I was fortunate enough to be interviewed about the Pink Tax this morning by Becky Quick, host of the CNBC syndicated show "On the Money."
The Pink Tax is a hot topic again, largely spurred by a New York City Department of Consumer Affairs study , which provides evidence that women pay on average 7% more than men for equivalent products. The study also found that 42% of the time, women's products cost more than equivalent men's products. This is made worse when you think that women, on average, earn less than men.
It is good to finally have evidence for what many of us have always believed to be true. Aside from the fact that some products might genuinely cost more, why else might brands charge a Pink Tax?
1. Successful brands constantly seek to find points of difference in the market. To do this, many try to change the conversation in the market. What do I mean by this? Imagine you buy a skin care product and you currently value ingredients 1, 2, and 3. You notice a new and improved product being advertised with a message to value ingredients 4, 5, and 6. You are told that these new ingredients are based on groundbreaking research and if you use the product you will look 25 years old again. Trusting the product claims, and aspiring to look younger, you buy the product. What's happening here? The marketing folk have successfully shifted your preferences and encouraged you to buy the new and improved product. By shifting your preferences, the chances are that you will also pay a bit more for the new and improved product. Remember, however, you are not being forced to buy the new and improved product at a slightly higher price, but you do seek to solve a problem you believe you have - in this case, the need to look younger.
2. Pink Expectations. This leads me to my second point, something I call "pink expectations" - that is, a different set of expectations women place on women compared to men. To explain, think of the Oscars. Here, men have a dress code - a tuxedo suit. While I know there are different types of tuxedos, for all intents and purposes, it is still a tuxedo. For women, however, the fashion label she is wearing, her shoes, her bag, her jewelry, her hair and make up, and perhaps her nails, define her. I am sure that leading up to the Oscars, she has likely spent money on other beauty routines such as skin care. I am mindful that there is a lot of product placement at the Oscars and so she doesn't pay for everything she wears, but still, events like the Oscars set pink expectations that influence other contexts such as the high school prom, party wear, and work wear. For some women these expectations are also aspirations, but for other women they are not. The point is, as long as we have pink expectations we will have a pink tax, as women feel the need to conform to what is expected of them and will pay a price premium to do so.
What can be done about the Pink Tax?
1. Women can boycott products they feel incur a pink tax. There are plenty of stories of women buying men's razors, for example, because they believe men's razors are no different to the women's equivalent - only cheaper.
2. Women can ask questions and hold organizations accountable for price discrimination based on gender. For example, why do women with short hair pay more for a haircut compared with men who have short hair?
3. Women can demand more transparency. If a product truly does cost more to make because it uses different ingredients or requires more design input, or is more expensive because the production run is smaller, then tell her why the product is more expensive. Consumers don't trust brands at the best of times and want brands that are more transparent, honest, and deliver on their promises.
4. Support campaigns such as #askhermore, which was noticeable at the last Oscars (i.e., ask her more than just the designer label she is wearing). In Europe, I heard an expression that we need to "move from bling to being" and focus more on purpose, happiness, and well being as opposed to... well, bling. By asking her more, and encouraging her to focus on her well being, pink expectations might reduce, which in turn will reduce the occurrence of a Pink Tax.
Reference: de Balsio, Bill and Menin, Julie (2015). From Cradle to Cane: The Cost of Being a Female Consumer A Study of Gender Pricing in New York City. New York City Department of Consumer Affairs