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The Price Elasticity of Cause-Marketing Products

December 8, 2010

Photo credit: Esther Gibbons via Creative Commons License through Flickr. The photographer does not necessarily endorse the views expressed in this article.

How much extra are people really willing to pay for a product that supports a cause? For the past several years, companies like Barkley, Cone, Inc., and Edelmen have gathered data that suggest cause-related products and brands are on the rise in consumer demand and support. This begs the question: how much – specifically – extra are consumers willing to pay for a cause-supporting product? That is where our survey enters the picture.

We call it “a proxy for price elasticity” and we believe it’s the first time something like this has been studied or released related specifically to cause-marketing. In economics, price elasticity measures marginal changes in demand as a response to marginal changes in price. Our proxy effort flips that equation and identifies specific dollar amounts American consumers would be willing to pay for products that costs specific dollar amounts.

As one part of our study to be released on December 15 on this web page, Do Well Do Good, LLC looked to see exactly what amount extra the average consumer would be willing to pay on cause-marketing products that cost $1, $5, $10, $50, $100, or $1,000. The results were interesting:

If the product costs… % that do not want to pay any extra … of those willing, would pay this much extra:
$1 45% $2.12
$5 45% $2.59
$10 30% $2.98
$50 29% $4.53
$100 29% $6.41
$1,000 30% $14.93

So what does this mean? In our forthcoming executive summary, Do Well Do Good, LLC will address this data more in depth and will look at how the different demographics (men, women, and moms) we measured answered this question. We will also share our insights and analysis into other important areas not previously addressed in cause-marketing, CSR, and sustainability research. If you can’t wait until December 15, take a look at yesterday’s teaser post looking at the overall consumer demand for companies to be engaged in CSR and cause-marketing.

If you would like to receive special access to the Executive Summary of our reports – before they go public – sign up for our SPAM-free newsletter by entering your email in the field to the right and click “go.” Don’t worry, we will never sell your information to anyone and you can always unsubscribe. In the meantime, stay tuned!

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