Monthly Archives: May 2012

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How much are people willing to pay for craftsmanship and design?

To what extent can the average consumer identify quality in an item they purchase? Given the weight people give to an affordable price tag, and given the preponderance of cheaper options in the marketplace and the number of brands that emphasise lower prices as part of their business model (from H&M and Zara in the fast fashion domain, to Ikea for homewares and furniture), it is hard to know how much consumers care about quality relative to cost, and how good they actually are at assessing the quality of something to determine whether it is actually worth the cost. People must have some notion of how to appraise quality – just existing in the world and experiencing it is enough to give you some sort of idea of what quality is. Then again, whether you’re willing to actually pay for that quality or how much you’d be willing to pay for it might be another thing entirely. Empirical enlightenment might be at hand, as scientific research has investigated some aspects of this issue and come up with some potentially interesting results.

This particular study involved getting participants (who were just random people in shopping centres) to evaluate shoes in three separate experiments. In each experiment (each involving a different set of participants), there were the same three pairs of plain, black, men’s business shoes to evaluate – a pair valued at $33 by a brand called Ambition, and which were coded as pair S; a pair valued at $83 by Filanto, and coded R; and a pair valued at $233, by ECCO, coded Q (I don’t know if those prices are US dollars or what; the paper doesn’t say where the study was conducted, and all I know is that the authors are affiliated with institutions in Denmark and Canada, so I guess maybe it’s Canadian dollars). The prices were what the shoes were sold for in shops. As you can see, the shoes are pretty damn similar:

(Image copyright © 2011 John Wiley & Sons, Ltd.)

The participants filled out a computer-based questionnaire and had the three pairs of shoes at hand to evaluate. They were allowed to pick up and inspect the shoes as much as they liked.

Experiment 1

This experiment looked at how people evaluated the shoes when they weren’t given any brand information – any branding on the shoes was covered up and brand names were not mentioned at all. The participants had to rate how much they liked the pairs of shoes based on nothing more than an inspection of the three pairs.

Without knowing price or brand, participants still managed to prefer the Q shoes (the $233 pair) more than the R shoes ($83) and the R shoes more than the S shoes ($33). In fact, based on just a visual and tactile inspection, participants greatly preferred the most expensive shoes, which suggests that the quality and workmanship and general visual appeal were pretty discernible.

When asked how much they would be willing to pay for each pair of shoes, participants were willing to pay significantly more for the Q shoes than for the R shoes or S shoes. As to whether they would actually buy any of the shoes, if they were in need of such a pair of shoes, 27% said they would buy Q, 18% would buy R, 18% would buy S and 38% said (yes, that adds to 101% – that’s rounding errors for you) that they would not consider any of the pairs of shoes. So of the people who were hypothetically willing to buy one of the pairs, the majority wanted the Q shoes.

Finally, the participants were told that one of the pairs of shoes was ECCO, a brand that was apparently at least somewhat familiar in terms of name and image to the demographic these participants came from (it’s a Danish brand, but it’s pretty widespread throughout the world). When asked to guess which pair of shoes were the ECCO ones, 49% of participants correctly chose the Q shoes. If people were randomly guessing which pair was the ECCO pair, you’d expect only a third of participants, 33%, to identify the pair correctly, so participants were performing better than chance, suggesting that they associated the ECCO brand name with a certain level of quality and could then identify varying levels of quality in the pairs of shoes presented to them. So far so good.

Experiment 2

The effect of brand name was evaluated this time, by making the branding of each pair of shoes perfectly visible to the participants. The Q shoes (ECCO brand) were still significantly preferred over R (Filanto) and S (Ambition), although the preference for the Q shoes increased and preference for the S shoes decreased compared to when the branding was concealed. This suggests that adding a known and respected brand name to an object increases people’s preference for that object on top of their existing preference that was based just on a visual/tactile inspection of the object.

Experiment 3

Participants in this experiment were primed with information about the ECCO brand – “information central to the brand’s company vision”. They were told:

“[The ECCO company] is driven by passionate people who are deeply committed to well being of their customers, as well as design technology and product functionality. They create a timeless product, while at the same time following fashion trends. Their working style is also their lifestyle and their mission is to create comfortable footwear of a high quality which fits the foot and not the other way around. They are a well-known brand and sold around the world.”

Participants were given the three pairs of shoes, unbranded, to inspect, and weren’t told which ones were the ECCO shoes. When asked which pair of shoes they thought were ECCO, 53% of participants correctly identified the Q shoes as ECCO. The participants were then asked to rate their preference for each pair of shoes (still without knowing which shoes were which brand), and they preferred the Q shoes (yep, the ECCO ones). Not only that, the preference for the Q shoes was greater than it was in Experiment 1, when the brand identities were also concealed, which means preference for the Q shoes was increased simply by telling the participants the brand’s “company vision”. It seems that simply priming someone by telling them about a brand’s ethos and values perhaps makes that person sensitive to those values, and they subsequently try to seek them out.

Further analysis

Based on the data they had collected across the three experiments, the researchers were able to calculate how much the participants would be willing to pay for the ECCO shoes depending on different conditions. In experiment 1, with the brand identity withheld, participants would have been willing to pay $67 for the ECCO shoes (so the price is based on just perceived quality and design of the shoe). In experiment 2, with the brand name included, participants would have been willing to pay $173 for that same pair of ECCO shoes (so just adding the brand name to that pair of shoes increased their perceived value by 2.6 times!). And finally, in experiment 3, with the shoes unbranded but the participants primed with the ECCO brand’s ethos and goals, the price the participants would pay for the ECCO shoes was $159 (suggesting that just priming a person to think about an ethos of high standards and discerning taste makes them willing to pay more for an object they have a preference for).

As the authors of the paper summarise, “the results show that consumers prefer an object that is well crafted with particular design details; they also show that a well-known brand name will greatly increase preference for the object.” The main criticism I have here, though, is that the entire study is based on the implicit assumption that the ECCO shoes were actually objectively more visually appealing in terms of design, were more well-crafted and were of better quality than the other pairs of shoes. The study relies on the premise that the higher priced shoes are, by virtue of their cost, better quality and better designed. That might simply not be the case.

This might explain one of the issues raised in the discussion section of the paper. The participants were also all given another survey to assess the centrality of visual product aesthetics (CVPA) – that is, their concern or interest in a product’s appearance or design. If you score highly on CVPA, you have high design acumen and judge an object’s appeal based on its inherent design features. If you score lowly on CVPA, you would base your judgement on external cues such as brand name or price. It turned out that, when evaluating the shoes and forming preferences for them, participants with high CVPA didn’t necessarily show a preference for the ECCO shoes when the shoes were presented unbranded – people who apparently valued good design didn’t seem to think the ECCO shoes possessed good design. This might suggest that the CVPA assessment wasn’t measuring exactly the right thing, or it could mean the ECCO shoes weren’t necessarily of an objectively higher level of quality and design and craftsmanship than the others. (Or it could mean that there’s some degree of subjectivity when it comes to judgements of quality, design and craftsmanship.)

The fact that more participants (than chance would predict) converge on the same pair of shoes as their most preferred or as the shoes they think a high-quality brand would produce doesn’t mean that that pair of shoes is necessarily of higher quality or craftsmanship. Naïve people might generally make similar superficial and incorrect assumptions about quality – maybe they reason that the more small details or embellishment an object has, the higher its quality, when that isn’t necessarily the case. There might be any number of features of a manufactured or crafted object that might, at face value, seem to signify good quality or design, when in fact they do not, so you end up with multiple people accidentally and incorrectly arriving at the same judgement, while a true connoisseur or expert would arrive at a contrasting judgement.

I think there’s a reasonably good chance that the ECCO shoes were objectively more well crafted and of better quality and more visually pleasing than the other two pairs of shoes, but this study didn’t exactly get the opinions of designers and cobblers and shoe manufacturers in order to make sure that a higher price really did mean higher quality and better visual design. Other studies have sought the opinions of experts, such as in this study when researchers got two garment experts to evaluate quality. This study really should have done something similar. So for now it seems that the random person on the street (or in the shopping centre) can indeed detect quality and craftsmanship to some degree, but it’s difficult to know to what degree given that the quality and craftsmanship haven’t actually been directly measured.

Anyway, critiques aside, the interesting thing about this paper, I think, is just how much influence a brand name can have. People are willing to pay $67 for a pair of shoes – then tell them that shoe is by ECCO and suddenly they’re willing to pay $173 for that same pair of shoes. (Although you’ll note that that’s still not quite the actual price of the shoes in-store, which you’ll remember is $233.) And that’s just a brand with a sort of medium-level profile and perhaps an image of practicality and functionality. Imagine what a brand with a high-end image could be capable of. If someone said they were willing to pay $67 for a pair of shoes based on quality and design alone, and then I told them that the shoes are actually made by Prada, how much would they be willing to pay then?

As per usual, it comes back to treating price and brand as a proxy for quality. I think the participants in this study assessed the quality and design of the ECCO shoes unbranded and decided that the shoes were worth an average of $67 to them, but when they were told the shoes were ECCO, the participants assumed that there was some degree of quality in the shoe above and beyond what they had initially thought, to the tune of $173. That suggests that people just aren’t that good at assessing the quality of items like that, since they still rely hugely on brand name as a proxy for quality. Given the ratio of $67 to $173, it’s tempting to quantify it like this: that around one-third of the value of your judgement about an item’s quality and design is based on the item’s actual features and properties, and around two-thirds of the value of your judgement is based on desperately hoping that your assumptions about the brand and its image are accurate.

Well, the data don’t really stretch to quantifying it exactly like that, but it does seem to be true that we basically bet a fair amount of money in each purchase we make on our impressions of a brand being accurate. And given the extent to which brands go to manipulate our impressions of them, that’s not necessarily a great idea.