Current Topic: Strategy

Picture this: you're wandering the aisles of a grocery store, looking for a healthy snack. You come across two seemingly identical products, but one has a brand name that's as long as a Shakespearean monologue, while the other has a snappy, short name that's easier to remember. Which one are you more likely to trust as the healthier choice? Did you rely on your instincts and beliefs about the product rather than scrutinizing its nutritional label? 

As consumers, our food choices are heavily influenced by our intuition (Chan & Zhang, 2022; Motoki & Togawa, 2022). In turn, our intuition is largely shaped by branding elements. From brand names to logos and even the personality associated with a brand, these cues offer us valuable information that guides our purchasing decisions.

For instance, foods packaged in green or blue colors are often perceived as healthier, while those in red packaging may trigger a different response (Huang & Lu, 2015; Schuldt, 2013). But what about brand names? Can a simple name affect how we perceive the healthfulness of a product? 

“Giving up smoking is the easiest thing in the world” the words of Mark Twain, an American writer in the late 1800s. “I know because I've done it thousands of times.” In the present day, it’s crystal clear that smoking and alcohol consumption is a great health risk, but still, it’s very difficult for people to quit or decrease their consumption of these indulgence. 

The motto “Prevention is better than cure” (Dutch philosopher Desiderius Erasmus) has motivated scientists around the world to look into ways to help people live healthier lives and avert diseases. Moreover, more and more companies are becoming socially responsible and looking into ways to promote healthy purchase decisions.

But how to do that?

Do you usually go for a “fat burger”, “super-size burger” or a “thin cookie”? These kind of labels push us to make mental associations with human body shapes and types, triggering our emotions and the way we perceive and evaluate the food we consume. A “thin cookie” implicitly suggests a small portion and lower calorie content perfect for those who work out or watch their figure. A “fat burger” caters to hedonistic needs and might appeal to people getting a kick from larger, more satisfying portions. These very words play on self-image and fitting social expectations.  As humans, we tend to make choices that gain us acceptance from others we identify with and demonstrate our conformity to established norms (Van de Waal, Borgeaud, and Whiten 2013).

Picture this: You’re mindlessly scrolling through your Instagram feed, and there she is – Kylie Jenner, effortlessly flaunting the latest makeup trends. Now, Kylie is not just a reality TV superstar; she's a mega influencer with millions of followers. When you see her sharing her makeup tips and product recommendations, you can't help but feel a sense of wishful identification. You admire her glamorous lifestyle and think, "Maybe I can achieve a touch of that too!" It's like having a front-row seat to the world of luxury. These feelings of identification with Kylie spark a desire to emulate her, and suddenly, those makeup products she's endorsing become must-haves in your beauty routine.

Suppose you want to sell a cupboard; how do you determine the price? You will probably compare prices with similar ones and how much the purchase price was. Buyers, in turn, will judge it on external features: how many drawers are there, what material is it made of? Yet often there is a difference in what the seller thinks a product is worth and what the buyer is willing to pay. This is also called the endowment effect (Thaler, 1980).

However, society is becoming increasingly technological, and more (digital) services are offered. Think, for example, of a platform like Amazon, a company specializing in data privacy, or the experience of going to a concert. How are these services evaluated? And more importantly, how big is the seller-buyer gap? Let’s dive in!