By Cesar Perez-Carballada
As much as we like to think that we are rational beings, truth is that emotions have a critical role in how we human beings make decisions.
Nobel laureate Herbert Simon perhaps said it best when he wrote in 1983: “In order to have anything like a complete theory of human rationality, we have to understand what role emotion plays in it” (1)(2).
Since then, multiple researchers have confirmed the role of emotions in decision making. A famous example is the neurologist Antonio Damasio (3) who conducted clinical observations of victims of brain trauma: physical damage to their frontal lobe resulted in a significant reduction in their ability to experience emotion (while leaving other cognitive functions minimally affected) which profoundly diminished their capacity to make decisions. Another more recent example is Dan Ariely and the findings explained in his book “Predictably Irrational” (4).
Choosing a brand over another is a decision and, as such, it also subject to emotions. In reality, while emotions overwhelmingly drive behavior, it is misguided to believe that thinking and feeling are somehow mutually exclusive. Emotion and logic are intertwined. However, one of the longest-running debates in marketing is whether to use a rational or emotional advertising approach. Many companies are inclined to favor the rational side and try to explain the features and functional superiority of their products. This strategy may work if the functional benefits are substantially superior but in a world in which products are becoming more and more similar, emotions become the most sustainable (and only?) way to differentiate a brand.
One of the most comprehensive advertising test ever conducted proved that it’s critical to combine both rational and emotional elements. A few years back, Millward Brown tested 1,795 ads from 33 countries covering 37 categories and they found a clear relationship between the emotional impact of advertising and the short-term sales return (sales generated in the eight weeks from ad air date)(5). This relationship was much stronger for established brands than for new brands. Similarly, established brand ads with purely emotional content and no rational messaging tended to out-perform those with just rational messaging. The reverse was true for new brands, where rational content was more likely to drive sales. However, the test found that the most potent communication is a combination of the emotional and rational together. Emotions are an important driver of decisions, but successful brands also provide a rational 'reason for choice' to help consumers justify their decisions.
The challenge is how to choose the right emotional focus. Even companies that are open to the emotional motivations are deceived by market research: they rely on traditional research techniques to select what benefits to communicate, however this may prove to be incorrect because when our emotional desires begin to shift toward a prospective brand, we align our reasons to be consistent with that intention. Our critical mind is always looking for evidence to support our beliefs. The stronger the emotion, the stronger the belief, and the greater the tendency is to seek out supporting evidence. We are not rational, we are rationalizers (6). This tendency creates problems when people in survey research and focus groups seek out reasons to explain their feelings about new products, concepts, and ads. Self-reported research shines the spotlight on their logical interpretation of emotion, rather than the motivators of behavior, the emotions themselves. Respondents and subsequently marketers often end up inventing rationalizations instead of identifying the real emotional motivators. Brands suffer and concepts die prematurely as marketers try to react to the sometimes arbitrary reasons people make up.
Emotions activated by a brand may relate to how we want to be perceived by others and/or how we perceive ourselves. Thus, brands are typically used as personality statements (some people call these statements "badges"). Your choice of a badge is often determined by the statement you want to make to your friends, neighbors, coworkers or relatives. Sometimes it is determined by the statement you want to make to yourself. People define themselves through brands they use, the branded clothes they wear, the cars they drive, the drinks they consume, favorite spots to hang out, and so on (7).
RATIONAL REASONS FOR EMOTIONAL BRANDING
In the end, the case for emotional branding is not to develop nice ads or cool brands. Instead, there is a very rational reason to support it: emotional branding is potentially the only way to differentiate our products in the long term allowing us to sell more and/or to charge higher prices, even if they are functionally similar to the competitors.
We can explain these two positives externalities by using the Value Proposition framework. As we can see in the next chart, there are two axes, the vertical one refers to the benefits of the products in the marketplace and the horizontal one refers to their prices. Just to illustrate it, we have added automotive brands in Europe.
The vertical axis refers to the product benefits for the consumer, where benefits encompass a combination of functional and emotional elements. Here we define emotional benefits as the symbolic meaning attached to a brand in consumers mind related to feelings (“When I buy or use this brand, I feel ___”). Thus, a consumer makes a decision based on both the product (i.e. functional features: mostly a rational process based on logic) and the brand (symbolic meaning typically related to emotional associations), of course regular consumers dont distinguish consciously between the two and their minds typically intertwine both elements.
Most products will be placed close to the regression line in the framework because benefits and price are correlated: the more benefits a product offers, typically the higher its price is. Based on their relative value (benefits-price ratio), we can determine clusters: low-tier, mid-tier, high-tier and premium.
In the real marketplace, this correlation between benefits and price is not perfect and some brands deviate from the trend: if a brand offers superior benefits at the same price (see case A in next chart) or the same benefits at a lower price (case B), then that brand will gain market share due to its superior value proposition. The inverse is also true: any product below or to the right will tend to lose market share due to an inferior value proposition. In general, brands above the “regression line” will tend to gain market share, and those below the line will tend to lose market share.
If we consider all these elements, then we can see how consumers are willing to pay more (price premium) for a product that functionally is similar to another one as long as its emotional benefits are superior, making it a better choice overall.
For instance (see next chart), the Volkswagen Golf Plus 2.0 TDI may have similar features (performance) than the BMW 118d but the brand BMW has a superior symbolic meaning over VW Golf, therefore BMW has three options: (i) charge a similar price to the VW Golf (around 27,000 €)(8) and sell more units (gain market share), (ii) raise its price to sell the same quantity as VW but collecting the extra profits (increased profitability), or (iii) any combination of the prior options.
The emotional branding explains the Price Premium that BMW is able to charge over VW or its extra market share.
Emotional branding also explains luxury products: typically these products are functionally at a similar level than that of premium products (and sometimes at a lower level!) but their prices are significantly higher. For instance, is a $420,000 Rolls Royce Phantom five times better than a $83,000 BMW 7 Series ? According to many comparison sites (9), their features are similar. If we considered only product features, we would get the next chart. Then, how is it possible that luxury products can justify such high prices given their lack of advantage in product features?
The answer again relies in the emotional connection with the consumers. The purpose of emotional branding is to create a bond between the consumer and the product by provoking the consumers emotion.
Not only luxury products can enjoy that kind of connection. Timberland has created a lifestyle around their brand, one of strength, perseverance and individual power. Timberland makes sure it is the guy alone in the wilderness, testing his mettle against the elements. They create a sense of a lone warrior archetype.
Nikes hero archetype, for example, has inspired fervent customer loyalty throughout the world. The hero starts from humble beginnings, challenges a terrifying foe, and against all odds, prevails. Nike takes the emotional marketing story of the hero and turns it inward. “You are the hero, and your lazy side is the villain. They know that while some people may identify with an external foe, all people identify with an internal one,” says marketing consultant, Graeme Newell (7).
With time and repetition (“operant conditioning”), brands can establish a lasting connection in the mind and heart of consumers. In order for humans to create a relationship between themselves and a brand, the brand needs to portray a particular personality with specific values and symbols attached to it.
EMOTIONAL VS FUNCTIONAL EQUILIBRIUM
As we explained, both functional and emotional benefits are important, however their weight varies across categories and across price tiers.
Our intuition tells us that the role of emotional branding is not the same when buying salt than when buying a car nor is it the same when buying a cheap or a luxury car, thus how does emotional branding vary across categories and price tiers?
Some categories are more prone to emotional decisions such as cosmetics and handbags than others such as financial services or B2B products. One way to quantify the specific weight of the emotional benefits is the one exemplified by Interbrand and its brand value ranking (10). The firm calls it “Role of Brand Index” and it defines it as “portion of the purchase decision attributable to the brand as opposed to other factors (for example, purchase drivers such as price, convenience, or product features)”. This Index is expressed as a percentage, such that if the RBI is 25%, then one quarter of the decision to buy certain product is due to the emotional benefits attached to its brand.
In terms of price tiers, one would assume that when dealing with more expensive products, logic becomes more important because the consequences of a bad decision are larger. Actually, contrary to that assumption, the emotional elements are increasingly more important when we go up in the price continuum in the same category: feelings are more important when deciding between premium brands than when doing so between cheap brands.
Thus, it’s important to note that the equation ‘benefit = functional + emotional‘ has two characteristics:
(1) The weight of both components (functional and emotional benefits) varies across the price continuum: the higher in the scale, the more important the emotional component
(2) The type of emotional benefits also varies across the price continuum: higher in the scale the symbolic meaning becomes more abstract and detached from the product
We can see both elements explained in the following table:
In that table we can see how the importance of the emotional benefits grows when we move up in the price ladder. At the bottom, we can find the entry-level products such as retailers cheapest private labels for which consumers don’t pay any Price Premium, on the contrary, in this segment consumers decide which product to buy mostly based on price and the emotional benefits have no weight.
When we move up, from low to mid-tier, consumers rely more and more on emotional benefits but still the functional elements carry more weight and the emotional benefits are pretty rudimentary (basic meaning of quality and familiarity with the brand). In the high tier and, even more in the premium segment, the emotional benefits increase their weight to impact more on the decision and these emotional motivations are more abstract and complex related to self-expression and status.
Finally, at the top, the emotional benefits outweigh the functional ones when a consumer purchases a luxury product and the symbolic meaning is more complex, related to self-expression, prestige/status and scarcity/timeless.
The implication is that, when managing a brand that competes at the low end of the price spectrum, we can differentiate our product based on some of its functional characteristics and add some basic notions of emotional branding, however, when managing a brand at the high-end or premium segments, the emotional benefits become crucial and may define which brands succeed and which ones fail, specially when there are no big differences in terms of functional performance.
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Now you understand the power of the emotional branding: the ability to charge more for a similar product. The good news is that you can infuse any brand with emotional meaning and achieve, as result, price premium, so its up to you: are you going to continue competing on price in a race to the bottom or will you differentiate your brand via emotional branding to amass higher profits?
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Sources:
(1) “Reason in Human Affairs”, Herbert A. Simon, Stanford University Press; 1 edition, July 1, 1990
(2) “The Myth Of Rational Decision-Making”, Vivian Giang, Fast Company, July 6, 2015
(3) “Emotion, Decision Making and the Orbitofrontal Cortex”, Antoine Bechara, Hanna Damasio, Antonio R. Damasio, Cerebral Cortex, Volume 10, Issue 3, 1 March 2000, Pages 295307
(4) “Predictably Irrational: The Hidden Forces That Shape Our Decisions”, Dan Ariely, Harper Perennial; Revised and Expanded ed. Edition, April 27, 2010
(5) “Millward Brown reveals the most comprehensive advertising pre-testing validation ever conducted covering 37 categories and 33 countries”, Campaign Brief, November 2, 2011
http://www.campaignbrief.com/2011/11/millward-brown-announces-the-m.html
(6) “The End Of Rational Vs. Emotional: How Both Logic And Feeling Play Key Roles In Marketing And Decision Making”, Douglas Van Praet, Fast Company, May 16, 2013
(7) “Emotional Branding and the Emotionally Intelligent Consumer”, Christie Barakat, Adweek, January 12, 2014
(8) http://www.cars-of-europe.com, retrieved on December 3, 2017
(9) https://www.carwale.com/comparecars/rollsroyce-phantomcoupe-vs-bmw-7-series-2013-2016/, retrived on November 2017
(10) http://interbrand.com/best-brands/best-global-brands/methodology/, retrieved on December 3, 2017
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Author: César Pérez Carballada
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