Marketers have long noticed puzzlingly high levels of brand loyalty: Consumers appear to have high willingness to pay for particular brands, even when the alternatives are objectively similar. The majority of consumers typically buy a single brand of beer, cola, or margarine, even though relative prices vary significantly over time, and consumers often cannot distinguish their preferred brand in blind “taste tests”. Consumers pay large premia to buy homogeneous goods like books and CDs from branded online retailers, even when they are using a “shopbot” that eliminates search costs. A large fraction of consumers buy branded medications, even though chemically equivalent generic substitutes are available at the same stores for much lower prices.
It's been observed that in recent years there seems to be a movement toward establishing our identities based on what we consume (branded items that others see being one part of that) and away from what we produce, and that this is not a good thing.
Yeah really, maybe the next post will be along the lines of "Pope Catholic, Bears Shit Woods". I guess Hanson still works under the base assumption that people are hyper-rational and any observed deviation from that is novel and interesting.
That is charmingly obtuse, and I'm guessing it stems from the underlying desire to replace politics (in which branding and loyalty play an even bigger role) with markets. Looks like that doesn't work since the same stubborn human patterns emerge there as well.
Butter and pasta are not homogeneous substances- Jason has a point in general. Different sources of milk and production methods of butter and fillers will produce variations in taste, texture, and yes, the way it melts and so on. (Btw, substances containing more than one compound don't have a fixed melting point, they usually melt gradually over a range of temperatures, and the composition of the liquidus and solidus phases during melting vary continuously as temperature rises - phase diagrams get a lot more complicated).
Similarly, the ingredients in pasta may be the same, but "flour" is a very variable thing, and different pastas cook differently and have different textures and so on. In this case (more so than with butter) I am quite certain that Jason's point has merit.
You trust Land O Lakes butter to melt a certain way? Is there something besides butter in it? Otherwise, I'm certain the melting point will be the same as generic butter.
That makes sense, but it doesn't really explain brand loyalty in products which are commodities of largely uniform quality.
Medications are a prime example, as the unbranded ones are chemically equivalent to the branded ones, and the production quality is most likely also equivalent, due to strict regulation and liability for failures.
That also applies to many types of processed food: a typical unbranded cola doesn't taste much different than Coca Cola, and most people wouldn't be able to distinguish them in a blind experiment.
"Let me suggest" don't seem the appropriate words to introduce a proof.Hanson is making an hypothesis, my point is that this hypothesis has been the working hypothesis of the whole advertising business for decades.
A large fraction of consumers buy branded medications, even though chemically equivalent generic substitutes are available at the same stores for much lower prices.
When people do this, we call it 'brand loyalty'. The definition of brand loyalty is ignoring cheaper, yet equivalent substitutes, in favor of a more expensive and strongly branded option. Same thing expressed differently. When a definition and a referent are identical, the definition is circular. 'Brand loyalty' explains nothing - it is just an activity label, but a psuedo-explanation for that activity.
Firms compete at the individual product level, but also at the reputational level. Reputation concerns the predictablilty of quality of new products, and the maintenaince of production quality of existing products. Brands are associators for reputational mechanisms. Generic brands lack a strong branding association, so the reputational strength of these brands is compromised. Advertising a brand, or promoting a product as an "excuse" for advertising a brand, is a way of promoting a commitment to high reputation. Reputation is partly tangible. 'Good will' is an element of the firms market value. Consumers are prepared to pay extra for products by firms with high reputation, just as those who purchase companies are prepared to pay extra for 'good will'.
Companies thereofore have incentives to maximize their reputations, from both a customer and assets perspective. How these incentives interact with and are affected by product related regulations such as minimum standards, is worth considering.
My harmless post keeps getting filtered as spam. I wrote, responding to Robin,
Intuitions loyalty that would make sense informational terms may be biased downward by ignoring a subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
It was "rejected" three time. If it sticks this time, then the "censor" deals differently with blockquoted matter.
My harmless post keeps getting filtered as spam. I wrote, responding to Robin,
Intuitions about the degree of brand loyalty that would make sense in purely informational terms may be biased downward by ignoring the most powerful but subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
It was "rejected" three time. If it sticks this time, then the "censor" deals differently with blockquoted matter.
Intuitions about the degree of brand loyalty that would make sense in purely informational terms may be biased downward by ignoring the most powerful but subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
Intuitions about the degree of brand loyalty that would make sense in purely informational terms may be biased downward by ignoring the most powerful but subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
Yes of course *some* degree of brand loyalty would make sense in pure info terms. But the observed degree seems much larger.
The divergence from expectation might be explained by our intuitive underestimation of the costs of decision, as suggested by ego-depletion theory. ( http://tinyurl.com/arg4ttq )
Certainly the role of identity for products of conspicuous consumption is glaringly obvious, but are people loyalty to their toothpaste for the same reason (when others don't even know).
Meh, I don't think people consistently buy the same brand of butter in order to signal a specific identity. It seems more likely that people just stick to what they know and are comfortable with. But that would be too simple, right?
Didn't George Akerlof right an entire book about exactly that? http://www.amazon.com/Ident...
It's been observed that in recent years there seems to be a movement toward establishing our identities based on what we consume (branded items that others see being one part of that) and away from what we produce, and that this is not a good thing.
Yeah really, maybe the next post will be along the lines of "Pope Catholic, Bears Shit Woods". I guess Hanson still works under the base assumption that people are hyper-rational and any observed deviation from that is novel and interesting.
That is charmingly obtuse, and I'm guessing it stems from the underlying desire to replace politics (in which branding and loyalty play an even bigger role) with markets. Looks like that doesn't work since the same stubborn human patterns emerge there as well.
Butter and pasta are not homogeneous substances- Jason has a point in general. Different sources of milk and production methods of butter and fillers will produce variations in taste, texture, and yes, the way it melts and so on. (Btw, substances containing more than one compound don't have a fixed melting point, they usually melt gradually over a range of temperatures, and the composition of the liquidus and solidus phases during melting vary continuously as temperature rises - phase diagrams get a lot more complicated).
Similarly, the ingredients in pasta may be the same, but "flour" is a very variable thing, and different pastas cook differently and have different textures and so on. In this case (more so than with butter) I am quite certain that Jason's point has merit.
You trust Land O Lakes butter to melt a certain way? Is there something besides butter in it? Otherwise, I'm certain the melting point will be the same as generic butter.
That makes sense, but it doesn't really explain brand loyalty in products which are commodities of largely uniform quality.
Medications are a prime example, as the unbranded ones are chemically equivalent to the branded ones, and the production quality is most likely also equivalent, due to strict regulation and liability for failures.
That also applies to many types of processed food: a typical unbranded cola doesn't taste much different than Coca Cola, and most people wouldn't be able to distinguish them in a blind experiment.
I can see your original post posted twice
"Let me suggest" don't seem the appropriate words to introduce a proof.Hanson is making an hypothesis, my point is that this hypothesis has been the working hypothesis of the whole advertising business for decades.
A large fraction of consumers buy branded medications, even though chemically equivalent generic substitutes are available at the same stores for much lower prices.
When people do this, we call it 'brand loyalty'. The definition of brand loyalty is ignoring cheaper, yet equivalent substitutes, in favor of a more expensive and strongly branded option. Same thing expressed differently. When a definition and a referent are identical, the definition is circular. 'Brand loyalty' explains nothing - it is just an activity label, but a psuedo-explanation for that activity.
Firms compete at the individual product level, but also at the reputational level. Reputation concerns the predictablilty of quality of new products, and the maintenaince of production quality of existing products. Brands are associators for reputational mechanisms. Generic brands lack a strong branding association, so the reputational strength of these brands is compromised. Advertising a brand, or promoting a product as an "excuse" for advertising a brand, is a way of promoting a commitment to high reputation. Reputation is partly tangible. 'Good will' is an element of the firms market value. Consumers are prepared to pay extra for products by firms with high reputation, just as those who purchase companies are prepared to pay extra for 'good will'.
Companies thereofore have incentives to maximize their reputations, from both a customer and assets perspective. How these incentives interact with and are affected by product related regulations such as minimum standards, is worth considering.
My harmless post keeps getting filtered as spam. I wrote, responding to Robin,
Intuitions loyalty that would make sense informational terms may be biased downward by ignoring a subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
It was "rejected" three time. If it sticks this time, then the "censor" deals differently with blockquoted matter.
It wasn't this time I am substituting some words.
My harmless post keeps getting filtered as spam. I wrote, responding to Robin,
Intuitions about the degree of brand loyalty that would make sense in purely informational terms may be biased downward by ignoring the most powerful but subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
It was "rejected" three time. If it sticks this time, then the "censor" deals differently with blockquoted matter.
Intuitions about the degree of brand loyalty that would make sense in purely informational terms may be biased downward by ignoring the most powerful but subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
Intuitions about the degree of brand loyalty that would make sense in purely informational terms may be biased downward by ignoring the most powerful but subtle roadblock to choice: decision fatigue. ( http://tinyurl.com/arg4ttq )
Yes of course *some* degree of brand loyalty would make sense in pure info terms. But the observed degree seems much larger.
The divergence from expectation might be explained by our intuitive underestimation of the costs of decision, as suggested by ego-depletion theory. ( http://tinyurl.com/arg4ttq )
Certainly the role of identity for products of conspicuous consumption is glaringly obvious, but are people loyalty to their toothpaste for the same reason (when others don't even know).
http://en.wikipedia.org/wik...
Meh, I don't think people consistently buy the same brand of butter in order to signal a specific identity. It seems more likely that people just stick to what they know and are comfortable with. But that would be too simple, right?