Relaxation Increases Monetary Valuations

Michel Tuan Pham, Iris W. Hung. and Gerald J. Gorn
Journal of Marketing Research (JMR)
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Executive Summary
Of all the consumer experiences that marketers try to create, states of relaxation are among the most common (e.g., in hotel rooms, business-class cabins, airport lounges, spas). In general, marketers assume that the calmer people are, the better their decisions will be. Whether a person is buying a house, negotiating the price of a car, or considering what stocks to buy, common wisdom holds that people should be relaxed during the decision-making process. Our research suggests that this may not be true when it comes to one important dimension of consumer judgment: the monetary valuation of products and services (how much consumers think products and services are worth).

The authors’ findings document an intriguing phenomenon whereby states of relaxation not only increase the monetary valuations of products but actually inflate them. In simulated bidding studies, relaxed participants consistently bid higher for a digital camera than less-relaxed participants. Whereas less-relaxed participants’ bids were close to the product’s estimated market price on online auction sites, relaxed participants’ bids were approximately 15% higher than the estimated market price. The same effect was observed across a large variety of products in other studies: Not only did relaxed participants think that relaxing products and services such as a spa treatment or a cruise were worth more, they also thought that exciting products and services (e.g., bungee jumping sessions) and indulgent products and services (e.g., an ice cream sundae) were worth more as well. Thus, the effect of relaxation on monetary valuation seems to be quite far ranging.

This effect is specific to relaxation in particular and is not merely caused by the pleasantness of this state. Indeed, in all the studies, relaxed and less-relaxed participants were matched in terms of how pleasant they felt. The authors obtained these findings across more than 670 participants and using two methods of inducing relaxation (music and videos). Why would relaxed consumers think that products are worth more than less-relaxed consumers? The findings indicate that this is because relaxed people tend to think about the value of products at a more abstract level. For example, when bidding for the camera, relaxed participants focused more on what the camera would enable them to do (e.g., collect memories) and how desirable and advantageous it was to own it, whereas the less-relaxed participants focused more on the concrete features of the camera itself (e.g., the number of megapixels it had, the shutter speed). Given that most products and services are meant to fulfill broadly desirable goals, in general, a higher level of thinking about the product increases its perceived monetary worth, as the authors found in these studies.

The relaxation effect has significant marketing implications. All else being equal, consumers will be willing to pay higher prices if marketers are able to relax them first. This may partly explain why luxury products and services (e.g., luxury hotels, high-end boutiques, first-class lounges) are typically provided in relaxing environments.

Biography
Michel Tuan Pham is the Kravis Professor of Marketing at Columbia University. He holds a License in Applied Economics from the Catholic University of Mons, Belgium, and MA and PhD degrees in Business-Administration/Marketing from the University of Florida, Gainesville. His marketing expertise is in the areas of branding strategy, consumer psychology, trademark psychology, and the psychology of decision making. He has authored more than 30 publications in journals such as Journal of Consumer Research, Journal of Consumer Psychology, Journal of Marketing Research, Organizational Behavior and Human Decision Processes, Psychological Science, Review of General Psychology, and Personality and Social Psychology Review. He is best known for his research on the role of affect in judgment and decision making and the effects of regulatory focus on consumer behavior, which has been widely cited and has received several awards and recognitions. He was recently elected president of the Society for Consumer Psychology.

Iris W. Hung is Assistant Professor of Marketing in the NUS Business School at National University of Singapore. She earned a PhD in Marketing from Hong Kong University of Science and Technology. Her research interests focus on consumer subjective experiences (e.g., emotions, metacognitive experiences and bodily sensations) and effectiveness of marketing communications. Her research has been published in leading marketing journals including Journal of Marketing Research, Journal of Consumer Research, and Journal of Consumer Psychology.

Gerald J. Gorn is the Wang Seng Liang Professor of Business and Marketing Area, Chair Professor at the School of Business, Faculty of Business and Economics, the University of Hong Kong. His research addresses two questions of interest to marketers and public policy makers: when and why marketing communications cause consumers to make certain types of judgments. His research also focuses on how to design more effective communication strategies based on this understanding. Professor Gorn has written articles on the effects of advertising on adults, children, and seniors. His research has been published in marketing, health, and psychology journals, including Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, Management Science, Journal of Consumer Psychology, and American Journal of Public Health. His editorial board memberships include Journal of Consumer Research and Journal of Consumer Psychology.

Journal of Marketing Research, Volume 48, Number 5, October 2011
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Michel Tuan Pham, Iris W. Hung. and Gerald J. Gorn
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