'Payday proximity changes consumer behaviour'

Payday proximity means more than awareness of the amount of money in the bank.

It actually influences a consumer's motive and behaviour, says a new study led by two Indian-origin researchers.

Professors Himanshu and Arul Mishra at Utah University have found payday proximity changes consumer motives, response to messages and purchase behaviour, the Journal of Marketing reported in its latest edition.

"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," said Himanshu Mishra.

Newly paid consumers are more likely to spend money on 'promotion-focused' products and services -- those that make their lives better, if even in a small way.

And, as previous payday gets further away, though, consumers are motivated to choose products that are 'prevention-focused' -- that preserve their current standard of living, say the researchers.

"As time goes by and your paycheck is almost spent, you want to maintain your status quo. The results could have several real world applications," Mishra said.

The study was done in two segments.

In the first, 61 participants -- all with full-time jobs -- were asked to document their buying choices over a month-long period, categorising purchases as things they 'aspired' to buy or 'ought' to buy.

In the second segment, they asked 152 participants to choose between a series of identically priced and sized products.

The snack choice, for example, was chocolate cake (promotion focused) or fruit salad (prevention focused).

The researchers found that the proportion of 'aspired' products declined and proportion of 'ought' products increased as the participants got further away from their paychecks.

They also demonstrated that these results were not related to declining checking account balances during the month or to product prices.

After the participants chose their products, some actually received their choices through random -selection process in order to make the study more realistic.

"The idea was, whatever choice they were making should have some real consequences," Mishra said.

The Best Business Specials