Payday

If the workers who built the Pyramids were paid wages, undoubtedly nearby vendors knew when to exert maximum effort: payday. A person with a fresh supply of money is far more likely to spend liberally than one who’s nearly tapped out. Beyond the obvious fact that only people who have money can spend it, it turns out there is a more subtle and complex change in our spending related to when we are paid. Research shows that consumer motives change depending on where they are in their pay cycle, as does their response to advertising messages. Understanding when consumers are most receptive allows marketers to optimize the timing of their sales pitch.

Promotion vs. Prevention

University of Utah marketing professors Himanshu Mishra and Arul Mishra studied consumer behavior and attitudes, and found,

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. As the previous payday gets further away, though, consumers are motivated to choose products that are “prevention-focused”—that preserve their current standard of living. [From Payday Proximity Changes Consumer Motives and Behavior.]

Payday timing chart

According to Himanshu Mishra, “As time goes by and your paycheck is almost spent, you want to maintain your status quo.”

The researchers conclude that if you are advertising new products or products geared toward improving lifestyle, those should be advertised in the time period shortly after payday. If you are advertising products intended more to maintain or prevent worsening of their lifestyle, target the period just before payday. They provide a simple example: whitening toothpaste would be an improvement-oriented product, while a cavity-prevention message would be geared to prevention. Hence, if one assumes a first of the month payday, one would promote the former at the beginning of the month and the latter at the end.

Of course, there are practical issues in acting on this advice. Not everyone is on the same pay cycle, and it seems that more affluent consumers who don’t live from paycheck to paycheck would be less influenced by payday issues. Still, this work presents some interesting possibilities.

Local and Individual Targeting

In some locations, a single employer or small group of companies may account for a large number of employees. Synchronizing marketing might be more productive in this environment. And with today’s ability to target consumers down to the individual level, it’s not impossible to think about optimal times to email, mail, or text a consumer with an offer.

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