You’ve probably seen a sign like this pop up in your local deli or coffee shop: “Due to an increase in the cost of [some raw ingredient], we’ve had to temporarily increase the price of [some food or beverage]. We apologize for the inconvenience.” These sorts of notices play an important role in managing a business’s relationship with its patrons because a lot of behavioral economics research has shown that when consumers feel like a rise in price is unfair, they’ll have no compunctions about taking it out on the entity in question — even if that means switching to a rival, even more expensive brand (or coffee shop). If they feel the increase was justified, on the other hand, they won’t act out in this manner.
But how do consumers decide whether a given rise in price is fair? A new study in the Journal of Marketing offers a fascinating partial answer to this question: Consumers’ reactions to an increase (or decrease) in price is affected by whether or not they imbue the brand in question with humanlike qualities — that is, whether they see it less as a faceless façade for products sold under its name and more as (almost) a being that can have goals and relationships of its own.
For the article, a team led by Hyokjin Kwak of Drexel University’s LeBow College of Business ran five studies involving household-purchase panel data, interviews with mallgoers, and experiments with undergraduate and business students in which they tried to understand the relationship between brand anthropomorphization and consumers’ reactions to (hypothetical) changes in price. Overall, the more humanized a brand was, the more unfairly consumers viewed price increases. And the panel data showed that “humanized brands [had] significantly higher price elasticities than non-humanized brands,” which simply means that when humanized brands’ prices went up or down, consumers reacted more dramatically by buying less or more of the product, respectively, as compared to non-humanized brands.
There were also some interesting personality and gender differences — guys seemed to get madder at humanized brands than women, for one thing — but the basic story line here is interesting and actually pretty intuitive,when you think about it. Obviously no one really sees a brand as a full-blown being, but cognitively there’s a big difference between viewing something as having intention of its own versus viewing it as just an inanimate trademark. When we think of a brand as a being, it’s hard not to take a price increase a bit personally — why are they doing this? Are they trying to take advantage of us? If the brand’s not humanized, it’s easier to just blame it on the vicissitudes of wheat prices or supply chains or whatever.
This is definitely a case of “more research is needed,” but these findings could point to interesting ways for companies to raise prices without alienating customers.