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Truthful yet misleading packaging: Consumers falsely believe that low fat means less sugar

When manufacturers advertise their products as being low in fat, many consumers assume that they also contain less sugar. However, the sugar content of many low-fat products differs little from that of other products.

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The “low fat” label on foods can do manufacturers and consumers more harm than good. According to a new study by Martin Luther University Halle-Wittenberg (MLU), when manufacturers advertise their products as being low in fat, many consumers assume that they also contain less sugar. However, the sugar content of many low-fat products differs little from that of other products. Many of the respondents in the study felt deceived by this and said they would be less inclined to buy these products. The paper was published in the journal Food Quality and Preference.

The researchers conducted three experiments to investigate how the information on yoghurt packaging influences perception and purchasing behaviour. A total of 760 people from the U.S. took part in the online experiments. They were asked to rate calorie content, sugar content and fat content on a scale of one to seven. They were also asked whether they would buy the product. “We wanted to find out whether information about a reduced fat content changed the overall perception of a product,” says the study leader and economist Dr Steffen Jahn from MLU. 

The results showed that almost all of the respondents correctly estimated the lower calorie content of the low-fat yoghurt. At the same time, they also believed that the yoghurt contained less sugar than the yoghurt that wasn’t labelled low fat. In the second and third experiment, some of the respondents were shown the low-fat product with the actual nutritional information printed on the front. This group did correct their opinion on the sugar content, but their willingness to buy decreased, even though the low-fat yoghurt contained fewer calories. Another group was shown low-fat products without the ‘low fat’ label and their purchase intention did not change. 

“Many people want to eat healthily but fail to do so for a variety of reasons. The information on food packaging also plays a role in this, as it can bias consumer perceptions,” says Jahn. Some manufacturers take advantage of this effect. In Australia, a cake mix was advertised as being “97 per cent fat free” while containing 55 per cent sugar. 

“Our study shows that consumers can feel deceived by a product because, even though ‘low fat’ claims by manufacturers are technically true, a part of the truth is concealed,” concludes Jahn. Manufacturers should rethink this practice if they want to retain their customers in the long run, says the researcher. One possibility is to place the nutritional values directly on the front of the products. 

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Sticking with old technology can be a strategic move

As competitors adopt new technology in some markets, firms that stick with the old technology may experience an initial decline before actually rebounding and even reaching new heights.

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Technological innovation — especially disruptive innovation — is often heralded as the best strategy for a company. But new research published in Strategic Management Journal found that as competitors adopt new technology in some markets, firms that stick with the old technology may experience an initial decline before actually rebounding and even reaching new heights. While the rise of a discontinuous technology does pose a substitute threat to the old technology, it also further exposes niche segments where companies can gain a foothold with customers who favor the old technology.

The analysis by Xu Li, a professor at the London School of Economics and Political Science, used archival data from the traditional Chinese medicine industry in China during the 1990s. In his interviews with managers in the field, he found that some chose not to innovate along with their competitors. In many cases, Li found these companies were performing well, if not sometimes better, by not making changes. Inspired by these conversations, Li chose to study under what conditions a firm may benefit from not innovating.

Li found some prior research on why companies would stick with older technology, but none explored why — during times of disruptive change in the market — sometimes firms are able to survive and even perform better within a small niche with old technology. What Li’s paper showed was that adhering to the old technology can, in some cases, be an effective strategy that ultimately improves firm performance.

The data showed a U-curve effect for traditional Chinese medicine firms that chose not to adopt new technology: The decline in performance began as a few competitors started launching a new technology, but later recovered and reached new heights as most competitors had adopted the new technology and exited the old technology market. But a lack of competition within the niche group of consumers who prefer older technology essentially gave these firms a monopoly within a smaller market as fewer competitors remained.

“Even though the new technology is often superior in terms of functionality, it doesn’t mean that every single customer or customer segment will be willing to move to the new technology,” Li says. “It’s important to understand what customers like about your product. We tend to assume that if a firm introduces something new, then customers must appreciate the new thing or the newness of the offering. But that’s not always true. The emergence of new technology can actually reveal people’s preference for something older.”

The research also refutes the idea that when the market is small, a company won’t perform better — but that depends on how many firms are still serving this niche. If only a few firms are left to serve this market, a company has far more power to charge higher prices among loyal customers with few other options.

“When you see a firm that is not actively innovating, we tend to believe the firm must be either incapable or is suffering — it’s always a bit of a negative tone,” Li says. “Sometimes staying with old technology might actually be a strategic choice, because by doing so it might also lead to better performance.”

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Customers prefer text over video to provide service feedback

More people indicated they would likely leave written compliments or complaints about service on a restaurant-provided tablet powered by artificial intelligence. A video message option appeared to discourage leaving feedback.

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At a time when one viral video can damage a business, some companies are turning to their own commenting platforms rather than letting social media be the main outlet for customer feedback. Only one wrinkle: in this context, customers appear to prefer writing a message rather than leaving a video.

In a recent study, more participants indicated they would likely leave written compliments or complaints about service on a restaurant-provided tablet powered by artificial intelligence. A video message option appeared to discourage leaving feedback.

With more restaurants and hotels turning to AI to enhance their service, the findings indicate that methods that require “low self-disclosure” would work better, meaning ones that don’t require customers to provide very much identifiable information.

“Some restaurants and hotels actually ask customers to create video testimonials that they can share, but for general customers, it seems they feel more comfortable with low self-disclosure. This is probably because people still do not trust AI to that level,” said lead author Ruiying Cai, a researcher in Washington State University’s Carson College of Business.

With a lot of hype around AI technology, many people have misperceptions about what it can do, Cai pointed out, perhaps believing it is capable of a lot more than simply recording a message.

The study participants reported being concerned about what would be done with their information in all the scenarios, but this was heightened with the option to leave a video.

For the study, published in the International Journal of Hospitality Management, Cai and her colleagues presented different online scenarios to a total of 439 people. The participants were first asked to imagine a restaurant where they had either good or bad service. Then they reported how willing they were to give the server compliments, or complaints, with either text or video on an AI-enabled tablet.

The researchers found that the participants were more willing to give feedback using text, whether positive or negative.

The scenarios also had participants receiving a theoretical immediate or delayed reward to provide feedback, namely a 5% discount of their current meal or a future one. For complaints, the reward timing did not appear to make much difference, which the authors said was not surprising as people tend to be more highly motivated to complain than compliment.

For compliments, the researchers found an interesting connection: with more participants choosing the delayed reward over the immediate one. This may indicate that giving the compliment itself is its own reward as it makes the giver feel good, Cai said.

“It’s a good start to think about how to encourage customers to leave more compliments which could be very important for frontline employees. It could also be beneficial for the customers themselves,” she said.

Even complaints are important to encourage, Cai added. As her previous research suggests, restaurants and hotels should make it easier for customers to complain to them directly rather than go elsewhere to air their grievances.

“There have been episodes when customers were not afraid of posting angry videos on their own social media,” Cai said. “If restaurants and hotels can encourage customers to complain directly to them, then they may be able to recover and solve that service failure before it goes viral online.”

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Ambitious workers park the office politics when employer is struggling, study suggests

Workers curb competition against competitors to unite against external rivals when employer faces either losing sector status or can improve reputation.

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Workers curb competition against competitors to unite against external rivals when employer faces either losing sector status or can improve reputation.

This is according to a study – “Revving Up or Backing Down? Cross-Level Effects of Firm-Level Tournaments on Employees’ Competitive Actions” by Patrick Hallila, Hans T. W. Frankort and Paolo Aversa – that appeared in the Academy of Management Journal.

The peer reviewed paper, which has been published on the website of the Academy of Management Journal, looked at riders who, systematically, adjusted their internal and external overtakes based on their team’s competitive threats and opportunities, as well as the resources available to those competitor teams.

“Sports – particularly motorsports – can be a good proxy for several other industries as they are extremely competitive: if you don’t perform and progress you may be out. Workers in sectors such as consultancy and financial services face similar pressures,” Frankort said.

This study linked the motorsports experience to other workplaces, particularly since earlier research has shown that employees compete to improve their relative standing in the eyes of their employer, in the hope of climbing the career ladder. Such behaviors may include poaching colleagues’ clients or even disrupting or sabotaging their work.

And yet this study suggests that ambitious workers tend to modify those behaviors when the standing of their organization is about to deteriorate or improve.

“Why? Because they see the standing of their firm as an important factor in deciding who to compete with to advance their career,” Frankort said.

“If the company has a chance to out-perform better-resourced rivals, employees’ workplace behaviour is geared towards being seen to be a key contributor to that success. For example, a salesperson might try to poach colleagues’ clients. However, if a firm is facing threats, such as losing market share to smaller rivals, workers may feel that infighting is poor form. Instead, they would focus on competing against rival firms. Inside the firm, individuals may simply want to blend into the background when their company is going through difficult times.”

The findings suggest, Frankort said, that employers can influence the nature of their employees’ competitive actions. For example, employers could highlight threats to the firm from underdog firms or its opportunities against bigger rivals.

The research also found that riders’ overtaking attempts were shaped by their contractual position with the team. For example, replacement riders – the MotoGP equivalent of agency workers – attempt more overtakes against teammates when the team is doing well and against all riders when the team is struggling.

The paper concluded: “It may be that replacement riders are keen to signal their skills relative to incumbents, hoping to secure a permanent contract.”

Riders whose contracts will not be renewed challenge their teammates on the track and are less likely to overtake riders from other teams – suggesting they feel detached from the team and even disgruntled with it.

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