Pink Tax, White Paper: Why Do Women Still Pay More?

Photo by The Creative Exchange on Unsplash

Hi, I’m Yulia Chuzha. I’m a Strategy Lead at Aimbulance marketing agency, and, as a woman, I think about the Pink Tax a lot.

I know for sure that products “for women” cost me more, and my wallet is a witness. I also know that sometimes market laws work in mysterious ways. However, the mystery becomes clearer if you look at it from an evidence-based point of view. In this paper, I want to summarize and share all the knowledge our team has gathered on the topic.

What is the Pink Tax

The Pink Tax is the extra amount that women pay for everyday products like razors, shampoo, haircuts, clothes, dry cleaning, and more. This “tax” applies to items that women use throughout the span of their entire life, from girls’ toys and school uniforms to canes, braces, and adult diapers.

In fact, according to axthepinktax.com, where anybody can check what the Pink Tax price they pay, a woman in her 30s has, on average, already paid more than $40,000 in her lifetime. A woman in her 60s has coughed up nearly $82,000 in fees that men don’t have to pay.

Top 10 products that are subject to the Pink Tax are:

1. Shampoo and conditioner: 48% more expensive for women
2. Personal urinals: 21% more expensive for women
3. Shirts: 15% more expensive for women
4. Supports and braces: 15% more expensive for women
5. Dress shirts: 13% more expensive for women
6. Helmets and pads for sports: 13% more expensive for women
7. Canes: 12% more expensive for women
8. Lotion: 11% more expensive for women
9. Razor cartridges: 11% more expensive for women
10. Razors: 11% more expensive for women

To be fair, there are a few products that cost more for men:

1. Underwear (29% more expensive)
2. Digestive health products (5% more expensive)
3. Shaving cream (4% more expensive)

Does it really exist?

Naturally, there are arguments for and against the very existence of such a phenomenon or even a conspiracy theory around the Pink Tax.

Those who see it as a real myth point out that:

1. Men’s and women’s products aren’t exact substitutes. Many women’s products smell different, work differently, and contain different levels and mixes of active and inactive ingredients.
2. Even if the products are substantially similar, their packaging and marketing costs might be different, and all those research, development, and marketing costs are reflected in the higher prices.
3. Women may be willing to pay more. For example, they may value aesthetic features in products much more than men do or they may prefer products that are more complex to use and produce like delicate blouses instead of t-shirts. It may just be their choice to use products that naturally cost more.
4. Which products are considered male or female is subjective. Moreover, we can’t say for sure that women pay more than men. It’s an assumption that items that we think are targeted at women are bought only by women.

On the other hand, the defenders of the Pink Tax theory say that:

1. The idea of the Pink Tax is not that women are forced to pay more than men for goods and services. Instead, it’s the observation that products explicitly marketed toward women are generally more expensive than those marketed toward men, despite either gender’s choice to purchase either product. As a result, companies are making more margins on women’s products and services.
2. Women are manipulated to purchase more expensive products because they are unaware of this phenomenon. When a product is labeled as “for men,” it creates an implicit purchase barrier for women. Women perceive these products as “not for me”. Additionally, gendered products are sometimes shelved separately to obscure the price difference further.
3. Women pay more than men if and when they are less sensitive to prices. Manufacturers and retailers have found that if they try to raise the price of razor blades or shampoo, men will shop elsewhere or skimp on the product, while women will willingly pay the higher price.
4. The Pink Tax is another way the government is grabbing every penny they can from consumers. They know that women can’t live without these items, and they decide to take advantage of the situation.

Photo by Paweł Czerwiński on Unsplash

Marketing strategies that play on the Pink Tax side

What we know for sure is that some specific market patterns make the Pink Tax look very real.

Tariffs. The tariffs on some imported goods vary depending on whether the product is made for men or women. On average, clothing imports for women are taxed at a higher rate than clothing imports for men — 15.1% compared to 11.9%. It may be passed on to consumers and contribute to the markup on some goods targeted to women.

Product differentiations. Sellers frequently distinguish a product or service from others to make it more attractive to a particular target market, for example, by changing the packaging and altering the color of a product. However, doing so may increase the cost of production. For example, a manufacturer may choose to produce a smaller number of pink razors, which could increase the cost of producing each pink razor relative to the larger run of black razors.

Price discrimination. This is the practice of charging different customers different prices for the same product or service. Sellers attract buyers who would otherwise not purchase their product by offering those buyers a lower price. But it can also mean higher prices for others. A typical example is the discounts for advanced purchases of airline tickets and higher prices for last-minute purchases. If sellers find that women are less price-sensitive and, therefore, willing to pay more for a particular product or service, they are more likely to charge a higher price for a version marketed to women.

Price fixing. Some markets may not be fully competitive, and competitors who would drive down inexplicably high prices for women’s versions of products and services may be prevented from entering the market. As a result, firms holding a significant share of market power would be able to continue charging more for goods and services targeting women. This could indicate that there is a need for government intervention as the federal government takes an active role in maintaining competitive markets.

POS effect. There is a difference in how men’s and women’s products are represented in stores. Appealing “female” products are hard to miss with more eye-catching Point of Sale (POS) and packaging effect and, with an explosion of pink and light purple, with an added dose of glitter. Promotions and coupons also matter, not to mention that men’s and women’s personal-care products are often sold in different areas of the store, especially in supermarkets.

Sounds convincing. So what’s the problem?

The problems begin when we look at the limitations of the way we collect data. We can’t determine the extent to which price differences may be due to market factors as opposed to gender bias.

In 2015 a study was conducted by the NYC Department of Consumer Affairs, and the authors acknowledged that its main limitation was that because “men’s and women’s products are rarely identical, making exact comparisons difficult.” Also, we can’t guarantee that this type of study doesn’t unwittingly cherry pick its examples.

An example from the NYC Department of Consumer Affairs study

United States government Accountability office conducted similar research and listed far more limitations:

• “We were unable to determine the extent to which consumers actually paid these prices and in what volume the products were sold, and our results are not generalizable to the broader universe of prices for these products sold at other times or by other online retailers.”
• “We do not have firm-level data on all cost differences — for example, those related to advertising and packaging.”
• “We also do not have the data to determine the extent to which men and women have different demands and willingness to pay for a product.”

So now it looks like we can’t jump to conclusions so quickly.

Why it is incorrect to make a general statement that the Pink Tax is a form of discrimination against women

We can’t say that goods cost more for women than for men, simply because they are supposedly bought by women or marketed toward women. There may be differentials that we can’t explain. As a result, we might tentatively see their causality, and tentatively conclude that there appears to be gender bias.

It is a common mistake in marketing to assume that something was the cause of something else just because it happened shortly before it. It is a false assumption.

Price discrimination isn’t only about pink razors. For example, rail and tube travelers can be subdivided into commuters and casual travelers, and cinema goers can be divided into adults and children. Splitting the market into peak and off-peak use is widespread and occurs with gas, electricity, and telephone supply, as well as gym membership and parking charges. Third-degree discrimination is the most frequent type.

For example, at first glance, it can be assumed that the pink care kit is more expensive without any specific reason. Or is it because it’s pink and targeted at women?

This might not be the case. The pink care kit might be selling faster than the blue one, so the retailer simply tries to optimize the stock. We don’t know why pink products are selling more quickly, we can’t assume that it’s only because women prefer the color pink, and are more likely to choose it. There is no evidence that women prefer pink more than blue. Both women and men are free to purchase the pink care kit. The same applies to the blue one.

Moreover, “It’s for her” and “It’s for him” targeting doesn’t always work. Even when marketers try, in very overt ways, to target specific audiences, they end up with normal-looking customer bases (as long as they are successful in winning market share).

Here is a Yorkie chocolate example:

Yorkie bar. “It’s not for girls!” Is it?

The packaging featured the slogan, “It’s not for girls!” and had a picture of a girl that was crossed out. This packaging looks like a serious attempt to gain a segmented customer base: men. But either the market got the joke, or the targeting failed because a lot of women buy Yorkie — they make up about half of its customer base.

Percentage of Yorkie bars buyers. Source: Kantar Worldpanel, according to How brands grow, Byron Sharp, 2010.

The scientific approach to the issue

As a professor of marketing science, Byron Sharp has taught us with his books and his research grounded in an evidence-based approach, that customer bases of brands in a category are very similar — except in the number of buyers.

Different brands are bought primarily by the same kinds of people, and attitudes towards different brands in any category are much more similar than they are different. Some minor variations to these general rules exist, but they are much less critical than the generalities. There isn’t a vanilla ice-cream buyer and a different type of person who prefers strawberry. In essence, there are just ice-cream buyers who sometimes buy vanilla and very occasionally buy strawberry. So the question is not about flavors or colors.

The other bright scientist who can help us on this issue is Daniel Kahneman, author of the famous Thinking, Fast and Slow. He was awarded the 2002 Nobel Memorial Prize in Economic Sciences for his work on the psychology of judgment, decision-making, and behavioral economics. What we learned from him is that the brain prefers to avoid hard work and instead takes the easiest route.

Daniel Kahneman and his book Thinking, Fast and Slow

Things we buy are mainly driven by emotional decisions and/or time-saving habits. Women might continue to buy a more expensive pink razor because brains prefer the easy and preferably familiar path. For example, for women, it is easier to choose a familiar “pink razor” or other female-oriented packaging labeled “for her” rather than considering buying male product variations.

Women may also find it difficult and time-consuming to compare prices for similar men’s and women’s products because of the ways they are differentiated (such as product size and scents) and because they may be sold in different parts of a store. People are more likely to settle when it comes to purchasing merely to get a product that’s considered satisfactory, rather than putting more energy and time into searching for the perfect product.

But what if we just move away from gender-focused products and promote unisex ones instead? Wouldn’t it be more fair, innovative, and profitable?

The gender fluidity trend

Brands are slowly starting to adopt a more gender-neutral mindset:

• In 2016 Zara launched Ungendered line with unisex jeans, shirts, sweatshirts, and t-shirts.
• Other big brands like CoverGirl (by naming its first male supermodel) have taken steps in this direction, and new unisex personal care options from companies like Brandless, Panacea, and Non-Gender Specific are being introduced all the time.
• H&M has removed gender labels from their children’s clothes, and global brands like Selfridges, Gucci, and ASOS have released unisex collections.

Zara Ungendered collection

• According to this Guardian article, gender-neutral fragrance launches accounted for 17% of the market in 2010; by 2018, that figure had grown to 51%.
• More beauty salons are adopting the gender-neutral approach to services. For example, in London, prices at Glasshouse are determined by the expertise of the stylist, Chop Chop charges according to time, and Bleach charges according to hair length.

However, most unisex products still tend to be distributed by niche brands or in smaller quantities, so they are still no so available for women. And this is where the issues arise. Women buying unisex products simply won’t solve the problem of The Pink Tax, at least for now, because most women will still buy from bigger brands that are more available.

Here is where Sharp comes in.

Physical and mental availability as a key

Sharp talks about the importance for brands to maximize ‘physical availability’ (distribution and in-store presence) and ‘mental availability’ (the ability to be noticed or come to mind in relevant situations, accompanied by positive associations that encourage purchase).

The combination of these two things makes buying a particular brand more comfortable:

• Distinctive memory structures bring the brand to mind when a consumer is shopping in that category. Distinctive brand assets are ones that are memorable and attractive and provide sensory and semantic cues.
• Distinctiveness reduces the need to think, scour, and search.
• Distinctive assets improve advertising effectiveness by making it more likely that viewers will correctly identify which brand the advertising belongs to. In a shopping environment, distinctive assets make it easier for consumers to notice and purchase a brand.
• When it comes to purchasing, distinctiveness matters: the women’s razor may be pink (versus blue for men), and deodorant may have a different fragrance. The packaging is designed to be more distinctive, different from others, more clinical in that product category isle, with bright colors and strong fonts. These are distinctive brand assets that grab attention.

In a few words, the harsh truth and reassuring wisdom of evidence-based marketing are this:

any product can have a high margin if the marketing is done well and if you make the product distinctive and noticeable for the audience.

Conclusions

• The Pink Tax is the extra amount that women pay for everyday products like razors, shampoo, haircuts, clothes, dry cleaning, and more.
• The idea is not that women are forced to pay more than men. It is rather the observation that products explicitly marketed toward women are generally more expensive than those sold for men.
• Marketing strategies that result in products “for women” costing more such as price discrimination and price-fixing do exist and work successfully.
• Despite these facts, all the research on this issue and data collected around it, have certain limitations.
• As a result, it is a false assumption to say that goods cost more for women than for men, just because they are supposedly bought by women or marketed for women.
• Instead, the scientific approach to the issue of the Pink Tax is linked to physical and mental availability.
• Most women will still buy bigger brands, which are easier to notice and find in stores. But any product can have a high margin if it is distinctive and noticeable, whether it is considered as female, male, or unisex.
• The key for brands is to resonate with specific consumer behavior, not a gender.