Presence of Vice Products Increases Utility from Virtue Products

On a sunny afternoon you just finished your run and is hungry for a snack. Now consider these two scenarios

  1. You walk by a fruit stall that sells only fruits and you buy an apple
  2. You walk by a fruit stall that sells Snicker and other chocolate bars as well and you still buy an apple

In both these scenarios, which one of the two will you feel more virtuous? According to Dhar and Wertenbroch, you will feel  more virtuous in the second situation.

Selecting an unappealing virtue from a choice set that also includes tempting vices provides a positive self-signal (highlighting one’s ability to resist temptation) that enhances the utility of consuming the virtue

Utility from consuming the virtue when a choice is available is more than that when virtue was the only option available. Since consumer’s utility translates to their willingness to pay, can a marketer apply the findings of Wertenbroch and Dhar to increase perceived value of their virtue products and hence be able to charge higher price premium? Yes,  here are a few applications for this finding:

  1. For the said two stores, the one selling both candy bar and apples can price the apples more than the other stores and the customers would gladly pay for it.
  2. For a restaurant selling fresh green salads, offering a really greasy and fatty appetizer or entree  in the menu will enable it to price the salad at a higher price than it would have been possible with all healthy options. This is one reason why McDonalds is able to charge  premium prices for its salad options.
  3. A broader example is green products, these qualify as virtue compared to regular products. Are customers willing to pay a higher price for green products? In a study done by Yale forestry department it was stated that half the people surveyed they were willing to pay a 15% price premium for green products. A marketer cannot take these results to imply that customers will choose green products at the point of purchase. But we infer from Wertenbroch and Dhar’s study that a marketer is better off, in terms of profit maximization, offering regular products alongside green products instead of just green products.

Take the most recent story from NYTimes on how chickens are killed before they are processed.

Two premium chicken producers, Bell & Evans in Pennsylvania and Mary’s Chickens in California, are preparing to switch to a system of killing their birds that they consider more humane.

When customers see these benignly killed chicken next to regularly killed chicken, their willingness to pay for the former is likely to be higher than that for the latter.