My fellow FutureLab blogger, David Widger, wrote an interesting post, How Many Green Marketers Does It Take to Change a Light Bulb? In it he notes that fluorescent bulbs have proven difficult to market, despite today’s lower bulb prices and dramatic energy savings. The big issue is cost. At our closest Home Depot, for example, individual compact fluorescent bulbs can cost about $2 in a pack of five or six, and about $5 individually. A four pack of incandescent bulbs, meanwhile may cost a mere $1 – just 25 cents per bulb. According to Widger, a fluorescent bulb can save $30 to $100 over its lifetime. One would think consumers would gladly pay an extra dollar or two per bulb to save many times that in energy costs, not to mention less frequent bulb changing and a positive environmental impact.
In fact, neuroeconomics research provides a logical explanation of the slow adoption rate for the fluorescent bulbs. Consumers “know” what lightbulbs cost from years of experience. Seeing a price of $5 for one bulb is likely to create an automatic, “Wow, that’s an expensive bulb!” reaction, while four bulbs for a dollar will do just the opposite, prompting, “Gee, that’s really a bargain!”. Based on work by CMU’s George Loewenstein and others (see The Pain of Buying), we know that prices perceived as too high activate the pain centers in the brain. In that study, researchers could predict whether or not a consumer would purchase an item just by studying fMRI brain scan data with accuracy almost as equal to the subjects own self-reported purchase intention.
The challenge facing green marketers and lightbulb makers in particular is to overcome the initial price reaction when the green product is more costly. The compact fluorescent bulb makers do this by putting project energy cost savings in a prominent position on the packaging. If you know you’ll save $20 in electricity, paying $2 for a bulb seems quite reasonable. Still, the marketers have to overcome the fact that it’s the immediate cost where the pain of buying is strongest. That’s why credit card purchases remove much of that pain, even though the long-term cost may be higher if the consumer incurs interest costs. In short, consumer brains will fight buying a $5 light bulb regardless of the future energy savings.
One other option open to green marketers in general is to increase the value that consumers place on green purchases. Toyota Prius buyers, for example, must be driven primarily by environmental concerns. When one weighs the higher initial cost and potential long-term maintenance costs of the Prius against possible fuel cost savings, the economics don’t make it a clear winner. Nevertheless, Toyota is selling increasing numbers of the hybrids. People buy cars because they make a statement about the owner, and the Prius says, “I am doing my part to save the environment.” (Apparently, some challenge that idea: Study: Hummer more earth-friendly than Prius.)
Widger suggests a finance plan to eliminate the up-front cost of the more costly energy-savings bulbs. I can’t speak to the practicality of that idea, but, from a neuromarketing standpoint, the neuroscience behind it is sound.