Friday, April 15, 2011

Tax Our Ingenuity to Keep Customers Healthy

In most years, today, April 15, would be Tax Day, the deadline for filing your return with the Internal Revenue Service. But Tax Day 2011 is April 18 instead. That’s because in Washington, DC it’s Emancipation Day, which celebrates the freeing of slaves in the district. Federal law says that Tax Day can’t be on a weekend or holiday, so those who wait until the last moment to file have been emancipated for three more sunsets.
     But our thoughts must never stray too far from levies due to the government, so today I ask you to think about another tax—what researchers at University of Alberta and University of Wisconsin-Madison called a “fat tax.” It’s a surcharge for foods that are less healthy than available alternatives. The warning label used in the research read, “This product is high in fat. It has been taxed due to its less healthy nutritional content. Health Canada.” The study participants were not told until the end of their participation that the label was fictitious.
     The researchers wondered what the effect of the tax and of the label would be on people’s purchase preferences. But before I reveal the results to you, I need to ask why a retailer should be taxing their ingenuity to keep their customers healthy. My answers are that it’s an important contribution to the community and when our customers live longer, they’ve many weeks ahead in which to spend their money with us.
     Now for the findings:
  • Some consumers respond clearly to a fat tax. The additional cost makes them significantly less likely to buy an unhealthy product. However, they also become less likely to buy any product in that category. Their irritation about the fat tax leads to them boycotting a purchase. They may be healthier for it, but you’re losing a sale.
  • Some consumers devote close attention to the warning label not so much because of the fat tax, but because of concerns about their health. In fact, they will pay even more than they would for a fat-taxed product if that higher-priced product doesn’t carry the warning label. It’s with this group that you can make up for the lost sales by having premium priced healthy options.
     There were others who didn’t fall into either of these two groups. However, for all consumers, feeling they have choices leads to them selecting a healthier option.

Click below for more:
Unchain for Health
Ease the Guilt for Adult Unhealthy Eaters
Balance Healthy and Indulgent in Merchandise

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