Stressed Consumers: Do They Make The Right Decisions?

THE PROBLEM

Consumers today are constantly faced with complexity in the retail environment. Whether it is choosing from the multitude of products available, assessing quality, taking note of prices and discounts, shopping has undoubtedly become a complex affair. However despite all of this complexity, consumers are still able to make informed decisions based on the information at hand. Most are rational customers capable of evaluating a product weighing on its price vs. quality in order to get the “best deal” for them.

However, at what point do consumers become over stimulated, or too stressed to make good decisions? Given that the human mind only has a limited capacity for intelligent processing, overload of choices and information causes humans to default to automatic biases in order to make decisions. These biases may not lead to the most optimal choice. The researchers wanted to answer the question are there pressures in everyday living that can cause a person to abandon rational thinking when making purchasing decisions and instead rely on heuristics?

In other words; can stress, hurt you as a consumer?

FINDINGS

In order to test the hypothesis, the researchers designed an experimental survey that was sent out to 500 people. The survey used computer software to simulate a grocery setting and participants were given a list of items to purchase (breakfast items or dinner items). Each item type had 3 choices whose values were manipulated along the dimensions of price and volume in such a way that there is one “best” choice for a value seeking consumer.

The researchers manipulated two types of stress; namely short-term stress or acute stress and chronic stress or long term stress. Acute stress results from temporary and specific events or situations that involve unpredictability or poor sense of control. Research has shown that the effects of this short-term stress can be mixed as performance may actually improve in certain instances as a result of increased focus. Chronic stress, on the other hand is persistent and recurring. It is essentially a life condition that is deemed as stressful (divorce, overdue mortgage etc.)

In order to manipulate acute stress, some participants were given a time limit of 3 minutes to finish the task. While the consumers completed their virtual shopping task, a countdown clock was displayed to increase the pressure experienced, and increase the salience of the constraint.

In order to manipulate chronic stress participants were assigned one of two priming tasks before the survey. One asked them to write down pleasant memories or experiences that they had experienced over the last week. The other asked them to recall stressful memories or experiences from the last week. A regression analysis was conducted to look at the effect of the two types of stress on shopping performance.

IMPLICATIONS & CONCLUSIONS

The results revealed a significant positive effect of a time constraint on performance, when we controlled for the total amount of time that consumers spent shopping. Those under acute stress also rated the task as “more difficult” implying that being challenged to do a difficult, but not impossible task increases performance up to a certain point. This would suggest that the shoppers under acute stress became more focused, and thus performed better.

The results revealed no effect of chronic stress. There are many explanations for this, but it may simply be that consumers under chronic stress have become accustomed to this state of mind thus it no longer has an effect on performance. This also suggests that consumers are able to push back longer term issues to the back of their minds in order to focus on the task at hand.

The initial findings lead to many interesting implications. For one it was thought that the store layout and the isle placement of a retail store or shopping mall should be mildly confusing in order to keep consumers in the store as long as possible. The added challenge and may actually increase their shopping performance, though an increase in focus. Therefore this result would suggest that building a more relaxed and comfortable retail environment might cause consumers to lose focus and purchase more. For consumers, there may be added utility in challenging themselves to shop in a limited amount of time, in addition to sticking to their standard budget.

Martin Nograles

Stress and Price Perceptions

Martin Nograles is a first year MBA at the Georgetown McDonough School of Business. He studied Economics in a Jesuit university in the Philippines. His background is in Finance particularly asset management where he worked both as a fund manager and as a financial advisor. He is interested in researching how emotions and human psychology cloud judgment and behavior, a phenomena seen in any market whether retail or financial.

Download article Twitter Twitter Twitter

More studies