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Visual design of product can hold symbolic meanings to consumers – study

Simplicity of the product package aligns with consumers’ default assumption that store brands invest less in product quality. Thus, the simplicity of store brand packaging likely signals a lack of investment in the product rather than few ingredients and product purity.

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Researchers from Texas Christian University, University of Illinois Urbana-Champaign, and University of Georgia published a new Journal of Marketing article that examines the consumer trend towards minimalist packaging in consumable products.

The study, forthcoming in the Journal of Marketing, is titled “Symbolically Simple: How Simple Packaging Design Influences Willingness to Pay for Consumable Products” and is authored by Lan Anh N. Ton, Rosanna K. Smith, and Julio Sevilla.

Designing products is both an art and a science. Companies have found that bringing together many visual elements in product design—with multiple colors, text, and illustrations incorporated in the packaging—can lead to enhanced brand engagement. However, in the last few years, consumers have increasingly desired more minimalist aesthetics.

The new Journal of Marketing study examines this consumer trend toward minimalist packaging in consumable products. The research team theorizes that consumers tend to assume that the simplicity of the product package suggests that the product contains few ingredients, which in turn increases perceived product purity, defined as the belief that the essential ingredients of the product are undiluted. With customers increasingly seeking product purity, there is an increase in a willingness to pay for consumable products with simple packaging.

The study defines simple packaging design as the extent to which a product package contains few design elements, which lack detail, are similar to one another, and are arranged in regular ways. Complex packaging design refers to the extent to which a product package contains many design elements that are highly detailed, different from one another, and arranged in irregular ways.

The researchers examined over 1,000 consumable product packages from the largest supermarket chain in the U.S. and find that the simplicity of the packaging design is positively associated with price. As Ton explains, “in a series of experiments, we show that the visual design of a product can hold symbolic meanings to consumers. Specifically, although there is no information about the product’s composition on the package, we find that consumers assume that the simplicity of the product package signals that there are few ingredients within, which enhances perceived product purity.”

However, simple packaging does not always enhance consumers’ willingness to pay. Smith says, “we find that store-brand products are not likely to experience the same benefits of simple packaging as non-store brand products. This is likely because the simplicity of the product package aligns with consumers’ default assumption that store brands invest less in product quality. Thus, the simplicity of store brand packaging likely signals a lack of investment in the product rather than few ingredients and product purity.”

Sevilla adds that “we also find the preference for simple packaging depends on consumers’ goals. When consumers have a health goal, they are more likely to pay for a product with simple packaging. This is because simple packaging conveys that the product contains few ingredients and high product purity, attributes that tend to be associated with healthy products. By contrast, when consumers seek to indulge, they are less willing to pay for products with simple packaging. This is because complex packaging signals many ingredients and low product purity, attributes that tend to be associated with unhealthy and, by extension, tasty products.”

This research extends the understanding of consumer interest in minimalist aesthetics by showing conditions under which design simplicity can be less desirable. Visual simplicity often conveys the idea of “less is more,” but there are situations when it can simply signal “less is less.” It also broadens the understanding of the concept of purity in the context of consumer research. While explicit illustrations, such as a drawing of a mountain spring, can enhance consumer judgments of product purity, product purity can be inferred from more subtle visual cues (or even the lack of visual design elements). Relatedly, the study digs into the concept of product purity, which can hold a variety of meanings, and differentiates purity from its related construct of naturalness, which typically refers to products that are not man-made.

This research provides several insights for chief marketing officers:

  • Simplifying package design can be an effective way for brands to visually (and nonverbally) communicate key product information to consumers. Simple packaging can lead consumers to infer that the product has fewer ingredients and is purer—thereby enhancing their willingness to pay.
  • Aligning the visual design of the product package with ingredient information is essential to make a positive impact on consumers.
  • Managers may consider the specific brand when using simple packaging because positive inferences are less likely to occur for store-brand products.
  • When managers want to signal that their products are indulgent, opting for more complex designs could be more effective.

This work could be extended to durable goods such as technology products. For instance, Apple products are well-known for their simple packaging and are often seen as easier to use than their competitors. It may be fruitful to explore how inferences derived from simple packaging of technology products align or differ from those of consumable goods.

Strategies

5 Tips for small business owners to help grow their business online

Choosing and registering a domain name for your business that’s memorable is increasingly important in an expanding digital marketplace, as it helps to shape your online business identity.

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Small businesses are embracing digitalization and catering to their customer needs through a variety of online channels. With new technologies emerging such as artificial intelligence, there is no time like the present to help your small business grow by taking advantage of the online world.

A GoDaddy 2023 global survey examined the status of small businesses including their ways to reach customers and survive in highly competitive markets. APAC countries surveyed, including Philippines, Singapore and Thailand, showed use of a business website, online store, ecommerce or a combination of them ranking at 57% of survey respondents. These results support having a strong online presence with multiple complementary channels can be vital for businesses to thrive and grow in today’s competitive digital environments.

With this in mind, GoDaddy shares five tips to help your small business grow with an online presence.

1. It starts with a domain name

When getting started, check availability of domain names for the desired name. A domain name can be considered a business’ piece of real estate and identity on the internet. It is a way for customers to easily find a business online.

Choosing and registering a domain name for your business that’s memorable is increasingly important in an expanding digital marketplace, as it helps to shape your online business identity. If the .com extension is not available, there are many new extensions available, such as: .shop; .co.; .photography; .tech, to name a few, for you to consider which can help define your business.  After choosing a domain name register it with a reliable hosting provider right away.

2. Build a website 

Websites help create visibility for small businesses and acts as a home base for your business on the internet, even if you have a brick-and-mortar store.  A website can help consumers easily find your business, learn about your product offerings and services, and contact you for more information.

A well-designed professional looking website can offer an engaging customer experience with the use of text along with photo images and video.  Having a website gives you control over the messaging about your business and can serve as a hub by linking with your social media channels.

3. Listen to your customers

The growth of your business is directly related to customer satisfaction. Listen to your customers and pay attention to the needs of your target market. Identify their problems and pain points. How can your offerings act as a solution? Is it possible to develop new products to help solve these problems?  Engage for customer feedback and keep an eye on customer behaviour changes and audience interests.

4. Develop a business support system

By developing a strong business support system, entrepreneurs can benefit from new ideas on ways to address a particular issue or ideas for growth. In addition to close family and friends, consider mentors and business coaches who can provide relevant insights into your business.

5. Review your business plan

Many entrepreneurs make a business plan at the beginning of their business journey, but do not take the time to revisit it from time-to-time. So, analysing aspects of that business plan like target audience and competitors, examining cash flows and what can make the business profitable, while also checking timelines to reach business goals is all equally essential to help ensure continued growth of your business.

For more information on how GoDaddy can help your small business: Domain Names, Websites, Hosting & Online Marketing Tools – GoDaddy PH.

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BizNews

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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BizNews

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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