How does the brain respond to prices and packaging of meat alternatives?
Under a commission by ISMI (International Shopper Marketing Institute), we designed this exploratory study to investigate how consumers' brains intuitively respond to different meat substitutes' prices and packaging.
Consumers' willingness to pay was measured using EEG. In the study, participants were presented with packages of meat alternatives at different prices on a computer. At each price presentation, participants had to indicate whether they thought it was 'expensive' or 'cheap' under time pressure. While performing the task, participants' brain activity was measured using EEG. This measures the electrical currents on the surface of the brain. During the task, the EEG measured the intuitive brain response at each price point. The measures result in what we call the Feel Good Price, which predicts the expected demand, revenue and profit for the different prices.
Participants were shown three different meat substitutes' packaging designs at different prices. The designs included one regular design, one sustainable design and one premium design (see below). The packages were unbranded and comparable to the private labels for vegetarian burgers at two big Dutch supermarkets - Albert Heijn and Jumbo.
Results
As a starting point, we used the current retail price of Albert Heijn and Jumbo meat alternatives: €1.59. We expected €1.59 to be a good price for a regular packaging design. Together with all the other prices, we calculated the Feel Good Price and created the demand curve. From this demand curve we derived the expected revenue curve and estimated variable costs, and computed the expected profit curve. The expected profit curve revealed that the expected maximum profit for the regular and sustainable packaging designs was actually at a price lower than €1.59. For the regular design, the maximum profit can be reached at €1.21 and for the sustainable design at €1.24 (see below).
On the other hand, the price for maximum profit for the premium packaging design is at €1.35. The price could go up to €1.70 without losing much (expected) profits, as the profit curve does not decrease much up to €1.70. Therefore, we concluded that only meat alternatives with premium packaging designs are able to come close to reaching maximum profit at a price of €1.59 (i.e. the current price of private label meat alternatives at Albert Heijn and Jumbo).
Conclusion
Our research shows that the price of €1.59 is too high for meat alternatives in regular packaging. Since the regular packaging resembles the meat alternatives of private labels from Albert Heijn and Jumbo, this suggests that the current retail price of €1.59 is too high for private labels meat alternatives. The results of this exploratory study indicated that with a price decrease of 38 cents, profits can actually increase by 30%.
As meat alternatives contribute to a more sustainable world, it's in society's interest to make them a success, both for the consumers and for the suppliers of these products. Consumers want an affordable product, suppliers need a good margin that enables further development.
At a lower price than the than current level, more meat alternatives will be sold. So much more, that the total profit contribution in that case becomes higher (while the profit contribution per sold item is slightly lower). In addition, premium packaging ensures a higher expected value of the product and this will also increase demand. In short, we recommend charging €1.59 only when the product is wrapped in premium packaging.
Contact us
Walter Limpens
Senior Client Executive
Want to know more about the research possibilities?
Andries van der Leij
Head of Research & Development
Want to know more about our research techniques?
Are you interested and want to know more? Contact Walter and he'll tell you more and answer your questions.
Walter Limpens
Do you have a questions about our research techniques? Don't hesitate and contact Andries.
