Mood and Consumer Behavior

Cheung, Grace

Lim, Jennifer

Perkis, Polina

Weinstein, Anna

Wu, Mark

UGBA 160 – Consumer Behavior

April 29, 2008

Background Information and Research Question:

In today’s competitive environment, companies frequently use discounts as a quick, easy

marketing strategy to increase their unit sales and revenue. Despite being effective in inspiring

consumer purchase, heavy discounting reduces per-unit profit margins and should not be

considered a long-term strategy. Discounts appeal to a consumer’s immediate purchase decision

whereas studies show that customer feelings have a lasting influence on their perception,

evaluation, motivation, and ultimately choice to buy a product. The goal of our experiment is to

determine if a customer’s mood affects his reaction towards price discounts. Will a person in a

sad mood need a larger discount to purchase a product compared to someone in a happy mood?

We hypothesize that people in a happy mood will be more likely to purchase a product

with a small (10%) discount than people in a sad mood. People in a sad mood will need a higher

discount to be persuaded to purchase the discounted product. We also hypothesize that people

will choose the phone with a small (10%) discount more often than a non-discounted phone.

However, overall, people will choose a heavily discounted (40%) phone most often.

Procedure:

We used a two-by-two between subject design to test our hypothesis (Appendix A). The

subjects were randomly selected U.C. Berkeley undergraduate students. There were four

treatments, and each treatment consisted of 15 subjects. The two independent variables (X) were

mood (happy or sad) and discount percent (10% or 40%). Our dependent variable (Y) was the

customer’s choice of a discounted, slightly lower-quality “Phone A” or a retail-priced, slightly

higher quality “Phone B.” Subjects were presented with one of four different survey packets

(Appendix D) for each of the four treatments. In each treatment, subjects were either asked to

write about a happy or sad experience (mood manipulation task), asked to choose between

discounted Phone A (discount varied between treatments) and retail-priced Phone B, and finally

asked to rate their current mood. Phone B’s price stayed constant throughout all four treatments.

Therefore, the 4 treatments are as follows: Treatment 1 involved a happy mood manipulation

task and the choice of a 10% discounted Phone A; Treatment 2 involved a happy mood

manipulation and the choice of a 40% discounted Phone A; Treatment 3 involved a sad mood

manipulation and the choice of a 10% discounted Phone A; and finally, treatment 4 involved a

sad mood manipulation and the choice of a 40% discounted Phone A.

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Each one of our team members conducted the experiment following the same procedure:

Each team member administered three surveys per treatment to random U.C. Berkeley

students, ensuring a total of fifteen subjects per treatment.

Subjects were given five to ten minutes to write a paragraph about a happy or sad

experience, depending on the treatment they received

Subjects were then directed to answer questions on the following pages, asking them to

choose between the discounted (10% or 40%) phone and the retail-priced phone.

Finally, participants rated their mood on a scale of one through ten and answered a few

extra irrelevant questions to prevent them from guessing our hypothesis.

The results were then recorded for each treatment (see appendix).

Results (See Appendix B and C):

Our results were consistent with our hypothesis. In comparing the results of the Happy

10% condition to the Happy 40% condition, we found that in both groups, subjects were more

likely to choose Phone A, the discounted phone, than Phone B, the non-discounted phone. The

proportion of subjects that chose Phone A was 80% and 73%, respectively; the z-test results were

not statistically significant (z = -0.43167). However, when comparing the results of the Happy

10% condition to the Sad 10% condition, we found that subjects in the “happy” condition were

more likely to choose Phone A and subjects in the “sad” condition were more likely to choose

Phone B. The proportion of subjects that chose Phone A was 80% and 46.7%, respectively; the

z-test results showed marginal statistical significance (z = -1.89434). Next, we compared the

results of the Sad 10% condition to the Sad 40% condition, and found that when given the choice

of a 40% discount, subjects chose Phone A more often. The proportion of subjects that chose

Phone A was 46.7% and 86.7%, respectively; the z-test results showed statistical significance (z

= 2.32379). Thus, although subjects in the “sad” condition were much less likely to choose

Phone A over Phone B when given a 10% discount, they were as likely to choose Phone A as

subjects in the “Happy” condition when given a 40% discount. Subjects in the “sad” condition

needed a larger discount to influence their choice of Phone A. Lastly, when comparing the

results of the Happy 40% condition to Sad 40% condition, the proportion of subjects that chose

Phone A were 73% and 86.7%, respectively; z-test results were not statistically significant (z =

0.912871). The 40% discount influenced the subject’s choice in both treatments, despite the

mood condition.

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Marketing Implications:

The results of our experiment demonstrate that people in a happier mood will be

persuaded with a smaller discount, whereas people in a sad mood require a larger discount in

order to be swayed by a similar lower quality product. For a company, the implications of our

experiment show that the emotional effect of the customer experience is important in the

customer's final purchasing decision. To apply these results, a retail store, for instance, should

create an ambiance to promote positive feelings through upbeat and appropriate music selections,

colors and symbols that evoke a recall of a past positive association, and product complements

that accentuate the benevolent impact of the main product. As an overall strategy, companies

should use the emotions evoked by television ads as displays in retail locations to maintain a

lasting emotional connection between the customer and the product. Additionally, companies can

manipulate the mood of customers in a negative way and then use the product as a mood-

uplifting device. A dependable mood association between the customer and product will allow

the company to discount less, thereby maintaining a higher profit margin on all units for sale.

Limitations:

Although our study revealed significant marketing implications, there are several

limitations to our experiment. First, our 60-person sample was not completely random because

all subjects were U.C. Berkeley undergraduate students. In general, undergraduate students are

more price sensitive to products such as cell phones, which might influence them to choose a

discounted product in all cases. After analyzing the data, we noticed that the mood manipulation

writing task was not completely effective in influencing mood because the subjects’ intended

mood after the task was often inconsistent with their own rating of their mood on the last page of

the survey. The writing task may have only influenced a subject’s emotions, rather than his

mood, which is more stable and long lasting. Although our survey gives the option of two

“unbranded” phones, some subjects may have recognized the brand and model of the pictured

phones. As a result, they may have disregarded the information presented in the survey and

picked the phone solely based on their prior experiences and opinions of that particular brand or

model. Lastly, our experiment greatly simplified the experience of purchasing a product.

Although the two phones in the survey may be similar, consumers are usually given more

information about a certain product besides the discount, appearance, and rating before making

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their purchase decision. Nonetheless, after running statistical tests and analyzing our data, we are

confident that our study produced useful information. This experiment can be further improved

by using a larger sample size, more randomized subject selection, a task that is more effective in

influencing mood (i.e. watching a funny or sad movie clip), and maybe inserting more subtle

questions so subjects cannot guess at all what we are attempting to study.

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