September 30, 2011

Kick Back and Spend

Can retailers prompt customers to splurge by cultivating relaxation?
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Cup of tea while you wait? Complimentary mini-massage as a precursor to your cut, color, and style? Such perks and atmospherics aren’t new to marketers; many retailers go to great lengths to create robust customer experience settings — music, lighting, scent, design, and more — whether in an attempt to associate their brand with pleasure or as an acknowledgement that consumers simply enjoy shopping in pleasant environments.

Marketers may be on to something, but more and differently than they know, says Professor Michel Pham. In a study undertaken in collaboration with Iris Hung of the National University of Singapore and Gerald Gorn of the University of Hong Kong, Pham found that consumers in a more relaxed state of mind consistently increase — and often substantially inflate — their monetary valuations of products and services compared with those in a less relaxed state of mind.

In their initial experiment the researchers induced feelings of relaxation in their participants by showing a video of nature scenes or playing a recording of instrumental music. When these participants were then asked to assess how much a series of different products — from a digital tire-pressure gauge to a scarf — were worth, they consistently estimated higher values for each of the products compared with a control group of less relaxed (but not stressed) participants who were feeling equally pleasant.

When the researchers switched up the experiment by asking relaxed participants first to think about a product’s characteristics in a more concrete way before being asked to place a value on it, the effect of relaxation was eliminated. In other words, when relaxed participants thought about products in a more concrete, less subjective way, their valuations did not increase much compared with control groups. This suggests that relaxation increases monetary valuations by triggering more abstract thought processes in the brain. Indeed, when participants were asked to describe their frame of mind when assessing the value of the products, the more relaxed participants reported more abstract thinking and less concrete thinking than participants who hadn’t been “primed” for relaxation beforehand.

“Relaxed consumers tend to imagine the higher-order benefits and goals that might be fulfilled by having the product. They could make a heartwarming family movie with a new digital camera or be better global citizens by driving a hybrid car,” Pham says. “That's a more abstract, contemplative mode of thinking. Whereas less relaxed consumers tend to focus on more lower-level aspects — the specific, practical characteristics of the product, like how much memory the camera has or what gas mileage the car gets.”

The researchers were careful to distinguish between a merely pleasant mood and feelings of relaxation, noting that the two don’t necessarily co-exist. A child about to open many birthday gifts and an athlete about to take the podium to receive an award are both probably in exceptionally pleasant moods, but too excited to be relaxed.

The effect holds true for a variety of products and services, not just, as might be expected, for products typically associated with relaxation, such as spa services or a weekend retreat, but also for less relaxing products such as gym memberships or bungee jumping sessions, and "vice" products such as casino memberships and rich desserts. What mattered was the state of mind at the time of the purchase or, as here, the valuation, which depending on the experiment, increased between approximately 10 to 20 percent when participants were relaxed. (These experiments used nature videos and instrumental music to promote feelings of relaxation, but Pham notes that a number of techniques or stimuli could be used to the same effect.) The researchers emphasize that their data indicate that it is relaxed consumers who consistently attribute higher valuations for products, not less relaxed consumers who decrease their valuations of the same products.

Ultimately, says Pham, their findings suggest that consumers may pay more for products and services if marketing professionals can find new ways to encourage customers to sit back and relax. As for consumers, while some types of decisions might best be made under contemplative circumstances, when it comes to shopping, they might do well to focus on the practical aspects of products before letting their imaginations — and wallets — run away with them.

Michel Pham is the Kravis Professor of Business in the Marketing Division at Columbia Business School.

Read the Research

Michel Tuan Pham, Iris Hung, Gerald Gorn

"Relaxation Increases Monetary Valuations"

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