We continue our series on consumer psychology by looking at how mental accounting and positioning can impact a consumer’s willingness to pay and consumption. In part one, we considered consumer price beliefs and their impact on consumption enjoyment.
Willingness to Pay for a Snack vs. a Meal vs. Dessert
Willingness to pay can differ depending on consumer categorization of the food item, aka mental accounting. The idea behind mental accounting is people create different mental accounts or categories for money and treat money different depending on the account. So in the case of food consumption, one would expect willingness to pay is higher for something that is categorized as a meal vs. a snack or a dessert.
Frozen yogurt is typically seen as a snack or dessert, not a meal. In some ways this is a good thing, because snacking behavior is growing. However, frozen yogurt shops need to be mindful that people may be more like to experience sticker shock if the cost of their cup of frozen yogurt puts it in the category of how much is typically spent for a meal rather than a snack or dessert.
Consumers also compare frozen yogurt prices to similar snack alternatives, such as ice cream, smoothies, milk tea/boba drinks, gelato, cupcakes, etc. So, frozen yogurt shops need to consider indirect competitors rather than focus solely on other frozen yogurt shops in the area.
Consumer categorizations can impact actual food consumption. A study from the University of Surrey found that people are less aware of their snacking than their meals. Research participants were given a bowl of pasta labeled as a snack or the same pasta on a plate and were told they were having a meal. They were then asked to taste some other foods. Interestingly, snackers, those who were told that the pasta was a snack, ate 50% more calories than those who were told that the pasta was a meal.
Willingness to Pay More for Healthy, Quality Snacks
Frozen yogurt shops have a choice in how they position their offerings in the minds of consumers. They can position their frozen yogurt as healthy, high quality or as an indulgent, fun treat. A 2016 consumer survey from Mintel found that” 73% of consumers are willing to pay extra for snacks made with high quality ingredients. Moreover, 50% of consumers say healthier snacks would motivate them to buy more from specialty snack shops.”
While people may seek indulgent foods, they’re willing to pay more for high quality, healthful foods. One study found that Millennials are driving the better-for-you snack category since they eat more better-for-you snacks. Fifty five percent of Millennials ate at least three better-for-you snacks in the past week and 89% reported eating better-for-you snacks at least once a week. This was more than any other demographic group surveyed. Millennials are looking for snacks with fewer ingredients, environmentally friendly packaging, responsibly sourced ingredients, and that are free of added sugar, trans fats and artificial sweeteners. They also would like the company they buy from to be socially responsible.
The trend towards better-for-you snacks seems likely to continue. Nielsen’s Global Health and Wellness Survey found that 41% of Gen Z (those under 20 years old) said they would be willing to pay a premium for “healthier products” compared to 32% of Millennials (ages 21-34).
