How have rising material costs affected formulation and pricing? How can

formulators balance cost pressures from clients/brands with consumer expectations

for quality and affordability?

Rising material costs are forcing formulators to make tough choices, which can mean swapping out expensive ingredients, simplifying formulations, or finding cost-effective alternatives. While this is an economic challenge for both brands and consumers, it’s also deeply psychological. From a behavioral neuroscience perspective, these formulation decisions are not just about achieving functional equivalence but a perceived equivalence as well. And that's where things can get really challenging.

Because consumers don’t evaluate a product purely on ingredient lists. They also evaluate it through a multisensory, emotionally-driven experience that’s shaped by memory, expectation, and context. This is why a formulation that’s technically similar might still feel “off” to loyal users. ‘Close, but not close enough’ violates the brain’s predictive model of how the product should feel, smell, or perform, and the consumer has to determine whether that change is acceptable… or not.

Take, for example, switching to a cheaper emulsifier in a lotion. If that slightly changes texture or afterfeel expectations, even if efficacy is unchanged, the user might perceive it as “lower quality.” The brain expects a certain sequence of sensory events. When that is disrupted, it can lead to surprise or even rejection. In behavioral terms, it creates a prediction error.

So how do we help consumers accept these changes? The answer lies in designing for congruency and expectation management.

Leverage Sensory Anchoring. Behavioral neuroscience tells us that once a consumer builds an emotional and sensory association with a product, it becomes part of their mental model. If you need to change a formula, keep at least one strong sensory anchor, like fragrance or a signature tactile cue, consistent. These act as “identity markers” or brand signatures and reduce the sense of change, helping the brain reframe the experience as familiar and trustworthy.

Pre-emptively Set Expectations. When possible, reframe the product’s narrative before consumers detect a change. If a reformulation is likely to alter perception, even subtly, brands can “own the change” through messaging that primes expectations. Like labeling the pack with “Now with a cleaner feel” or “Reformulated for faster absorption.” The brain tends to confirm what it’s been primed to expect, a phenomenon known as the confirmation bias and can be an ally in managing perception.

Tap Into the Psychology of Tradeoffs. Consumers are surprisingly open to changes when they understand the why, especially if the benefit aligns with their values. Behavioral science shows that perceived fairness and transparency can actually increase acceptability. If an ingredient was swapped due to sustainability, safety, or allergen concerns, framing the change in terms of consumer-centric benefits can increase tolerance for tradeoffs. Even if the tradeoffs include subtle shifts in performance or feel.

Use Behavioral Testing, Not Just Technical Validation. Acceptability isn’t just about lab measures (like for equivalence). Behavioral tools like implicit association testing, multisensory product journey mapping, and real-context use studies can reveal how people actually experience reformulations. Are they surprised by the foam? Do they feel the scent aligns with the “clean” positioning? The goal isn’t just matching the old product. It’s also in creating a coherent, emotionally satisfying experience that signals all the right things.

Design With Emotion in Mind. Cost-saving formulations don’t have to feel “cheap.” Small sensory cues, like a light fragrance bloom or complexity, a tactile cue during application for some benefit, or even a satisfying sound of a cap closing can elevate consumer perception of quality. And neuroscience and psychology studies remind us that consumers remember peaks and endings most (the peak-end rule), so optimizing these moments of the overall experience can help ensure a positive memory even if other aspects were simplified.

Yes, cost pressures are real, but perception is powerful. From a psychological perspective, the key isn’t just maintaining the original formula as similarly as possible, it’s about maintaining the feeling the consumer expects. When brands design around how people predict, perceive, and remember product experiences, and not just the functional outputs, they can mitigate formulation changes with less risk and more trust.