Economists explore the complex forces that shape what ends up in your shopping cart and how that might change in the online marketplace
Imagine yourself in your local supermarket, doing your usual grocery run. In aisle after aisle, countless brands vie for your dollars and attention. Colgate, Crest and Aquafresh toothpaste. Smucker’s, Welch’s and Dickinson’s strawberry jam. Coke, Pepsi and RC Cola soft drinks.
Like most consumers, you probably prefer one over another in dozens of categories that are collectively called consumer packaged goods. This class of goods includes things with a relatively short life cycle such as food, drinks, cosmetics and cleaning products. These items are used and replaced quickly, compared with durable goods like appliances and cars. True product innovations in this realm are rare, and actual distinctions between brands are typically slim. Yet reaching for your go-tos is almost automatic, and economists have long tried to determine why.
It’s especially curious because, as research has repeatedly shown, consumers in blind taste tests routinely fail to pick out their preferred brands. And they will happily purchase name-brand products such as Advil even when identical generic products sit right next to them on the shelf for a fraction of the cost.
People’s brand preferences are deep-seated and long-lasting. It’s not as simple as one brand being most popular across the board, though. Different brands dominate market shares in different geographic regions. In some cases, these market shares have generally been considered to remain stable over remarkably long periods of time, including those of Coca-Cola, Wrigley chewing gum and Gillette razors. Among food and beverage brands, nearly 50 percent of those that were dominant in the US in 1923 were still among the top five in 1997.
What’s in a brand? Brands are a relatively recent innovation, emerging in the
early twentieth century. Over time, their value has shifted from a product-focused
statement of origin to something that is valued in and of itself.CREDIT: FLICKR
Precisely why people form lasting brand attachments to more or less indistinguishable products is a challenging question, says Stanford marketing professor Bart Bronnenberg. Psychology, geography, childhood experiences and advertising all exert some influences, concluded a 2017 paper in the Annual Review of Economics by Bronnenberg and Jean-Pierre Dubé, a marketing professor at the University of Chicago Booth School of Business. But, they note, finding definitive answers is made harder by the fact that long-term, multi-decade purchasing data for individuals and households are difficult or impossible to obtain.
“We’re just scratching the surface here,” Bronnenberg says. “I think the exact mechanism through which this stickiness comes about is still unknown, but people are researching it, and we have several good answers.”
And while researchers have gained insight into how brand loyalties are formed and persist in the brick-and-mortar marketplace, the shopping landscape is changing rapidly. How consumer buying habits may change — and brand loyalties along with them — in the age of online shopping may pose even trickier questions.
Here are some of the best explanations researchers have for why you reach again and again for Crest, Smucker’s or Tide. And how those habits may change as shopping gets smarter and more connected....MUCH MORE
