Social Marketing

Price Determining Incentives and Disincentives

Nancy R. Lee
Philip Kotler
 Determining Incentives and Disincentives

The price of a social marketing product is the cost that the priority
audience associates with adopting the new behavior. Costs may be
monetary or nonmonetary in nature. Your task is to use this second tool
to help ensure that what you offer the audience (benefits) is equal to or
greater than what they will have to give (costs). As noted, the product
and place tools are also used to increase benefits and decrease costs
(e.g., providing more convenient locations to recycle is a place strategy).
 Determining Incentives and Disincentives
Price is the cost that the priority audience associates with adopting the desired
behavior. Traditional marketing theory has a similar definition: “The amount of
money charged for a product or service, or the sum of the values that consumers
exchange for the benefits of having or using the product or service.”
Adoption costs may be monetary or nonmonetary in nature. Monetary costs in a
social marketing environment are most often related to goods and services
associated with adopting the behavior (e.g., buying a life vest or paying for a swim
class for toddlers).
Nonmonetary costs are more intangible but are just as real for your audience and
often even more significant for social marketing products. They include costs
associated with the time, effort, and energy required to perform the behavior,
psychological risks and losses that might be perceived or experienced, and any
physical discomforts that might be related to the behavior.
You probably discovered most of these nonmonetary costs when you conducted
barriers research, identifying concerns your priority audience had about adopting
the desired behavior.
 Determine Incentives and Disincentives

Your objective and opportunity with this second marketing tool is to develop and provide
incentives that will increase benefits and/or decrease costs. (It should be noted that
product and place tools will also be used to increase benefits and decrease costs. The price
tool is unique in its use of monetary incentives, as well as nonmonetary ones including
recognition, appreciation, and reward.) The first four of the six price-related tactics focus
on the desired behavior and the last two on the competing one(s).
Increase monetary benefits for the desired behavior
Increase nonmonetary benefits for the desired behavior
Decrease monetary costs for the desired behavior
Decrease nonmonetary costs for the desired behavior
Increase monetary costs for the competing behavior
Increase nonmonetary costs for the competing behavior
 1. Increase Monetary Benefits for Behavior

• Monetary rewards and incentives can take many forms familiar to you as a
consumer and include rebates, gift cards, allowances, cash incentives, and
price adjustments that reward customers for adopting the proposed behavior.
• In a 2018 article in the Huffington Post, the bad news reported was that only
half of the plastic bottles used in the United Kingdom each year were
recycled. The good news was that, by comparison, Norway recycled over 90%
of its plastic bottles. What were they doing different in Norway? Since 1972,
monetary incentives had been used to have recycling bottles “become part of
everyday life for most people.” Each recyclable container is labeled with the
amount of money you can get back when you return it to a “reverse vending
machine” conveniently located in places such as grocery stores and schools.
Reimbursements can be in cash or in vouchers. At the time the article was
published, several other European countries had adopted the scheme, as well
as Southern Australia, 10 states in the United States, and 8 out of 10
provinces in Canada
 2. Increase Nonmonetary Benefits for Behavior

There are also ways to encourage behavior change that don’t involve cash
or free/discounted goods and services with significant monetary value.
Instead, they provide a different type of value. In the social marketing
environment, they often take the form of a pledge/commitment,
recognition, and/or appreciation acknowledging the adoption of a desired
behavior. In most cases, the benefit is psychological and personal in
nature.
By signing and keeping a pledge or commitment, a participant receives (in
return) increased self-respect. If the pledge is made public, the value
increases, with public respect increasing perceived value even further.
Recognition or appreciation can be as simple as an email from a supervisor
thanking an employee for commuting to work by bicycling or as formal and
public as an annual awards program recognizing the dry cleaner who has
adopted the most significant green behaviors in the past year.
 3. Decrease Monetary Costs for Behavior

Methods to decrease monetary costs are also familiar to most consumers:

discount coupons, gift cards, trial incentives (e.g., eight free rides on a
network of bus routes), cash discounts, quantity discounts, seasonal discounts,
promotional pricing (e.g., a temporary price reduction), and segment pricing
(e.g., price based on geographic locations). Many of these tactics are also
available to you as a social marketer to increase sales.
In July 2013, for example, a pet adoption extravaganza in Seattle waived
adoption fees for cats one year and older and reduced fees for kittens,
resulting in 203 adoptions in one weekend and breaking a 116-year history.13
You yourself may have used a discount coupon from a utility for compost, taken
advantage of a weekend sales event for water-efficient toilets, or received a
discount on parking at work because you are part of a car pool.
 4. Decrease Nonmonetary Costs for Behavior
Tactics are also available for decreasing time, effort, and physical or psychological costs. Fox
suggests reducing usage time by “embedding” a new behavior into present activities.15 Thus,
people might be encouraged to floss their teeth while they watch television. People can also be
encouraged to “anchor” a new behavior to an established habit.16 To encourage physical activity,
for example, you can recommend that people climb the stairs to their third-floor office instead
of taking the elevator.
Gemunden proposed several potential tactics for reducing other nonmonetary costs in this model:
Against a perceived psychological risk, provide social products in ways that deliver psychological
rewards such as public recognition.
Against a perceived social risk, gather endorsements from credible sources that reduce the
potential stigma or embarrassment of adopting a product.
Against a perceived usage risk, provide target adopters with reassuring information on the
product or with a free trial of the product so they can experience how the product does what it
promises to do.
Against perceived physical risk, solicit seals of approval from authoritative institutions, such as
the American Dental Association, the American Medical Association, or other highly respected
organizations.
 5. Increase Monetary Costs for Competing Behaviors

In the social marketing environment, this tactic is likely to involve influencing

policymakers, as the most effective monetary strategies against the competition
often require increasing taxes (e.g., on gas-guzzling cars), imposing fines (e.g., for not
recycling), and/or decreasing funding (e.g., if a school doesn’t offer an hour of
physical education classes).

Washington’s new law was passed and went into effect on June 10, 2010. Tickets are
$124 for talking on handheld cell phones while driving or texting while driving. Teens
with intermediate driver’s licenses or learner permits may not use a wireless device
at all while driving, including a hands-free device, unless they’re reporting an
emergency.
 6. Increase Nonmonetary Costs for Competing Behavior

Nonmonetary tactics can also be used to increase actual or perceived

nonmonetary costs associated with choosing the competing behavior. In this
case, you may be creating or emphasizing negative public recognition.
In Tacoma, Washington, a website features properties not in full compliance
with municipal codes. They call it “The Filthy 15,” and although property owners’
names do not appear on the website, it does include photos of each building,
specific reasons the property is on the list, and what is next in the cleanup
process, including something a neighbor or other concerned citizen could
track.22
And in Denver, Colorado, in 2008, a judge tried a new nonmonetary disincentive
to decrease noise ordinance violators, many of them teenagers. In addition to
the normal fine, they were required to sit in a room and listen to music they did
not like, that of Barry Manilow. Some characterized it as “cruel and unusual
punishment” for this age group