What do consumers, Bruce Springsteen, and a Nobel Prize laureate have in common? They all understand the concept of fairness. And they understand that consumers reward and punish companies based on perceived fairness.
Nobel Prize winner Richard Thaler found that if a company raises prices or cuts wages for the sole purpose of better profit margins, consumers will penalize the company for being unfair. As he co-wrote in a 1986 paper:
“The cardinal rule of fair behavior is surely that one person should not achieve a gain by simply imposing an equivalent loss on another.”
The paper shows that wages and prices aren’t simply rational cost/benefit calculations, but are subject to more implicit rules of “fairness.” When consumers perceive a company’s actions as unfair, they will avoid doing business with the offender, regardless of inconvenience, and seek out a company they believe is fair.
Likewise, fairness is a major motivator for the values-based consumer. These consumers reward companies that align with their personal values and that they perceive as fair. But they take a broad definition of fairness and take the company’s internal dealings into consideration as well. Just Capital’s ranking survey revealed that worker pay and benefits, worker treatment, and leadership and ethics together comprise two-thirds of US consumers’ judgment on whether a company is just or not.
For brands, this elevated stipulation requires focusing on your customers’ values when creating product and pricing strategies. As we’ve argued in our research, corporate mission statements aren’t enough to appease these consumers. Instead, values-based consumers demand that brands have clearly-stated values and that they act in a way that is true to those principles.
To see brand values in action, look no further than The Boss himself. As the New York Times explains, scalpers were selling tickets to see Bruce Springsteen in concert for as much as $9,999. But for this particular tour, Bruce capped ticket prices at $850 and sold them via a lottery system. While this defies economic theory — he was clearly selling tickets below market value — The Boss’s pricing strategy makes sense from a human behavior perspective. First, fans who feel they’ve been ripped off will buy less in the future. Second, Bruce’s working-class fanbase would have deemed a $10,000 ticket unfair.
So, marketers: Channel your inner Bruce Springsteen. Establish strong brand values, and stay true to them. If you neglect your values, as Professor Thaler has shown, customers will make economically irrational choices just to avoid transacting with you. Perhaps The Boss says it best: “Walk tall, or baby, don’t walk at all.”