FINANCE
What is spaving? Experts explain the marketing trick used to get you to buy unnecessary products
Understanding the mechanisms behind spaving can empower you to protect your wallet amidst a period of significant belt-tightening.
Spaving, a term derived from the combination of “spending” and “saving,” is a cunning marketing strategy employed by companies to entice consumers into purchasing products they may not necessarily need. This tactic plays on the psychological inclination of individuals to feel like they are saving money while spending, creating a sense of value and urgency that drives impulse buying.
At the core of spaving lies the art of crafting deals, discounts, and promotions that appear too good to pass up. Companies strategically manipulate pricing, bundling, and limited-time offers to create a sense of scarcity and exclusivity, compelling consumers to make purchases they might otherwise have hesitated on. The allure of saving money or getting a bargain often overrides rational decision-making, leading individuals to acquire items they perceive as a steal.
Advice to avoid spaving by experts
Spaving is also an issue for companies as well as persons, according to Dean Kaplan, CEO of Kaplan Collection Agency.
“We regularly get claims against start-ups and early stage companies who expect massive growth to start in the coming months. To get volume pricing, they’ll sign up for much larger quantities than they currently need,” he said. “When the growth doesn’t materialize, they are locked in to purchase orders or long-term contracts that they can’t afford from cash flow.”
With interest rates at their highest level in two-decades, borrowing money to dig out of the problem is likely to lead to future disaster.
Kaplan has this advice to avoid spaving for persons or business:
- Check Every Expense: Make sure each significant expense is truly necessary. Do you really want that cereal just because you get another free?
- Think Before Spending: Ensure purchases align with your goals.
- Educate Your Team: Understand the dangers of overspending and discount offers which require higher total spending. Careful planning ahead of time can alleviate this.
“When it comes to spaving, the key is discernment. Consumers should ask themselves a few critical questions: - Is this purchase aligned with my long-term financial goals? - Will the cost truly translate into savings, or is it just an attractive price tag now?,” Kaplan continued. “The bottom line is to ensure that any decision to spend more now truly serves a well-considered financial plan and isn’t just a reaction to perceived savings.”