Connect with us

Strategies

For branding that stands out, choose red

The color red influences investor behavior, financial research reveals.

Published

on

Photo by Jon Tyson from Unsplash.com

The phrase “to see red” means to become angry. But for investors, seeing red takes on a whole different meaning. That’s the premise behind a new article by William Bazley, assistant professor of finance at the University of Kansas.

“Visual Finance: The Pervasive Effects of Red on Investor Behavior” reveals that using the color red to represent financial data influences individuals’ risk preferences, expectations of future stock returns and trading decisions. The effects are not present in people who are colorblind, and they’re muted in China, where red represents prosperity. Other colors do not generate the same outcomes.

The article appears in the current issue of Management Science.

“Our findings suggest the use of color deserves careful consideration when it’s to be used on financial platforms, such as brokerage websites or by retirement service providers,” Bazley said. “For instance, the use of color could lead to investors avoiding the platform or delaying important financial decisions, which could have deleterious long-term consequences.”

Co-written by Henrik Cronqvist at the University of Miami and Milica Mormann at Southern Methodist University, the article demonstrates how evolutionary biology and social learning are what creates this color-coded behavior. With regards to Western culture, it’s possible that social learning has reinforced biological underpinnings. Specifically, the physical and psychological context in which color is perceived influences its meaning and human responses to it.

“In Western cultures, conditioning of red color and experiences start in early schooling as students receive feedback regarding academic errors in red,” Bazley said.

Red is associated with alarms and stop signs that convey danger and command enhanced attention. Other examples include when California issues a “Red Flag Warning” that signals imminent danger of extreme fire or when the American Heart Association uses red in its guidelines to indicate hypertensive crisis (a blood pressure reading higher than 180/120) that necessitates medical care. Over time, repeated pairings of a color with negative stimuli can influence subsequent behavior.

In regard to finance, Bazley was most surprised to find how red color appears to prolong pessimistic expectations in relation to negative stock returns, while viewing the same information in black or blue leads to reversal beliefs.

He said, “This suggests the use of color may have broad implications for stock market liquidity during times of crisis and the momentum anomaly.”

Their research also drew on other examples outside the financial community where colors influence choice. An emerging field called color psychology analyzes how this affects human behavior. Bazley cites a 2005 study in the publication Nature that argued the color of sportswear may influence outcomes in the Olympics.

“Much like our everyday choices, our financial decisions are likely to be shaped by factors which are not specific to the decision at hand. This can be due to a variety of reasons, such as limits to our attention. Ultimately, it suggests that incorporating aspects of psychology when studying financial decision-making is likely to yield insights,” said Bazley, whose “Pervasive Effects” research is based on eight experiments with a total of 1,451 individuals.

He emphasized this particular project originated in a neuroscience course during graduate school. The research also benefited from the varied expertise of Mormann, who is a visual scientist, and Cronqvist, a behavioral finance expert.

Bazley’s interest in color effects relates to his overall study in the dynamics of financial decision-making.

“Our everyday choices are shaped by a multitude of factors,” said Bazley, whose expertise incorporates behavioral and social influences and fintech. A similar process plays out when we make our financial choices. We are still at the early stages of understanding these dynamics, but learning about them has the potential to yield insights that could ultimately improve the outcomes individuals realize from their decisions.”

So what is Bazley’s favorite financial term involving the color red?

“I appreciate the phrase ‘red herring,'” he said. “In finance, it refers to a preliminary prospectus that a company uses when issuing securities to the public. It is an important document for potential investors, but it tends to omit key pieces of information; hence, it usually has a red disclaimer on the front. I also find fish to be delicious.”

BizListing

Casi’s Mushroom Chicharon taps TikTok Shop to grow business

Casi’s Mushroom Chicharon was founded by Josemartin Casillano during a challenging time, following a significant medical expense. Starting as a side project, Casillano’s commitment and hard work led to the rapid growth of his business.

Published

on

As the digital landscape continues to reshape the business landscape, small and medium enterprises (SMEs) are finding new avenues for growth and expansion. Among these success stories stands Casi’s Mushroom Chicharon, a local business specializing in snacks crafted from organic white oyster mushrooms.

With the rise of e-commerce platforms like TikTok Shop, this local enterprise has seized the opportunity to enhance its market reach and visibility, positioning itself for sustainable growth in the digital era.

Thriving in Adversity

Casi’s Mushroom Chicharon was founded by Josemartin Casillano during a challenging time, following a significant medical expense. Starting as a side project, Casillano’s commitment and hard work led to the rapid growth of his business. Initially employing a small team, the focus was on efficient mushroom cultivation, production, and sales. The nutritional benefits of oyster mushrooms, including being a source of protein, fiber, and antioxidants, attracted a health-conscious customer base.

Leveraging TikTok for Business Growth

Recognizing the potential of social media, Casillano launched a TikTok Shop to increase the visibility of his products. Dedicated to empowering local micro, small, and medium enterprises (MSMEs), TikTok Shop assists businesses in enhancing their visibility and creating growth opportunities in the digital landscape. Casi’s Mushroom Chicharon stands out as one of the success stories from this platform.

“Selling Casi’s Mushroom Chicharon has become easier because of TikTok Shop. Customers can now see our product. It doesn’t require a large capital, and you don’t need much technical knowledge to join TikTok Shop,” said Casillano.

Casi’s Mushroom Chicharon experienced a significant transformation after partnering with TikTok Shop. Leveraging the platform’s dynamic features, including content creation tools and shoppable content options, the business saw an unprecedented increase in visibility and consumer engagement. Consequently, the growing business boosted its sales by 50-60% through TikTok Shop.

Empowering Filipinos with income opportunities

The rise in Casi’s Mushroom Chicharon sales created new opportunities for many individuals. Starting with an initial team of three, the company has expanded to employ 19 people and now relies on 35 mushroom growers to meet the growing demand for its product.

“TikTok Shop helps small business owners like me through their programs like Buy Local, Shop Local. By providing vouchers and discounts, it further boosts the sales of small business owners and also helps local employees and farmers,” Casillano shared.

Launched in November 2023, TikTok Shop’s “Buy Local, Shop Local” campaign aims to enhance the visibility of local vendors and promote community pride and economic solidarity among consumers.

Reflecting on his business journey, Casillano acknowledges the collaborative efforts with TikTok Shop, citing its alignment with his goals to promote business and support local growers. Together, they contribute to positive change, fostering growth in agriculture and socio-economic empowerment.

Looking ahead, Casillano sees potential in continuing the partnership with TikTok Shop, recognizing its role in fostering growth for Filipino enterprises.

Continue Reading

BizListing

How Linya-Linya and Common Room’s financial missteps’ turned into business successes

Retail shop owners Jim Bacarro of Linya-linya and sisters Roma and Maan Agsalud of Common Room shared in RCBC Boz Sessions that they had to learn it the hard way.

Published

on

For many successful entrepreneurs, financial missteps are part and parcel of the job—at first. And retail shop owners Jim Bacarro of Linya-linya and sisters Roma and Maan Agsalud of Common Room shared in RCBC Boz Sessions that they had to learn it the hard way.

RCBC Boz Sessions is a video series featuring Filipino entrepreneurs who share their own journey, tips and insights on starting and growing their own businesses.

Linya Linya’s Jim Bacarro said their company experienced “a rollercoaster of hilarious financial missteps” before it became the renowned and popular apparel and lifestyle brand that it is today. In this episode which premiered on April 3, he shared on Facebook how their funniest financial mistakes became the company’s foundational strategies, entitled Nadapa, Natuto, Kumita.

‘Those epic fails were also the foundational parts of who we are as a company today,” Bacarro shared.

Kids in a candy store

The Linya Linya founder cited issues with cash flow and business capital as “bloopers” that eventually became “incredible lessons.”

Bacarro admitted that they were like “kids in a candy store with our cash” during their beginning years. “Sales meant celebration, right? Wrong! We pulled out cash without thinking twice. And guess what? When it was time to pay suppliers, our wallets were singing crickets.”

He added Linya Linya started their operations “undercapitalized,” diving into projects with their “pockets half-empty.”

“The result? We got smothered by interest payments and were left scrambling for funds.” Bacarro explained, adding that they were also prone to making unplanned and unnecessary big purchases that “led to us scrimping on our actual products—the T-shirts!”

Mixing business with personal

Sisters Roma Agsalud-Agsunod and Maan Agsalud of the arts and craft store Common Room also admitted committing basic mistakes during their first few years in business.

In their YouTube video “Three Mistakes When Scaling Up Your Business,”  Agsunod and Agsalud shared the lapses they committed that prevented them from leveling up sooner.

The Common Room sisters said they did not know anything about the basics of business when they started. “Sa sobrang wala kaming alam sa negosyo, akala naming kumita na kami basta maibalik lang ang rental fee namin,” they said.

Their lack of business know-how made them commit other mistakes, such as mixing personal finances with their business earnings, and making decisions based on feelings instead of hard financial data.

“When Common Room was just starting, kami ang breadwinners ng family namin, so lahat ng earnings naming napupunta sa panggastos ng pamilya. Hindi namin alam na dapat paghiwalayin ang personal bank account sa business bank account. Pag hindi niyo sila pinaghiwalay, mabagal ang growth ng business,” they shared.

They also said: “Ang solution to not knowing the basics of business is to do simple self-studying. Kahit pinaka-basic concepts lang, pwede mo na matutunan sa YouTube videos. Manood lang kayo ng ilang videos at malaking advantage na agad yan.”

“Nakaka-stress ang mistake na yan. Kaya ikaw, study your data before you make any big decision,” the sisters added.

Don’t be afraid to try new tools

Bacarro believes that a financial misstep can translate to business success if one recognizes the mistake immediately, and turn it into an opportunity for growth and innovation. “Through these mishaps, we learned the hard way that managing a business isn’t just about making sales; it’s about smart financial planning,” he said.

For Agsunod and Agsalud, accepting the mistakes allowed them to make the necessary fixes and changes. “So, to all aspiring entrepreneurs out there, embrace your mishaps, learn from them, and maybe get a little help,” they said. Bacarro advised being in the know when it comes to new tools and technology for business owners as these could significantly make their lives easier. “Don’t be afraid to try new tools to help grow your business,” he said.

And so these bosses were all delighted to have found out about RCBC’s Boz app – something they wished they had when they were just starting out.

RCBC Boz is one of the bank’s newest apps specially designed for beginning entrepreneurs. It is a mobile banking platform that allows users to manage their RCBC business accounts separately from their personal accounts, to have an overall financial view of their business performance. It also has functions that allow users to pay suppliers, create and send invoices, and set financial goals. The mobile app has a Report feature that can provide entrepreneurs with weekly, monthly, and yearly financial reports—giving them access to instant and accurate business financial data.

“Entrepreneurship is fun. Having friends who can laugh and cry with you along the way makes it even better. What’s best though is a friend who can laugh, cry, and actually help you with stuff you’re not so knowledgeable on. An app like RCBC Boz is that friend,” he added. 

Download RCBC Boz app now and tune in to RCBC Boz sessions for more practical tips and insights on managing your own business.    

Continue Reading

Strategies

Marketing people, pay attention: Scent sells, and the right picture titillates both eyes and nose

There is a less expensive route to the olfactory senses – one where people’s imaginations almost do the marketer’s work. It is no surprise that attractive images of flowers or fruit with pleasant smells will attract customers if they are relevant to the product.

Published

on

Scented products with relevant images on their packaging and branding, such as flowers or fruit, are more attractive to potential customers and score better in produce evaluations, new research confirms.

And such images, the researchers conclude, are particularly effective if manufacturers and marketers choose pictures that are more likely to stimulate a stronger sense of the imagined smell – for example, cut rather than whole lemons. This, they say, suggests that as well as seducing our eyes, the images are stimulating our sense of smell.

The study, published online in the International Journal of Research in Marketing, could provide manufacturers and marketers with a cost-effective way of promoting the ever expanding range of scented products. As well as the obvious, such as perfumes, candles and air fresheners, products such as bottled water and greeting cards are now sometimes infused with scent.

The whiff of failure

Despite rising recognition of the power of scent, the paper says, much product branding does not include an image evoking an appealing smell. Alternatively, other marketers and their clients even choose images that actually reduce consumer appeal. Examples include objects whose unpleasant odours the product is designed to disguise, such as old trainers or ash trays. The new study confirms the negative impact of such images.

It also revealed that only 27% of the 957 scented laundry detergents and all-purpose cleaners on sale in America included in the study carried a picture of the object whose scent was recreated in the product.

The researchers then measured the customer ratings for the 532 products where consumers had provided feedback using 1-5 stars on the retailers’ website. Products branded with a relevant image of the source of the scent scored significantly better, with an average rating of 4.66 out of 5 stars, compared to 4.46 stars for products without a picture of scent on the package.

In an online study, 200 participants were asked to choose between two fruit-scented handwash products with and without pictures of the relevant fruit on packaging/advertising. As expected, the presence of an image was more important in determining consumer choice than whether the handwash was scented with clementines or pears.

A rose by any other name…

Similarly, when considering products described as having a floral scent, images of yellow roses scored better with participants than sunflowers, almost certainly because the latter does not have a strong smell.

The paper also concludes that marketers can boost the olfactory impact by adding a second ‘cue’ to packaging and branding material, such as showing cut lemons rather than whole lemons.

Co-author Zachary Estes, Professor of Marketing at Bayes Business School (formerly Cass), City, University of London, said: “Marketers and their clients have sought for some time to infuse packaging and even print advertisements with appropriate pleasant fragrances. There is strong evidence that appealing scents can boost sales in shops. However, for individual products that process is costly and not always particularly practical. It also has limited impact – research suggests that just 11 per cent of customers sniff fragranced magazine ads, for example.

“Our study suggests there is a less expensive route to the olfactory senses – one where people’s imaginations almost do the marketer’s work. It is no surprise that attractive images of flowers or fruit with pleasant smells will attract customers if they are relevant to the product. However, that impact can be magnified by using specific images that intensify stimulation the olfactory senses as well.”

Co-author Varun Sharma, Assistant Teaching Professor at Carnegie Mellon University (Qatar), said: “With this large market comes a growing demand to advertise and package these scented products effectively. Our work suggests that scent has far more pervasive and powerful marketing potential than previously thought.

“It’s reasonable to assume that even when packaging or advertisements carry a scent-related picture, it is initially chosen for visual appeal. Marketers and their clients need to understand the wider power of such images. Unless marketers fully understand why such pictures are effective and that their impact is multisensory, they may make costly mistakes.”

Continue Reading
Advertisement
Advertisement

Like us on Facebook

Trending