Documente Academic
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by Dina Gerdeman
When a company sets a price for a
product, shoppers typically have no
idea what it costs to produce that
item. But it turns out that
consumers reward efforts to lay out
these figuresto deconstruct the
price tag.
In fact, new research shows that
when a company selling T-shirts,
for example, itemizes what it
spends on cotton, cutting, sewing,
dyeing, finishing, and transporting
each shirt, consumers become
more attracted to the brand and
more likely to purchase.
INTIMATE DISCLOSURE
Since cost breakdowns are so often
tightly guarded secrets, the
researchers say that when a firm
does share this information,
consumers consider it a form of
"intimate disclosure"--and people
are often more attracted to brands
that disclose intimate information.
"If we think about our
interpersonal relationships, when
people share things with usas
long as they don't oversharewe
tend to like them better," Buell
says. "We find it interesting that
we're seeing evidence of the same
thing in our relationships with
companies."
MEANWHILE IN THE
REAL WORLD
The researchers took the academic
experiments into the real world by
examining customers interacting
with an online retailer. In
anticipation of the holiday season,
the retailer introduced a $115
leather wallet on its website that
came in five colors. In an effort to
promote sales after the holiday, the
retailer included an infographic
graphic on each product pages that
presented the cost of leather
($14.68), construction ($38.56),
duties ($4.26), and transportation
($1.00), as well as the total cost of
$58.50 to produce the product. But
the retailer made a fortuitous error,
including the costs infographic for
only three of the
colorsburgundy, black, and gray.
RAW HONESTY
APPRECIATED
Yet in the retail industryand
perhaps in other industries where
customers may take for granted
how much effort and money goes
into producing a goodmany
firms may benefit greatly from
sharing cost figures. Perhaps it
makes the price a company charges
seem more fair and justifiable. Or
perhaps it's simply a matter of
consumers appreciating a little raw
honesty from the corporate world.
"Our evidence suggests you should
open yourself up and say, 'Here I
am, warts and all,'" John says.
"When you make yourself
vulnerable, people like you more."