Webinars
MSI Webinar: Why Consumers Value ‘Cures’ More but Want to Pay Less
A fundamental premise of value-based pricing is that consumers should be willing to pay more for a product or service that does more (i.e., provides more value). In the domain of healthcare, we might thus expect a “cure” to be worth more than a drug or therapy that does not make such a strong claim. In this webinar, we will present the results of five studies that challenge this prevailing wisdom. The studies focus on consumer expectations for pricing and access to medications that purport either to “cure” or mitigate a disease condition. We robust evidence of a cure effect in which individuals prefer lower price levels for cures (vs. non-cures) and consider high prices to be especially unfair. This effect persists when companies describe their treatment by directly using the word “cure” or by indirectly using numbers or words that suggest it is a cure (e.g., “100 percent effective,” “eliminates disease”). Our findings suggest that when thinking about health treatments, people tend to focus on communal value rather than the traditional market value that underlies value-based pricing. In other words, because health care naturally lends itself to thinking about close relationships with others, individuals seek the fair and just distribution of outcomes.
The cure effect has important implications for patients, companies, and policymakers. Specifically, this study emphasizes the importance of careful word choice in all product labeling and advertising. Rather than broadcasting that their offerings are cures that eliminate a disease, it may be wiser for companies to utilize modest labels that are more conducive to higher price acceptance and less likely to spark consumer outrage. Subtle wording differences can have substantial influence on consumer judgments and behaviors such as insistence on universal drug access, price preferences, and price fairness judgments.
speaker
Mathew S. Isaac, Ph.D., is the Thomas F. Gleed Chair of Business Administration and Professor of Marketing at the Albers School of Business and Economics at Seattle University. His research focuses primarily on consumer judgment and decision-making. He is particularly interested in the processing of numerical information, lists, frames, and categories, and in consumers’ response to persuasion attempts. At Albers, Mathew serves as the Chairperson of the Marketing Department and teaches courses in Marketing Strategy, Brand Management, Sales Management, and Consumption & Happiness to undergraduate and graduate students.