Saturday, July 31, 2010

Feeling Left Out? Why Consumers Prefer Nostalgic Products

When people acutely feel the need to belong, they may reach for a nostalgic treat, according to a new study in the Journal of Consumer Research.

“Have you ever wondered why it is that you are in the mood to watch an old episode of Friends, rather than your current favorite TV show? Or why you are suddenly craving an Otter Pop, a summery treat you haven’t eaten since you were a kid?” ask authors Katherine E. Loveland (Arizona State University), Dirk Smeesters (Erasmus University, The Netherlands), and Naomi Mandel (Arizona State University).

The authors examined situations that lead people to prefer nostalgic products (products that remind them of the past) over more contemporary products. They conducted a series of five experiments in which they found that the key to preferring nostalgic products is the need to belong. “Whenever a situation arises in which people feel a heightened need to belong to a group, or generally need to feel socially connected, they will show a corresponding higher preference for nostalgic products,” the authors write.

In one experiment, the participants played a ball-tossing game on a computer in which some people were excluded soon after beginning. “Those people who were excluded after just a couple of ball tosses not only said that feeling like they belong is more important to them than people who were not excluded did, but they also chose more nostalgic than contemporary products in a variety of categories, including movies, TV shows, food brands, cars, and even shower gel,” the authors write.

In a final experiment, the authors discovered that when participants were excluded (from the same ball game as in the previous experiments) they not only felt a higher need to belong, but their need to belong was “cured” by eating a “nostalgic cookie”—a brand that had been popular in the past.

“Next time you know you are feeling left out, try watching a movie that you loved watching in college, or eating a food that reminds you of when you were a kid. It really will make you feel better,” the authors conclude.

Katherine E. Loveland, Dirk Smeesters, and Naomi Mandel. “Still Preoccupied with 1995: The Need to Belong and Preference for Nostalgic Products.” Journal of Consumer Research: October 2010.o

Wednesday, July 28, 2010

Signaling Status with Luxury Goods: The Role of Brand Prominence

Luxury goods are often used as signals by consumers who crave the status brought about by material displays of wealth. For example, many wealthy consumers use specific brands of purses, watches, cars, and other goods to signal social class. Consequently, manufacturers can produce a product with conspicuous branding or tone it down, depending on whether the user intends to signal loudly or quietly. The authors introduce the concept of “brand prominence” to reflect this variation in brand conspicuousness. They also develop a taxonomy, assigning consumers to one of four groups according to their wealth and need for status. The taxonomy helps predict consumers’ preferences for conspicuously or inconspicuously branded luxury goods, which corresponds to their desire to associate or dissociate with members of their own group and the other three groups.

Members of the first group, “patricians,” possess significant wealth and pay a premium for inconspicuously branded products recognizable only to other patricians so as not to be misconstrued as someone who uses luxury brands to differentiate themselves from the masses. Members of the second group, the “parvenus,” also possesses significant wealth, but they crave status and are primarily concerned with separating themselves from the “have-nots” while associating themselves with other “haves.” Thus, they use well-known luxury brands with conspicuous marking to show others that they are wealthy. Members of the third group, the “poseurs,” do not possess the financial means to afford authentic luxury goods. However, they want to associate with those they recognize as affluent, the parvenus, and dissociate themselves from other have-nots. Thus, they are especially prone to buying counterfeit goods. Member of the fourth group, the “proletarians,” are not affluent, do not crave status, and either cannot or will not concern themselves with signaling using luxury goods.

The authors validate this taxonomy across four studies. In Study 1, they analyze market data from several prominent luxury brands to show that, on average, inconspicuously branded luxury goods cost more than the same manufacturer’s goods with more conspicuous branding. This is consistent with patricians paying a premium for understatement. Study 2 uses market data from Thai counterfeiters and an online seller of knockoffs to reveal how counterfeiters disproportionately copy lower-priced, louder, luxury variants within the product line of the brands they knock off, which would appeal to poseurs attempting to emulate parvenus. Study 3 is a field study; it demonstrates that only patricians can read subtle brand cues correctly. Together with Study 1, Study 3 shows that patricians pay a premium for signals that only other patricians can decipher. Study 4 shows that preferences for loud or quiet luxury goods differ predictably among the four groups, corresponding to their social motives. Furthermore, poseurs are far more likely than parvenus to buy counterfeits, the loud bags that appeal to these two groups. The findings have implications for managers in the luxury goods market, including the need to develop and manage a griffe, or a set of special signatures for their brand.

Young Jee Han is a doctoral candidate in Marketing in the Marshall School of Business at the University of Southern California. Her research interests lie in better understanding how consumers use products and brands to signal their identities. She also explores how identity signalers and recipients interpret and respond to one another’s behavior. She is a winner of a Marketing Science Institute grant, and her work has been published in the MSI Working Paper Series. She has a Master of Science degree in Marketing and a Bachelor of Arts degree in English Language and Literature from Korea University, Seoul, Korea.

Joseph C. Nunes is Associate Professor of Marketing in the Marshall School of Business at the University of Southern California. His research focus is on loyalty programs, status and luxury goods, pricing, and consumer and managerial decision making. He has published numerous articles in top academic journals, including Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, and Marketing Science. He serves on the editorial boards of Journal of Marketing Research, Journal of Consumer Research, Journal of Consumer Psychology, and Marketing Science.
Xavier Drèze is Associate Professor of Marketing in the Anderson School of Management at the University of California, Los Angeles. He has authored several publications in the marketing field, which include studies of loyalty programs, pricing and promotion policies, consumer knowledge of prices, and Internet marketing issues. The quality of his research has earned him both the prestigious Alpha Kappa Psi award for best paper published in Journal of Marketing and the award for best paper published in Journal of Retailing.

Journal of Marketingo

Trying Harder and Doing Worse: How Grocery Shoppers Track In-Store Spending

One in seven American households lives in poverty. Another one in six can afford only basic necessities, such as housing, food, and health care. This state of affairs suggests that nearly one in three U.S. households must carefully plan its budgets and spend accordingly.

Budget allocation and spending behavior models often implicitly assume that shoppers with budgets are knowledgeable about the total price of their shopping baskets as they shop. However, because shoppers’ estimates of the prices of their shopping baskets mediate the relationship between budget allocation and actual in-store spending, it is critical to understand whether and how they estimate this total price. Inaccurate estimates could have notable implications for both consumer welfare and retail performance.

Yet despite the importance of understanding how shoppers on predetermined budgets might estimate the total price of their shopping baskets, it remains largely unclear whether, when, and how they keep track of in-store spending. This study has three objectives: (1) to determine whether and when budget shoppers keep track of how much they spend while shopping, (2) to understand how they estimate the total price of their shopping baskets, and (3) to examine the implications of estimation biases for consumer welfare and retail performance. The authors conduct this research in the context of grocery shopping, for which people shop multiple times per month and often spend 15%–20% of their income on ten or more items per trip.

A field study and two laboratory studies offer four key generalizations about budget shoppers in grocery stores: (1) They predominantly use mental computation strategies to track their in-store spending, (2) they adapt their mental computation strategy to the dominant range of price endings of items in their shopping baskets, (3) those who try to calculate the exact total price of their basket are less accurate than those who estimate the approximate price, and (4) motivated shoppers are less accurate than less motivated shoppers (because they tend to calculate instead of estimate the total basket price).

Shoppers who overestimate the total basket price likely spend less than they budgeted for––that is, they do not maximize their own utility under the budget constraint. Furthermore, they might reallocate the “saved” money to a different (mental) account, which could entail a financial loss for the retailer. Shoppers who underestimate the total basket price are more likely to spend more than their grocery budget, in which process they unintentionally reallocate more money to the “grocery account.” This reallocation in turn may trigger a chain of budget and spending decisions that could cause shoppers significant financial distress. A second field study demonstrates that shoppers who underestimate the total price of their basket are more likely to overspend, leading to negative store satisfaction.

Educating shoppers about computational estimation strategies may enable them to become more informed shoppers, turning wild guesses into more educated ones. In turn, consumer welfare should improve, because shoppers can maximize their utility given their budget while minimizing the likelihood of spending more than they can afford. Alternatively, enabling budget shoppers to accurately track their in-store spending—for example, using shopping cart scanners—may represent a win–win solution, enhancing consumer welfare and retail performance.

Koert van Ittersum is Assistant Professor of Marketing in the College of Management at Georgia Institute of Technology. He received his PhD from Wageningen University (the Netherlands). His current research focuses on reducing Type I and II errors during new product and technology introductions and behavioral biases that stimulate overspending of money and overconsumption of drinks, foods, alcohol, and medicine. His research is published or forthcoming in leading marketing journals, such as Journal of Consumer Research, Journal of Marketing, and Journal of Marketing Research, and premier medical journals, such as Annals of Internal Medicine, and British Medical Journal. He is a current member of the editorial board of Journal of Experimental Psychology: Applied.

Joost M.E. Pennings is Professor of Marketing and Alex Investment Bank Professor of Finance at Maastricht University, the Netherlands; AST Professor in Commodity Futures Market at Wageningen University, the Netherlands; and research fellow in the Office of Futures and Options Research at University of Illinois at Urbana–Champaign. His current research deals with understanding economic behavior by studying the decision-making behavior of real decision makers (e.g., market participants, consumers, managers). His research has been published in economics, finance, and management journals, such as American Journal of Agricultural Economics, Economics Letters, International Journal of Research in Marketing, Journal of Banking & Finance, Journal of Business, Journal of Financial Research, Journal of International Money & Finance, Managerial & Decision Economics, and Management Science.

Brian Wansink is John S. Dyson Professor of Marketing and Director of the Cornell Food and Brand Lab at Cornell University. He is author of more than 100 academic articles and books, including the best-selling Mindless Eating: Why We Eat More Than We Think (2006) along with Marketing Nutrition (2005), Asking Questions (2004), and Consumer Panels (2002). From 2007 to 2009, Wansink was granted a leave of absence from Cornell to accept a presidential appointment as Executive Director of U.S. Department of Agriculture’s Center for Nutrition Policy and Promotion, the federal agency in charge of developing 2010 Dietary Guidelines and promoting the Food Guide Pyramid (

Journal of Marketing, Volume 74, Number 2, March 2010o

Monday, July 26, 2010

NeuroFocus Reveals Groundbreaking Role That ‘Little Moments of Luxury’ Play in Economically Distressed Times, Introduces Luxury Perceptual Framework

BERKELEY, Calif. – July 6, 2010 -- As the economy sputters, the brain seeks relief in what the world’s leading neuromarketing company has identified as “little moments of luxury.” This finding lies at the core of the new Luxury Perceptual Framework that NeuroFocus has developed.

In an interview aired on “ABC World News With Diane Sawyer”, NeuroFocus founder and Chief Eexcutive Officer Dr. A. K. Pradeep described these ‘little moments’ as meaningful markers within the subconscious mind. The company created the Luxury Perceptual Framework (LPF) from research studies that have detected this phenomenon in consumers’ precognitive responses to its clients’ brands, products,packaging, in-store marketing, advertising, and customer service across numerous categories around the globe.

In announcing the introduction of the Luxury Perceptual Framework, Dr. Pradeep said, “This phenomenon is universal among human beings, and we see its effects in many business fields as well. The brain values and therefore seeks out even small amounts of pleasure and satisfaction in daily life. In times of economic strife, that subconscious pursuit of luxury becomes harder to satisfy, so our implicit luxury pursuit strategies change. We adjust to and attach more value to ‘little moments of luxury’ that enable us to feel as though we’ve experienced something rewarding amidst our stressful daily lives. The Luxury Perceptual Framework appears to function across geographies, cultural/ethnic/racial sectors and socioeconomic levels. The LPF is a truly global phenomenon.” Dr. Pradeep added that, “This finding has deep implications for brand development, product design, packaging, elements of in-store marketing, and offers guidelines for creating the most effective advertising, especially for marketers who want to stand out among the messaging clutter today.”

The eight dimensions of the Framework include:

Dimension 1: MORE – Be it volume, size, or quantity, offering just a little more than what is normally regarded as “necessary or needed” causes the subconscious to make the association with luxury. This response applies to McMansions, king size beds, a value pack with a super sized meal, gigahertz on a computer, megapixels on a camera, horsepower in a car, or diamonds in a watch bezel.

Dimension 2: VARIETY – The actuality or illusion of choice--offering a variety of features or entities to choose from--enables the “expression of self”. Such variety is perceived by the subconscious mind as a representation of luxury. Color or fabric choices, aroma or herb choices, toppings and menu choices, ram/storage/processor choices, dvd/nav/leather/color choices, and day/date choices are examples of the stimuli that can evoke this response and perception. Dr. Pradeep explained that “the ultimate in personal luxury is personal expression, and luxury is the freedom to express who we really are.”

Dimension 3: PURPOSE – Linkage to a socially respectable cause--the connection to an elevated purpose--provides the luxury of a sense of nobility. Linking soap and cars to environmental stewardship, linking cameras and computers to recycling and waste prevention manifests a sense of purposeful living, where our everyday lives seem to have broader and deeper meaning in an otherwise occasionally confusing, contradictory, and often stress filled existence.

Dimension 4: RARE and UNIQUE – The luxury of possessing the “one and only”, or qualifying as one of a select few to own or experience something--from collectible toys to antique cameras, one of a kind automobiles, the Hope Diamond, or limited edition premiums from fast food restaurants—causes the subconscious to respond in similar fashion. The brain aspires to possess what is perceived as the unique, rare, unavailable--brought to the forefront in “Avatar”, when the pursuit was for ‘Unobtainium’.

Dimension 5: TIME and LABOR – The prize of “hand-crafted”--the mental notion that someone labored with their bare hands to make something for you, be it beer, furniture, or a Rolls Royce—evokes a subconscious perception of luxury. The combination of time plus labor in crafting something ‘special’ equates in the precognitive mind to luxury. This can be defined as a sort of sweat equity value that the subconscious assigns.

Dimension 6: ME – Personalization. A monogrammed set of cuffs, a personalized set of license plates, or a burger with your name etched in mustard – if it is customized to you, and is therefore intimately connected to you, the brain attaches a luxury valuation to it. The personal recognition can be as simple as answering a caller with their name, and knowing their likes and dislikes (pioneered in the hospitality industry). Personal recognition symbolizes luxury in the subconscious.

Dimension 7: CARE and DETAILS – This is where flourishes come in. The tying of the bow on a package, the insight that a cup of coffee may need a cardboard holder…the attention to small details triggers a significant response within the subconscious that links directly to luxury. A focus on little but meaningful nuances or extra steps translates as care, and that perception becomes a hallmark of luxury.

Dimension 8: AESTHETICS – Beauty is indeed in the eye of the beholder, and when that stimulus is transferred from the occipital lobe to the prefrontal cortex where it is assessed, the brain assigns higher value to it. Higher aesthetic value is automatically equated with luxury. Exemplary aesthetic qualities that stand out to the subconscious include simple, harmonious, proportional, and clutter-free environments. Less is indeed more for the brain in this context. Aesthetic values may be subjective in some respects, but for the subconscious, they are meaningful markers of luxury.

Dr. Pradeep explained that brands that leveraged some or all of these LPF Dimensions stimulated consumers to make the linkage between their product, package, or service and the subconscious association with luxury. He added that, “Enabling that consumer impression to attach to products and services creates additional levels of brand value that consumers also voluntarily assign, and that in turn helps gain long-term marketplace success against the competition.” Among the most recent evidence of the power of the LPF in economically distressed times, he cited the repeatedly successful launches of Apple products such as the iPad and iPhone. Long lines outside Apple stores not only reflect Apple’s intuitive application of many of the LPF dimensions for its products, but also for its store designs, packaging, advertising, and customer service. “The brain has rewarded Apple with some of its greatest gifts: attention, emotional engagement, and memory retention. No wonder then that it has become a world leader in consumer technology,” Dr. Pradeep said.

“Smart marketers who look for ways to fulfill our universal but deeply-submerged yearning for luxury, especially in difficult economic times, are likely to reap rewards in terms of purchase intent and brand loyalty,” Dr. Pradeep added. “We know that because we see it in our studies, which capture and measure those subconscious responses and others on a daily basis. The Luxury Perceptual Framework also provides a landmark pathway into understanding how consumers respond to superior service levels, the same way that our Brand Essence Framework captures a brand’s core attributes at the subconscious level.

It may be that the LPF forms a fundamental game plan for the battle of the brands--and those brands that tap into our ever-present search for satisfaction, even through the ‘little moments of luxury’ that NeuroFocus uncovered, can gain an outsize marketplace advantage. ”

NeuroFocus is the world leader in EEG-based, full brain measurement of consumers’ subconscious responses. Its client list includes several of the world’s largest companies, and its normative databases far exceed in size and scope those of any other neuromarketing company. Dr. Pradeep’s book on neuromarketing, “The Buying Brain”, will be published this summer. In it, he offers a number of never-before-published frameworks and action plans based on NeuroFocus’ groundbreaking research into consumers’ subconscious responses. Marketers can follow these guidelinesto create brands, products, packaging, in-store marketing materials and environments, and advertising that will appeal most powerfully and effectively to the brain.o

Thursday, July 22, 2010

Biometric responses

This video tracks the biometric response of viewers to the BP “Apology” ad, and is published by Innerscope. Viewer engagement (mens engagement-blue line, womens red) is determined by heart rate, sweat, and other biometric measures. Low levels, the firm says, indicate low viewer engagement and/or a negative reaction.:

Other coverage of this video here and here.o

Monday, July 19, 2010

A dozen technology trends shaping business and IT in 2010

Download it here.o

Trends in Branding 2010

by SALT Consulting. Read them here.o

Wednesday, July 14, 2010

10 Brands to disappear in 2011

24/7 Wall St. regularly compiles a report of brands that are likely to disappear in the near-term. 24/7 Wall St. has put together the latest version of the Ten Brands that Will Disappear. To qualify, expectations are that brand to be gone by the end of 2011, or for its parent to be sold or go into Chapter 11:

Reader’s Digest
Blockbuster, Inc.
Dollar Thrifty Automotive Group
Moody’s Corp
BP p.l.c.
Zale Corporation
Merrill Lynch
Kia Motors Corporation

Read the argumentation here.o

Thursday, July 8, 2010

The Tree Life Box story

"The Tree Life Box™ is made of recycled paper fiber. In this fiber, we have inserted a wide variety of tree seeds, up to a hundred, dusted with mycorrhizal fungal spores. The mycorrhizal fungi protect and nurture the young seedlings. For millions of years, plants and beneficial fungi have joined together in a mutually beneficial symbiotic relationship.
The fungi "sprout" or germinate to form an attachment with root cells and extend into the soil with a network of fine cobweb of cells called mycelium. The mycelium mothers the seed nursery by providing nutrients and water, thus protecting the growing trees from disease, drought, and famine."o

Wednesday, July 7, 2010

The future of social relations

"The social benefits of internet use will far outweigh the negatives over the next decade, according to experts who responded to a survey about the future of the internet. They say this is because email, social networks, and other online tools offer ‘low‐friction’ opportunities to create, enhance, and rediscover social ties that make a difference in people’s lives. The internet lowers traditional communications constraints of cost, geography, and time; and it supports the type of open information sharing that brings people together."

Janna Quitney Anderson, Elon University
Lee Rainie, Pew Research Center’s Internet & American Life Project July 2, 2010

A special report available from PewResearchCenter available here.o

NIke´s Jeanne Jackson believes in growth

"Nike’s growth goals are indeed lofty, representing a 40 percent jump
over the next five years across a brand portfolio that also includes Converse,
Hurley, Umbro and Cole Haan." Read more here.o

Monday, July 5, 2010

A wise tip


Thursday, July 1, 2010

The latest in the now famous Old Spice ad campaign


Do we need the Creative brief?


Social media drives sales

Customers accessing an online store via a social media site are 10 times more likely to buy something than other users, claims new research. Read more here.o