Old bottle, new wine

Recent research from the University of Chicago (1) suggests that the value perceived by the consumer of a product or service is inherently linked to the effort needed to acquire it. In other words, the benefits that accrue to the consumer, regardless of the cost, is not considered independently by the consumer in the value assigning process. Also, the cost (effort) is generally considered to be positively correlated to value by the consumer.

On the surface, this appears to be a problematic observation. Most agree that such factors as the intricate design of the label on the bottle of the wine appear to correlate with the value assigned by the consumer to what is inside. In this case, the consumer is using the quality of the label and the bottle as proxies for the wine itself. This study appears to take it one step further in that the consumer perceives value to be correlated with the effort needed – i.e. making the label difficult to read actually increases the perceived value. The incremental value to effort, however, cannot be increasing monotonically – it is logical to assume that the consumer will walk away from the bottle of wine, if it is chained to the shelf, even though the effort needed to acquire it is very high in that case.

One way to rationalize this finding may be that the consumer has some extra “effort” to play with. As long as the incremental effort needed to acquire a product/service of equal quality is within this “budgeted effort, she will expend it and feel better from the purchase. However, if the effort needed is beyond that, it is likely that she will walk away from the product. Expending the budgeted effort brings the consumer incremental utility as the available effort (time, for example) may be perishable.

However, companies should be careful accepting the study conclusions literally and start designing their products and services to demand higher effort by their customers to acquire them.

(1) “From Inherent Value to Incentive Value : When and Why Pointless Effort Enhances Consumer Preference.” Sara Kim, Aparna Labroo – Journal of Consumer Research http://www.jstor.org/pss/10.1086/660806