Aug 30, 2010 08:10 GMT  ·  By
After payday, people buy more promotion-focused products and the behavior evolves towards prvention-focused products by the end of the month.
   After payday, people buy more promotion-focused products and the behavior evolves towards prvention-focused products by the end of the month.

Payday proximity changes the way we perceive prices, the way we respond to messages, our motives and our purchase behavior, a new study carried out by University of Utah marketing professors Himanshu and Arul Mishra, reports.

You would not think but it is not the actual price of things or the size of the bank account that matter, but rather our desire to improve or present life quality.

As every hard-working employee knows, a new paycheck brings the sensation of freedom with it, but scientists say that it is not the amount of money that makes us consume differently, it's rather the time elapsed since payday.

Himanshu Mishra stated: “Our findings are surprising because previous research has always considered preferences to be relatively stable, not changing much over time.

“We find that not only do preferences change during such a short duration – paycheck to paycheck, but also that they fluctuate between a promotion and a prevention focus.”

“How Salary Receipt Affects Consumers' Regulatory Motivations and Product Preferences,” co-authored with Dhananjay Nayakankuppam of the University of Iowa looks at the way that consumers' behaviors change as they get further away from their last paycheck.

This researchers conducted two month-long studies on people that were employed and received a regular salary.

In the first study, 61 subjects with full-time jobs, were asked to classify their buying choices over a period of one month, in things they “aspired” to buy or “ought” to buy.

For the second study, 152 participants were asked to choose between a series of products with the same price and size, with the snack choice being, for example, chocolate cake (promotion focused) or fruit salad (prevention focused).

The survey showed that the proportion of “aspired” products declined and that of “ought” products rose, as the subjects got further away from their paycheck day, without having anything to do with declining checking account balances during the month or to product prices.

In order to make the study more realistic, some of the participants, selected randomly, actually received the products they chose.

“The idea was, whatever choice they were making should have some real consequences,” Mishra says.

Also, age made no difference – participants were aged 21 to 45 years, nor family size or the presence of children.

The researchers' confirmed theory is that newly paid consumers have a tendency of spending money of “promotion-focused” products and services, while those that are further away from their payday will choose “prevention-focused” products, that will maintain their standard of living.

These results are very important and have many application fields within the real world, like in advertising for example.

Product-launching companies might use the results of the survey to advertise earlier in the month, when customers are more likely to have just been paid, thus more willing to spend.

Also, employers that want to promote certain employee programs, like a company-wide exercise program, for example, would attract more people closer to payday, since it is promotion focused, and participants would work to improve their lifestyle.

An initiative promoting healthy food will be more effective further away from payday, as people would want to maintain a lifestyle, and this is prevention-focused.

“Those messages will have more influence then, because people are more in that mode, in that state of mind,” Mishra says, and “as time goes by and your paycheck is almost spent, you want to maintain your status quo.”

This study was published in the September issue of the Journal of Marketing.