have changed
something in your life – not found the answer to a happy (gastric flu free) existence.
C. Don’t ignore things you don’t want to hear: - Sometimes we get emotionally involved in a
purchase (i.e. a house, wedding venue…) – if this ever happens you are in a dangerous spot,
because it means you are likely to follow your heart and not your head. Most Apple buyers
get a little bit too involved in the ideal of the product they are buying, of course they’ll never
admit that their experience isn’t quite what they had dreamed about ahead of the purchase,
but if they are honest with themselves then most have a little bit of post purchase dissonance
as nothing can live up to the ideal that they’ve imagined.
D. Ask yourself if you really need the purchase: - Yes, on paper of course you need it, but in
reality, will you use it as much as you think you will on paper? Here’s an example. I bought
a wireless music player (called a Squeezebox). On paper it was going to replace all my CD’s
and the need for a radio. The reality, I still listen to the CD player about 50% of the time,
because it always works, whereas my network doesn’t. So, I’ve a little regret there and it’s
not really anyone’s fault, but I didn’t really need the product, not really – so I could have
saved myself money and regret by not purchasing.
E. Just when you’re ready to buy – don’t:- Take a break, go and get a coffee. Give yourself a
chance to talk yourself out of it.
2. Do you think cognitive dissonance would increase or decrease during a
recession?
Last three months, the stock market is going higher and higher. However, it feels contrary
to reality because when you turn on the news; you are likely aware a recession is looming around the
corner. On the other hand, the stock market is experiencing a rebound since the outbreak of COVID-
19. Stocks have not been this expensive since 2001. It is normal to think the following; it makes little
sense that the economy is entering a recession and the stock market is experiencing highs. When you
are doing your research, carefully pick stocks that are doing well, and having the feeling the market
can turn against your investments every second could lead to cognitive dissonance.
• Results with a feeling of uncertainty:-
it’s difficult if you think you have taken all the right steps before investing and seeing the
economy enter a recession after your initial investments. This could lead to cognitive
dissonance which is a theory in psychology that was researched by Leon Festinger and is
regarded as psychological distress when, for example, an individual holds two contradictory
beliefs or values and therefore will try to make these elements consistent with each other.
When you invest, you are likely to have the objective to increase your wealth. When your
investments are paying off, you develop the belief that you are on the right track. You believe
conducting your research properly and investing carefully leads to an increase in wealth. However,
the economy is entering a recession and the consequences for the stock market linger in the back of
your mind. Below there is a graph of the S&P 500 in the last six months:-
 Out of a sudden, the market has a rally of three months and you are (virtually) gaining money
after experiencing lows. The reality of a volatile market could challenge your view that you are on the
right track, developing yourself and increasing wealth. Keep in mind the following; the economy is
backward-looking while the stock market looks forward.
The cognitive dissonance that you are experiencing when investing (temporarily) leads to
an increase in wealth but with a lingering feeling of doubt could lead you to do one of the following
three things.
❖ Change one or more of the beliefs, attitudes, values to make the
relationship between the two elements consonant: -
The investor could give up on the belief the economy and stock market always head the
same direction. Or they could change their belief by adding that from time to time the stock
market experiences volatility which is part and parcel of investing and learn how to deal with
it. This will allow you to keep the belief that you are on the right track.
❖ Use new information that outweighs the dissonance: -
Experts in the field also say the fast recovery of the stock market is unlike anything we’ve
seen before. However, the economy is backward-looking and the stock market is forward-
looking. Therefore, it is possible to have different outcomes. If you spread out your stock
purchases, it doesn’t matter if the prices are high or low. You would even prefer low prices to
buy more shares and average down their price. Over a longer period, experts increase their
wealth by dividing their investment(s) and having a long-term view.
❖ Reduce the importance of the cognition(s):-
The investor could convince him/herself understanding the discrepancy between the
economy and the stock market does not matter much to them in the grand scheme of things.
This would help them reduce the dissonance between doing their research, having good long-
term returns on their investment, and the reality of an economy entering a recession which
could influence the stock market every moment.
3. Consider a time when you purchased a goods or service that left you feeling
anxious. What product/service were you purchasing?
• Many retailers, such as Walmart and Target, were already expanding their e-commerce
offerings prior to the coronavirus pandemic.
• The global crisis, though, has added greater urgency to that effort.
• Other retailers, such as Macy’s and Gap, have used curb side pickup as a way to reopen as
lockdowns lift.
• Online sales come at a higher cost, though, and bring new headaches, such as the need to
train employees for new roles.

A forced change in consumer behaviour’

Still, some analysts remain sceptical the curb side trend will stick — especially for clothing
retailers. About 84% of all retail purchases were made at brick-and-mortar stores prior to the
pandemic, according to Forrester Research. People may prefer to shop in stores again over time. And
companies may focus on stores again, too, after seeing the curb side service cut into profits.
“This is a forced change in consumer behaviour,” said Brendan Witcher, a principal analyst at
Forrester. “We cannot assume it is permanent.”
He said curbside pickup makes more sense for some retailers than others. It’s been popular with
grocery orders, for example, allowing busy parents to order what they need, pull up in a car and keep
the kids buckled in the backseat.
For now, though, entire malls and shopping centers are rallying behind curbside pickup, hoping they
can help their tenants win at least some sales.
Kimco Realty, which owns more than 400 shopping centres and other mixed-use developments, has
rolled out permanent designated curb side pickup spaces to all of its properties. Mall
owner Macerich said many of its properties have retailers and eateries handing off online orders curb
side.
But it’s unclear if people will use curb side service for clothes, shoes or handbags — items often
advertised as “try before you buy.”
“If you are driving all the way to the clothing store, you would rather feel the product before you
buy,” Global Data Retail Managing Director Neil Saunders said. “With apparel, there is still this
need to touch and feel.”
Curb side pickup has other trade-offs, too. Retailers miss out on impulse buying opportunities, where
customers might be tempted to buy something else in store after looking at displays, visiting a fitting
room or interacting with salespeople.
When customers come inside a store to pick up an online order versus picking up an order curb side,
35% of those people will buy something else, according to Forrester research.
“Curb side, at the moment, is kind of a contingency option,” Saunders said.
At the end of the day, he said, “it’s not as good as having people come in the store to buy.”