Thursday, June 14, 2012

Colors effect the willingness to pay

Several researchers have shown that colors have an effect on our emotions. Blue rooms in hospitals makes people feel calm for example, while red triggers aggression. 

Amar Cheema, McIntire School of Commerce and Rajesh Bagchi,, Pamplin College of Business have written the research paper: "The Effect of Red Background Color on Willingness-to-pay: The Moderating Role of Selling Mechanism", showing that colors in a shopping situation affect our decision  making. And the research points out that this is the case whether the shopping environment is online or offline.
They write: "Our results suggest that incidental exposure to color on webpage backgrounds or on walls in brick-and-mortar stores can affect willingness-to-pay. Our findings therefore have important implications for website and store design. It is fairly straightforward to change background colors of websites and firms could even customize colors based on selling mechanism and product characteristics. For instance, in situations where consumers compete with each other to buy a scarce or a limited edition product, firms may increase consumers’ willingness-to-pay by exposure to red versus blue backgrounds. By contrast, in situations where a product is readily available and the consumer competes with the seller to get a lower price through extended price search or through haggling, consumers’ willingness-to-pay may be enhanced via exposure to blue versus red color backgrounds."

 Their research is available by clicking here.o