Fourth Law of Branding (Price)

Price is seldom an issue!

Reputation of the company and products are more of important factors why people buy Brands than the price is. People buy products that do accept the buyer. Perhaps it foster an environment that make the person more autonomous or instill more intrinsic motivation.

Perhaps buyers also recognize that. They opt for products that actually work on their intrinsic motivation and/or make them more autonomous. Since money and price are of extrinsic motivation factors, people don't usually opt for being influenced by money or price which are again extrinsic.

People buy products that do not criticizes the buyer. People buy products that appreciate the buyer. People buy products that enhances the buyer again through intrinsic motivation factors. It can also be through extrinsic motivation factors, however, the effectiveness is either temporary or deceptive. If you like your advertising or marketing campaign to be successful, think intrinsic motivation and not extrinsic motivation factors.

I believe the best example of a Brand that accepts the buyer is United Colors of Benetton.

People buy products that give more credibility to the buyer. They buy products that satisfy and play the emotional factors of the buyer. Remember "the customer is king" slogan; "the customer is always right" slogan?

Markets are created by complex products, complex people, and competition. Underlying forces that motivate people to buy are seldom the price or price related issues.

People buy to alleviate dissatisfaction or move toward greater satisfaction. The science of human motivation as a buyer is so complex that can not be just explained by price or price related issues. People act based on previous experiences and current situation.

Previous Experiences + Current Situation ==== > Motivation to Act ===== > Awaiting Certain Consequences

People hope that the outcome or these certain consequences will result in improvement of their condition. People do not buy products or if they did, price plays an important issue. No, people do not buy products; people buy consequences or results of buying certain products. These consequences either make the buyer more autonomous or instill more intrinsic motivations.

That is why people buy Brands. People buy Brands no matter what the cost is since the consequences are known.

Brands ==== > Certain Known Consequences

People do not buy the features of the products which are easily testable against the price of the product. People buy the improvement they anticipate as the result of those features. How much improvement? No one really knows and that is why price is not an issue. Perhaps the more you can show improvements, the more the product can cost.

Brands ===== > Better known anticipated benefits

In the field of Branding this notion is famous:

People do not buy life insurance. They buy security.

People do not buy Cars. They buy sexy, dependable, transportation that gives them greater freedom (autonomy).

People do not buy computers. They buy proven, reliable, faster, more efficient, with accuracy machines that get their job done.

Brands ==== > Envision a desirable future, an improvement, a solution, a better consequences, and/or alleviate dissatisfaction

You can never put a price on any of these.

Why Smart People Do Dumb Things: Psychologist Explores 'Blind Spots' To Critical Thinking

Are you feeling lucky? How superstition impacts consumer choice

Despite their strong impact on the marketplace, surprisingly little attention has been paid to the how superstitious beliefs impact decision making. A groundbreaking new study from the April issue of the Journal of Consumer Research examines the role of lucky and unlucky features and finds that consumers are more disappointed when a product that is supposedly “lucky” breaks. Additionally, even thinking about a “negative” superstition can make consumers more risk averse.

“Despite the large impact that superstitious beliefs have on the marketplace, we currently know very little about their implications for consumer judgment and decision making,” explain Thomas Kramer and Lauren Block (Baruch College).

They continue: “This research is one of the first to investigate the impact of irrational beliefs on consumer behavior in the marketplace.”

Between $800 and $900 million is lost in business in the United States every Friday the 13th. A businessman in Guangzhou, China, recently bid 54,000 yuan (almost seven times the country’s per capita annual income) for a lucky license plate containing the sequence 888. Continental Airlines recently advertised an $888 flight to Beijing with the slogan “Lucky You,” and the Beijing Olympics are scheduled to open on August 8, 2008 at 8 p.m.

Similarly, Kramer and Block found in a previous study that Taiwanese consumers were more likely to purchase a radio priced at $888 than one priced at $777 – a 15 percent increase in price. In this study, the researchers expand on their prior work with superstitious beliefs. They reveal that, following product failure – specifically, a rice cooker that burnt the rice – Taiwanese consumers expected to be more disappointed if the rice cooker was red, a lucky color in Chinese culture, as opposed to green, a neutral color.

However, when consumers were made conscious of superstitions beforehand through a questionnaire discussing cultural awareness, they were equally disappointed with the red and green rice cookers.

In another study of American college students at an East Coast university, the researchers found that having participants think about Friday the 13th made them significantly more risk averse. Participants were told they were participating in two unrelated studies. After thinking about Friday the 13th or a neutral day (Tuesday the 19th), participants were then asked to make a choice in betting situations, for example a guaranteed $18 or a 20 percent chance to win $240. Those who had thought about Friday the 13th chose the safe option 49 percent of the time, versus only 35 percent of those who had thought about a neutral day.

“In particular, we show that superstitious beliefs have a robust influence on product satisfaction and decision making under risk,” the researchers write. “However, these effects are only observed when superstitious beliefs are allowed to work nonconsciously.”

Thomas Kramer and Lauren Block, “Conscious and Nonconscious Components of Superstitious Beliefs in Judgment and Decision Making.” Journal of Consumer Research: April 2008.

About the Journal of Consumer Research: Founded in 1974, the Journal of Consumer Research publishes scholarly research that describes and explains consumer behavior. Empirical, theoretical, and methodological articles spanning fields such as psychology, marketing, sociology, economics, and anthropology are featured in this interdisciplinary journal. The primary thrust of JCR is academic, rather than managerial, with topics ranging from micro-level processes (e.g., brand choice) to more macro-level issues (e.g., the development of materialistic values).

About the University of Chicago Press: Founded in 1891, the University of Chicago Press is the largest American university press. The Journals Division publishes periodicals and serials in a wide range of disciplines, including several journals that were the first scholarly publications in their respective fields. Online since 1995, the Journals Division has also been a pioneer in electronic publishing, delivering original, peer-reviewed research from international scholars to a worldwide audience.

Optimists And Pessimists Are Influenced By Different Ad Messages

When it comes to financial matters, people tend to fall into two categories: prevention-focused (risk-averse) or promotion-focused (gain-oriented). A study in the June issue of the Journal of Consumer Research tests comparative ads that are positively framed ("Brand X is better than Brand Y") and negatively framed ("Brand Y is worse than Brand X"), and analyzes how their effects might differ depending on your initial mindset.

Shailendra Pratap Jain (Indiana University), Charles Lindsey (SUNY Buffalo), Nidhi Agrawal (Northwestern University), and Durairaj Maheswaran (NYU) found that financial outlook - which can shift after a traumatic event, such as stock market losses - was also reflected in how people viewed advertising. Prevention- focused consumers responded most favorably to messages emphasizing safety and loss-avoidance while promotion-focused consumers were drawn to ads promoting achievement and gain-seeking.

'This research shows that the effectiveness of positively and negatively framed direct comparative ads depends on differences among consumers (i.e., whether they are prevention or promotion focused). Thus, it underscores some consumer and message considerations that managers need to take into account in executing comparative advertising strategies," the authors write.

Interestingly, prevention-focused people also had a stronger preference for consistency. They tended to favor the brand being advertised over the brand to which it was compared. Prevention-focused people also looked at the comparison brand first, while promotion-focused people evaluated the advertised brand.

"We find that focus differentially influences which brand is evaluated first, which comparative frame is effect in driving evaluations, and whether a higher/lower rating of the initially evaluated brand influences the rating of the subsequently evaluated brand," the authors conclude.

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Shailendra Pratap Jain, Charles Lindsey, Nidhi Agrawal, and Durairaj Maheswaran. "For Better or For Worse" Valenced Comparative Frames and Regulatory Focus," Journal of Consumer Research: June 2007.

Contact: Suzanne Wu
University of Chicago Press Journals

Old dogs: Prior knowledge affects how consumers accept new information

Over time, consumers develop a set of cues that we then use to make inferences about products, such as “all French restaurants have great service” or “more expensive candles smell better.” However, this set of predictable beliefs can make it difficult for us to learn and recognize other real, positive qualities that are indicated by the same cues, reveals a new study from the April issue of the Journal of Consumer Research.

“Once people learned that a cue predicted an outcome, they became less likely to learn about this very same cue with respect to a different outcome,” write Marcus Cunha Jr. (University of Washington), Chris Janiszewski, and Juliano Laran (both University of Florida). “The implication is that the learning system is designed to discourage single cue–multiple outcome learning.”

In the pilot study of a series of five experiments, the researchers used cheese tasting to explore the development of predictive knowledge structures, a phenomenon also known as “protection of prior learning.” They first had participants taste an orange rind Raclette cheese that was mild and creamy, and a purple rind Drunken Goat cheese that was much stronger tasting and dry. They then had participants rate the cheeses on a scale of mild to strong to induce the association with an orange rind and a mild flavored cheese. A control group also tasted two different types of cheese but did not rate them.

To test whether an association between an orange rind and mild flavor would make it more difficult for consumers to gauge other existing qualities, such as texture, tasters were then asked to rate the creaminess of a mild, creamy Port Salut with an orange rind and a dry Manchego with no rind. Surprisingly, participants were less likely than the control group to expect the second orange rind cheese to be creamy, even though the first one had also been creamy. As the researchers explain, “Learning that the orange rind predicted a difference in the strength of flavor . . . attenuated the learning that the orange rind predicted creaminess.”

This research has important implications for marketers, policy makers and consumers. For instance, the researchers point to Merck’s introduction of the cholesterol-lowering drug Simvastatin under the brand name Zocor. Recently, researchers found that Simvastatin may be also effective at preventing the onset of Alzheimer’s disease.

“This opportunity creates a branding dilemma for Merck,” the researchers write. “Our findings suggest that consumers may be slower to learn the Alzheimer’s relief association to [Zocor] than to a new brand name.”

Similarly, from a public policy standpoint, the results suggest that people may be resistant to adopt new health and safety standards when information conflicts with prior learning. Beyond creating awareness, successful campaigns might present new information in a way that does not utilize attributes already associated with another outcome.

Marcus Cunha Jr., Chris Janiszewski, and Juliano Laran, “Protection of Prior Learning in Complex Consumer Learning Environments.” Journal of Consumer Research: April 2008.

About the Journal of Consumer Research: Founded in 1974, the Journal of Consumer Research publishes scholarly research that describes and explains consumer behavior. Empirical, theoretical, and methodological articles spanning fields such as psychology, marketing, sociology, economics, and anthropology are featured in this interdisciplinary journal. The primary thrust of JCR is academic, rather than managerial, with topics ranging from micro-level processes (e.g., brand choice) to more macro-level issues (e.g., the development of materialistic values).

About the University of Chicago Press: Founded in 1891, the University of Chicago Press is the largest American university press. The Journals Division publishes periodicals and serials in a wide range of disciplines, including several journals that were the first scholarly publications in their respective fields. Online since 1995, the Journals Division has also been a pioneer in electronic publishing, delivering original, peer-reviewed research from international scholars to a worldwide audience.

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