Currencies with a high face value such as the Japanese yen make people feel wealthier
Those who say “less is more” haven’t been following the work of Professor Dilip Soman.
Soman, who teaches marketing at the Joseph L. Rotman School of Management, has found travellers spend more when they have currencies with high face value. When Canadians, for example, exchange $100 for a thick wad of 11,500 Japanese yen, they also adjust their price expectations, says Soman. Suddenly, 460 yen (or $4 at the current exchange rate) seems like a perfectly acceptable price for a newspaper or a pack of gum.
“People believe they are wealthier, therefore they end up spending more,” he says. But when consumers don’t have yen in their pocket and buy with a credit card, they tend to balk at high sticker prices and buy less. For Soman, these findings are part of his overarching research into how consumers determine value. With currency, he says, it seems to boil down to “if I can count more, I must have more.” The psychological implications could help marketers and retailers refine selling techniques by tapping into the seemingly ingrained human belief that sometimes, more really is more.