Luxury Goods & The Irrational Brain - Research

According to a study by Henrik Hagtvedt of Boston College and Vanessa Patrick of the University of Houston to be published in the Journal of Marketing Research, customers who purchase luxury items that don't blend in with either their wardrobe or their home tend not to return these products. Instead, they buy more - usually cheaper - products to complement their new acquisitions. The cost more often than not exceeds that of the original purchase, creating a vicious cycle of consumption.

Over three years, the 125 participants' spending habits for shoes, necklaces and furniture were tracked. Participants were given high-end products from either “designer” labels or from luxury retailers that frequently clashed with their aesthetic tastes. After a period of time, subjects were offered the chance to return the products in exchange for money or to keep the product obtained through the study.

The vast majority of participants opted to keep the luxury goods instead of returning them - and also admitted to buying a host of cheaper items to complement their luxury product.

Via - FastCompany

Lots Of Product-Related Tweets

Having analysed over 500 000 tweets, Pennsylvania State University researchers Jim Jansen concluded that around 20% of them disseminates some kind of product-related information.

Jansen and his team looked for tweets mentioning a brand and why the brand was mentioned - to inform others, express a view on the brand or something else - and found that people were using tweets to connect with the products.

According to the press release, "with about six million active users daily and predictions of more than 20 million users by the end of the year, Twitter has become the next big thing on the Web."

With businesses starting to make profits from the use of Twitter - both in terms of sales and as a brand-building tool - the micro-blogging tool could see increased adoption in future. Imagine your brand reaching a potential of 6 million per day, can any brand afford to ignore this free channel?

Via - Penn State University

Solving The Food Crisis

PSFK has an interesting article which might perhaps help thousands in the third world who are currently starving. I'm not quite sure it sounds very appetising though...

Renowned chef Pierre Gagnaire seems to have created the world's first synthetic dish with the help of chemist Hervé This. By using a combination of ascorbic acid, glucose, maltitol and citric acid, Gagnaire concocted an appetizer of jelly balls named “le note à note”. The dish is said to taste like apples and lemons, with a crunchy exterior and creamy interior.

Perhaps I'm a little old-fashioned, but the idea of eating something that contains natural products seems slightly more agreeable to my palette. Then again, this latest technological "break-through" is probably not all that different to McDonald's.

Via - PSFK, London Times

Change In Media Focus Increases Sales

Asics, traditionally a print advertiser in the US, has had a taste of TV and can't seem to get enough of it.

The brand tried TV for the first time last year, spending about $5 million of its $27.6 million U.S. media budget on TV advertising. The spend came primarily at the expense of magazines, which have traditionally dominated Asics' budget. Magazine spending fell $2 million, to $21.7 million, despite a $3 million spending increase overall, according to TNS Media Intelligence.

The trial has seemingly paid off for the brand, with Asics' sales rose 11% last year, according to SportsOneSource. Considering the major push by traditionally strong running-focussed brands such as Nike and new-comers Body Armour during the Olympic year that was 2008, Asics' gain appears even more impressive.

A spokesperson for the brand has said the they will continue to invest in TV this year, although primarily concentrating on the major US cable networks.

Via - AdAge

Coke's Still Number 1

CoreBrand's Brand Power Index research for 2008 has concluded that Coca-Cola still remains the most powerful brand today, with Johnson and Johnson following in the number 2 spot. Worryingly for brands today, the remaining top 10 in the index remained basically unchanged. Only the Kellogg's company - in 10th place- posted any marked increase, jumping from 21st spot in 2005.

Of the top 100 brands, some of the biggest sliders are Starbucks, Pepsi and Microsoft. Microsoft has slipped from 26th position in 2005 to 54th spot in 2008. However, the tech giants can still take heart as they are still 37 spots above Apple.

Jim Gregory, CoreBrand's CEO, attributes the fall of Starbuck's as a natural evolution of a brand that has grown to fast and become too diversified in the process. It'd be interesting to see whether the brand rebounds quickly or continues it's downward decline over the course of 2009.

The other expected big losers resulting from the survey are the American automakers. GM has dropped 11 spots and now ranks at 41, triggered by a massive drop in the favourability score index.

The CoreBrand's Brand Power index ranks 100 corporate brands in terms of market reputation and awareness. The annual ranking is conducted by surveying 400 corporate executives across 1,200 companies and 49 industries, with financial performance, perception of management and investment potential taken into account.

Via: AdAge

Banks' TV Ads Drive People To Invest

Not that US banks hold any authority in the world at the moment, but an interesting research has shown that U.S. banks seeing the highest returns on their advertising investment between 200 and 2008 and are not necessarily those spending the most but instead have the heaviest TV budgets.

A new report from financial-services research firm Aite Group - which examined ad-spending trends and return on advertising performance of 32 of the largest 50 U.S. retail banks from 2006 through 2008 - found that top 25% highest-performing banks are those with TV-heavy buys.

Ron Shevlin, senior analyst at Aite Group and author of the report said banks in the top performing quadrant - which include big names such as Citibank and Wachovia, as well as smaller companies Huntington, BB&T and Hudson Bank - did best in driving deposit, loan and IRA account growth.

While other banks succeeded in ramping different traditional metrics of advertising return, such as awareness, he said those ad dollars were ultimately lost because they did not result in new deposits, loan or IRA growth.quick

So could TV ads have contributed to the current financial melt-down? I'm not sure if there'll ever be conclusive proof on that issue but despite all the hype on new media and the death of TV ads, it's nice to know that it's still effective.

Via: AdAge

Depression & Insanity Has Certainly Set In

The world is certainly a depressing place to be right now. With people questioning fundamentally everything that has come before the economic meltdown, brands have enjoyed far less success with the declining sales.

But not everyone is suffering. Certainly not if you are in the business of manufacturing or distributing firearms. And not if you're a pharmaceutical company making anti-depressants and sleeping pills.

According to AdAge, despite the weakest holiday season on record in the US, outdoor-products retailer Cabela's turned in strong fourth-quarter sales, largely as a result of an increase in firearm and ammunition sales. Smith & Wesson is reporting pistol sales up 40%, and Sturm, Ruger & Co. reported an 81% increase in firearm revenue.

People seem to be losing sleep too. Research from IMS Health indicates that prescriptions for major sleeping-pill brands rose 7% last year, while antidepressant-brand prescriptions jumped 15%.

Brands are in place to make people feel better. It's just rather ironic that the types of brands that are encouraging for many consumers are some of the most depressing ones too.

TV Still Effective - If The Creative's Great

Despite the doom-and-gloom which had been cast in the way of TV as an advertising medium over the past decade or so, a growing body of evidence which suggests not only that TV advertising still works, but that it may be working better than ever.According to AdAge, analyses and studies on advertising effectiveness for years find no evidence that all of the problems TV advertising faces have done anything to render it less effective.

The Media Marketing Assessment (MMA), a unit of Synovate, stated that whilst there hasn't been a significant trend in the erosion of TV effectiveness, TV has in fact emerged as having improved it's effectiveness as an advertising medium. The MMA also has found a surprising spillover effect for TV in digital media: About a third of search queries for brands studied are driven by offline advertising, particularly TV - a higher proportion than that driven by online-display advertising. This finding was corroborated by other research highlighted by the article.

However, despite the improved effectiveness of TV since 1995, more than half of US advertisers (16 of 29) surveyed in the study still lost money by running their TV ads. Unsurprisingly, the reason attributed to successful campaigns rests solely on the quality of the creative thinking.

Via: AdAge

Make The Logo Smaller

An interesting study conducted by British Neuro-Scientist Dr Gemma Calvert has found that a brand's logo, whilst eliciting responses in test subjects, actually affects potential consumers far less than more subtle, subliminally stimulating imagery.

The research subjects were shown subliminal images that had no overt connection to cigarette brands - a red Ferrari, a cowboy on horseback, a camel in the desert. Next, they were shown explicit images such as the Marlboro Man and Joe Camel, the Marlboro and Camel logos, and branded packs of cigarettes.

In both cases, MRI scans were used to look for activity in the nucleus accumbens - the area in our brain that controls cravings, with the aim to determine whether subliminal images would generate cravings similar to those generated by the logos and the clearly marked Marlboro and Camel packs. There was a similar response among former smokers, but no response among people who had never smoked before.

The results showed that even though both explicit and implicit images elicited some form of craving response in test subjects, the subliminal images not only generated more activity in the reward and craving center amongst test subjects than when they viewed the overt images. In other words, the logo-free images associated with cigarettes triggered more cravings among smokers than the logos themselves or the images of cigarette packs, a result that was consistent for both Camel and Marlboro smokers.

The research concluded that brand components engage the consumer in figuring out who's behind the message and, most importantly, speak to the subconscious mind. For example, one won't find a logo on the front of an iPod, yet its iconic look is enough for you to know what brand it is, whilst BMW's signature kidney grill is distinct enough to represent the entire brand.

Via: AdAge

In-Store Displays To Save Retailers?

Price discounting, while an obvious choice in times of economic downturns, not only are damaging to brands, but are also not very effective in promoting sales, according to research by shopper-marketing agency OgilvyAction.


OgilvyAction's research also indicates that 29% of U.S. shoppers impulsively buy from categories they didn't plan to when they entered the store. Of that group, 24% said they were influenced by secondary displays (away from the product's usual aisle), 18% by in-store demonstrations, and only 17% by price promotion.

The study also found 39% of U.S. shoppers have a category in mind but pick their brand in store, and of those, 31% were influenced by in-store demonstrations - more than the 28% by price promotion and the 27% influenced by some other form of consumer promotion.

In each case, however, more than twice as many consumers said they bought impulsively because of display or some other form of promotion as said they did so because of price.

Via: AdAge

Wise UK Shoppers

The findings from a new Jupiter survey commissioned by LinkShare show that U.S. online shoppers are being "outshopped" by their U.K. counterparts, with U.K. consumers spending 40% more money and making 24% more purchases online than U.S. shoppers.

U.S. consumers are also behind when it comes to online shopping tactics: They are much less aggressive when hunting bargains, with U.K. consumers eight times more likely to conduct research on multiple sites before making an online purchase.

U.K. consumers are also 13% more likely to be frequent online buyers (purchasing products or services more than 10 times in the last 12 months) than their U.S. peers.

Interestingly, neither U.K. nor U.S. online consumers seem ready to embrace their cell phones as shopping devices. Only 10.2% of U.S. and 10.4% of U.K. consumers agreed with the statement, "I would like to be able to shop and make purchases on my mobile/cellphone."

Via: AdAge

Second Exclusive Mercedes Site On The Way

Mercedes in the US, having found success with their previous Generation Y focussed community, now has their sights set on launching a new private, online community next year, the yet to-be-named site will target boomers.


Steve Cannon, vp of marketing, has found the site—generationbenz.com—so efficient and useful that he can envision it replacing some types of focus groups, particularly those that delve into broader issues, such as “green-washing.”

Mercedes launched a password-protected test version of the site six months ago. Through questionnaires, polls and live chats, the company seeks to better understand what makes Gen Y tick. It uses the forum to get feedback on an array of topics from product designs to advertising concepts for the 19- to 32-year-old crowd.

The site currently has about 800 members, each of whom was invited by Mercedes. Nearly half have visited in the past 60 days, and of those, a few hundred are “very regular users,” Cannon said.

About a third of the members own Mercedes cars; the rest are generally interested in the brand and may become owners in the future.

The luxury car maker honed in on Gen Y initially because it’s a “big and important” group that’s comfortable with technology and represents great potential buying power, Cannon said.

Via: BrandWeek

Future Gazing Magazine

A new free online publication has recently launched its first edition. Called H+ (Humanity Plus), the quarterly magazine will explore scientific, technological, and cultural developments that are overcoming human limitations.

It's a fascinating read and for a must for everyone interested in future trends, news and cutting edge ideas.

Click here to sign up for H+.

Via: PSFK

Unwavering Desire For Luxury Cars

Luxury car manufacturers have already begun feeling the negative effects as a result of the global economy. Coupled with the eco-consciousness of so many consumers, resulting in them now keeping their cars for longer periods or trading down.

Trendhunter, however, shows that there is still some light at the end of the tunnel for luxury car manufacturers. It seems that the US version of AutoTrader's traffic shows that the highest searches were for fantasy niche cars like the Dodge Challenger and Chevrolet Corvette during September. More ordinary cars such as the Jeep Wrangler ranked highly in searches.

It seems as though that the interest and demand for luxury cars is still there, it's just about finding a way to match offers to satisfy consumers' pockets.

Via: TrendHunter

Best Buy Listens

US consumer electronic retailers Best Buy has been listening to consumers. Through their latest initiative, known as Blue Label, Best Buy will be addressing customer needs in a way that no retailer has done before by providing feedback to manufacturers in order to better product offerings.Best Buy learnt from their customers that they were after more from the feature set on available laptops and went directly to manufacturers to address the issue. Some of the requested details include backlit keyboards, thin and light design and free warranties. Currently, Toshiba and HP Lenovo are on board with the program and both manufacturers have exclusive laptops on sale now at Best Buy.

Financial viability for initiative such as this one must be a deterring factor for many companies, but with Best Buy's footprint and influence, the success of this initiative could lead to a whole new way for manufacturers and product developers to gain inspiration for their designs.

Via: I4U, Best Buy

Trading Down But Still Brand Conscious

With consumers now far less willing to spend valuable disposable income with the worldwide economy in full retreat, the logical assumption is that consumers would be willing to temporarily fore-go brands and spend their hard-earned money in a much more sensible manner.

Fastcompany's October issue highlighted a piece of research which shows a creative way in which consumers are attempting to keep hold onto the status afforded to them by brands - by buying counterfeit.

It appears that although the seizures of counterfeit goods made by the U.S. government in 2007 amounted to 13000 - 1000 less than in 2006, the value of the seizures, however, has increased by 27%

The largest sufferers as a result of knock-offs are the computer software brands, with losses of around US$34 billion.

Research: Using The Right Brand Improves Performance

NY Times' Consumed magazine has brought to attention a new study which proves that exposure to brands overall can have a significant effect on our performance in many aspects in life.


The example of Speedo's warm up parka that was originally designed for Michael Phelps was highlighted. The suit was initially made only for Phelps until consumer demand prompted Speedo to manufacture the jacket for purchase. Thousands have already been sold - but unlike the $550 consumer version of its LZR Racer suits that Phelps wore while swimming, the parka will not actually make people faster physically. The psychological effect is what improves the athletes' performances

Gavan Fitzsimons, a professor of marketing and psychology at Duke, elaborates on how the subliminal effect might work:

“The trick is, the first time you wore the warm-up parka,” it wouldn’t have any effect, he says. “Because you’d realise, Oh I’m being ridiculous.” Wear it often enough, though, and you’ll probably stop ruminating about it. “Below the level of conscious awareness, you’d put the jacket on, and what’s activated in your mind is maybe Michael Phelps going very fast,” he continues. “And those things could actually kick up your motivation to go faster.”

It seems to good to be true, but the power of the human mind can clearly be influenced by brands in amazing ways. Great news for brand builders, let's hope the majority of brands out there bear this thought in mind in their future campaigns.

Via: New York Times

Aston Martin's Still UK's Coolest Brand

Aston Martin has beaten Apple's iPhone to be crowned the coolest brand for 2008/09 in the annual UK Coolbrands survey, the carmaker's third title in as many years.

Helped by the renaissance of the James Bond franchise and the anticipated release of 'Quantum of Solace', Aston Martin remained the coolest, most stylish brand in the eyes of the Coolbrands council and over 2,500 voters.

Thousands of brands were shortlisted to a list of 1,100 for this year's survey before a Coolbrands council and 2,500 members of the public rated the brands on style, innovation, originality, authenticity and desirability.

The Coolbrands survey is also divided into series of sub-categories including media and online media.

Fashion magazine Vogue was named the coolest media brand for 2008/09, followed by Vanity Fair. YouTube, Google and Facebook make up the top three coolest online media brands.

How Fuel Efficient Is the Prius, Really...?

The Prius has been hailed by many as a car designed with the best interests of our environment in mind. The halo effect as a result of this hybrid has done wonders for Toyota's green credentials worldwide, resulting in the Japanese manufacturer being ranked the most green conscious company in various surveys.

The popular British motoring show Top Gear, however, weren't convinced. "In the interest of science", they decided to pit the Prius against the latest generation M3 on a ten lap run around a racing track to see which car really is the more fuel efficient one.

The verified results came in with the Prius doing 17,2 miles per gallon, whilst the M3 managed 19,4 miles to a gallon... It's clearly not about what you drive, but how you drive it.

The Right Words For Every Pitch

The New York Times highlights the finding of a study in the Journal of Consumer Research regarding what language advertisers should use in countries where English is predominantly spoken as a second language.

It appears that English should be used when advertising luxury goods, but hybrid of English and the local language should be used for household necessities communications.

Aradhna Krishna, an author of the study and a marketing professor at the University of Michigan, said the reactions were probably a result of students associating different languages with different aspects of their lives.

“English is the language which is global and cosmopolitan and upper class,” she said. “You associate your first language with family, with warmth, with belongingness.”

Read the full article by clicking here.