Does true price influence consumer purchasing behaviour?

In the true price, the social costs are included in the purchase price of a product. These are costs that are incurred “behind the scenes” to reduce negative impact on the environment, such as water pollution during production, healthcare costs related to eating and drinking unhealthy products, or savings on costs made by underpaying farmers. Positive effects, such as carbon sequestration, landscape formation, and health also influence the true price of a product. True prices provide insight into the sustainable level of the different products, and comparing them may lead to companies and consumers to make different, possibly more sustainable choices. Four external factors were included in the true prices used in the experiment: land use, water use, climate impact, and underpayment. This caused the price of products to increase between 1% for rocket and 14% for cauliflower.

Three types of information

Researchers from Wageningen University & Research wanted to know whether choosing a food product is influenced by giving specific information about its true price. In a field experiment with fruits and vegetables, the effect of three types of information on the shelves was measured: basic information (“This product has a true price”), information about the redistribution of the extra funds (“We will pass on 100% of the extra funds”), and information that appeals to social status (“You are one of the first people in the Netherlands to pay true price”). The experiment was conducted among customers in the supermarket De Aanzet in Amsterdam. This is the first supermarket overall which has introduced true prices on the shelf.

Social status plays a role

At first glance, the experiment shows that the additional information had no impact on purchasing behaviour and it seems that customers more or less continued as before, but at the same time, the survey shows that customers did not really notice the information on the shelf labels, if at all. However, the survey does indicate that information about true price can have an impact. Customers are more willing to buy true price products if they trust them, if they think that by buying true price products they can distinguish themselves (social status), or if they think that their purchase has a positive impact on people’s living conditions and/or the environment. This effect is even stronger for customers who have relatively low confidence in true prices: they intend to buy true price products even quicker if they feel more strongly that they can distinguish themselves positively by doing so (status) or expect to make an impact with their purchase.

Willingness to pay more

From the survey, the researchers could also conclude that two-thirds of the respondents were willing to pay more for a true price product. They also noticed that on a day-to-day basis, customers continued to buy the true price products and that the true prices were accepted. The price increases may not have been a lot, but they were still there. Mariët van Haaster-de Winter, researcher at Wageningen University & Research, does note the following: “The experiment took place at an organic supermarket in Amsterdam, with loyal customers and a high confidence in true prices. For them, an increase in price is possibly less likely to be an obstacle for purchase. They are also more likely to be willing to contribute to sustainability than “mainstream” consumers because they have already made the choice to go organic. How do we translate the results and opportunities for the True price concept for “mainstream consumers”? More research is required to gain insight into whether and under which conditions they are prepared to pay true prices for food products.”

Getting attention

It is also clear that the interventions in the follow-up research must be more visible than the shelf labels used in the experiment. Van Haaster-de Winter: “The next intervention must be better at getting the attention of the customers or combine different types of interventions.”