Nothing matters more than context. What consumers see, hear and think about a brand is wholly shaped by the context in which they encounter it, which in turn directly affects what they do and buy.
Brand marketers know this, of course, which is why so much time and money are invested in carefully constructing retail environments. But there is more to context than facings and shelf placement.
Much of the context that matters is out of the immediate control of marketers, like the weather. A recent working paper by four economists from Northwestern University, the University of Chicago, Brigham Young University and the University of California at Riverside analyzed national data for 40 million car purchases and four million home purchases. They modeled price paid as a function of seasonal temperature variations, while controlling for other factors. It turns out that, holding other things constant, the premium paid for a house with a swimming pool or a convertible car was much greater when the purchase was made during months with warmer average temperatures. Bottom line, if a buyer sees a house with a pool or a ragtop car in the context of a sunny summer day, he or she is likely to pay a higher price.
There is no mystery about what’s going on here. Good weather puts people in a better of frame of mind, and makes them susceptible to a well-known, extensively documented cognitive mistake called projection bias. This is the tendency of people to overestimate how much they will enjoy something in the future (i.e., projecting future happiness) based on how much they like it today. When people see the sun glinting off a shimmering blue pool or the polished sheen of a new car, they forget that they won’t always feel that way. The value they place on it today – what they are willing to pay in the moment – is not predictive of the value they will realize over the long-run. In short, what they project is biased by the immediate context, and so they pay more than they would have if they had seen that house or car on a cold, rainy day.
While marketers can’t control the weather, they can control what they do for or with their brands in the context of the weather. But generally speaking, brand marketers focus instead on just the attributes of their products, and give little attention to context. They test what consumers like and what consumers will be willing to pay in isolation from the contexts within which people will actually encounter these products in the real world. The implicit assumption in doing so is that differences in real world context will cancel each other out over time and place such that the sterile testing environment, while not realistic, is predictive nevertheless of how things will average out across thousands if not millions of consumers and buying occasions.
While this implicit assumption is true, and has been validated over time through the proven track record of successful product forecasting, it consigns marketers to a passive role in dealing with context, thus overlooking and sacrificing the opportunities available to marketers to do more. Perhaps the best way to illustrate this is to make note of how the active management of context is being used these days to the disadvantage of marketers.
James Surowiecki, “The Financial Page” columnist for The New Yorker, explained in a recent piece that the impact of New York City’s ban on large soda sizes is best appreciated by understanding the ways in which it will change the context of consumption. Surowiecki makes reference to a number of empirical principles discovered by social psychologists and behavioral economists, especially the principle of default. This is the tendency of consumers to equate portion and package. In other words, consumers don’t eat a certain portion; they eat what they’re served, so package size, or serving size, creates the context of consumption.
By banning any soda size greater than 16 ounces, New York City is changing the “default.” Time and again, behavioral research has shown that people go along with whatever is the default, whether it’s retirement plans, organ donations or the size of the scoop to get candies from a bowl. It takes extra effort and attention to override the default, which, more often than not, people are unwilling and unlikely to do.
Other contextual effects also come into play with respect to New York City’s ban. A 16-ounce maximum will reframe how big and how filling consumers perceive even smaller sizes, affecting how satiated people feel after consuming smaller portions.
The range of contextual elements at work in any given situation are far greater than the few mentioned here, and only a very few raise questions of risk to consumers. Most elements of context give brand marketers untapped opportunities for reshaping how consumers stack up the brands in their consideration sets. It’s a matter of relative priority. What can brand marketers do to put their brands in the best light when consumers are ready to buy? The answer is not simply the best possible product. Indeed, more often than brand marketers realize, it’s not about the best possible product at all. It’s about the best possible context.
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