How Gender-Based Pricing Hurts Women’s Buying Power
This article was written in partnership with Women in Business
Who are we?
Nova Women in Business is an academic club that targets the existing gender gap in our society, specifically focusing on the business and academic world. In order to bring awareness and consciousness towards the issue of gender inequality, the club engages with the university community by promoting events and discussions surrounding the need for positive change, as well as focus on the personal and professional development of their members.
Nova Nudge is a student-run nudge unit focusing on behavioral economics, mainly using nudges. Their experimental approach targets the 3Bs of behavioral change: Behavior, Barriers and Benefits. The club helps with the implementation of behaviourally aligned solutions for smaller and impact driven companies.
In order to spread knowledge and create real impact in the academic community, both clubs gathered forces to raise awareness about important themes. The present article will discuss relevant concepts regarding Pink tax, an existing phenomenon in our society that affects women around the world.
The Pink Tax: What Is It?
Once children grow older, they are exposed to a variety of stereotypes that aid in the formation of their behavior. Males are frequently described as more powerful, strong, and agile by parents, classmates, and society. Females, on the other hand, are defined by their beauty, feelings, and fragility. Women, as compared to males, tend to spend more on cosmetics, personal hygiene, and clothing since they have been socialized in this manner since infancy. Advertising campaigns and marketing tricks play a large role in the reinforcement of gender stereotypes by priming consumer preferences subconsciously towards gender-typical products. Gender socialization contributes to the persistence of various gender preconceptions that are reinforced by society, resulting in gender-based pricing discrimination known as the pink tax.
According to listenmoneymatters.com, “The pink tax refers to the extra amount of money women pay for specific products or services. Sometimes you’ll see or hear it referred to as price discrimination or gender-pricing.” But, what exactly is it so controversial? Razors are a common example of the so-called pink tax, which refers to the issue of female-branded items being more expensive than male or gender-neutral counterparts. Even the most basic razors are priced differently depending on the gender they're marketed to, with women's versions costing more even when there are little noticeable changes between the two goods, as many critics of the pink tax have pointed out. So, while Romeo may pay only €9.99 for a pack of his favorite razors, Juliet pays €12.99 for essentially the same model. This trend applies to many other products a woman uses throughout her lifetime.
Figure 1 - Pink Tax Visual Example
Figure 2 - Pink Tax Visual Example
The Priming Effect: Mechanisms of Influence
A prominent way through which consumer preferences are influenced is the priming effect. If a female consumer is primed with words or images associated with stereotypical female attributes - for instance, a nurturing mother in a laundry detergent advertisement or a sexy female in a bikini on the beach in a razor advertisement (Figure 3) - female consumers are more likely to prefer these feminine products over more gender-neutral products. Similarly, males are influenced by stereotypical masculine attributes - for instance, a muscular man posing for a male deodorant (Figure 4).
These primes are so effective and dominant in consumer’s purchasing behavior due to gender images that have been built and upheld by society over centuries. The problem though is that brands take advantage of these gender stereotypes in advertising campaigns and set higher prices for “female” products.
Figure 3 - Female razor advertising campaign
Figure 4 - Male deodorant advertising campaign
How Pricing Experts Justify The Tax?
The pink tax, according to pricing experts, makes perfect economic sense. It's only one example of value-based pricing and price discrimination, both of which are essential components of a successful pricing strategy. According to this viewpoint, men and women value personal-care goods differently. Women should be charged a greater price since they are willing to pay more. Furthermore, to excuse the price variances, merchants give superficial product changes. For example, a women's razor may be pink, and a deodorant could have a distinct scent. The packaging will be unique as well. The cost argument is that this distinguishes the items and makes them more appealing to women. As a result, the price is higher. Finally, they argue that any woman who does not wish to pay the higher price may just get the cheaper male version, with no negative consequences. This strategy is referred to as "gender-based versioning" by pricing experts.
When a product is branded “for men” it inherently excludes women from purchasing it. These goods are perceived as “not for me” by women. Furthermore, men's and women's personal-care goods are sometimes offered in separate areas of the shop, especially in large supermarkets, reinforcing this impact. Men's personal-care goods, for example, are all exhibited on one aisle whereas the female equivalents are located two or three aisles away and are spread out across a broader area.
Figure 5 - Who pays more?
Research Behind The Pink Tax
The 2015 report by the New York City Department of Consumer Affairs is one of the most well-known and often quoted instances (DCA). The survey discovered that women's products cost 7% more on average than men's products, with the highest difference in personal care items, where women spent 13% more. Children's toys, children's and adult apparel, and senior/home health care goods all have considerable variances, according to the DCA.
The DCA research looked at 794 items from five industries, divided into 35 categories. They gathered pricing from a range of brands and retailers, focusing on items with comparable branding, ingredients, look, textile, construction, and marketing.
Women paid more for their purchases 42% of the time, according to the study. 40% of the time, prices were the same. Only 18% of the time do men pay more.
One of the most intriguing findings of this analysis is that the pink tax accompanies a woman throughout her life, causing her to spend extra for anything from early childhood toys to canes later in life.
In conclusion, gender-based price disparities clearly cost women and their families real money that they cannot afford to lose.
The most effective way to deflect pink tax is to avoid products specifically geared toward the female gender. Eliminating those products, boycotting or finding alternatives to replace them is a resistance act. However, further investigation is needed to better understand the factors that contribute to gender-based price disparities throughout the economy and how they impact women.
Lastly, spreading the word about the existence of Pink Tax is the best way to fight it and to guide society towards change and gender equality.