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The reasons shoppers don’t care about brand names

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AP Photo/Jae C. Hong
It’s the products, not the brands.
By Louise Lee

Insights by Stanford Business

Published Last updated This article is more than 2 years old.

Marketers know plenty about how consumers make purchase decisions, but research is not keeping pace with how the internet and mobile devices have transformed the shopping experience, leaving gaping holes in what we understand about how people choose products.

“If you look at today’s textbooks about consumer behavior and marketing, they are not as relevant as they used to be,” says Itamar Simonson, a marketing professor at Stanford Graduate School of Business. Researchers who study how consumers make decisions need a new direction, he says.

Do online reviews matter more than traditional sources of information? Are brand names becoming less important as cues for quality? These are some of the questions Simonson—in a recent issue of Journal of Marketing Behaviorsuggests are ripe for further inquiry.

Years ago, researchers examining behavioral decision theory and judgment and decision-making achieved their main objective: demonstrating convincingly that people often behave irrationally. “By now, there have been more than enough demonstrations that they often violate key principles of rationality,” says Simonson. “I think the point has been made in all kinds of entertaining ways. Books have been written reaching beyond the academic world, including a broad segment of the population.”

Also, more recent research in decision-making has examined how to apply that existing knowledge—how to try to use people’s preference for default options to make better health-related choices, for example—but so far there has been little research on how the new internet environment has changed the manner in which decisions are made, Simonson says.

“People today can easily and quickly access a lot more information that they used to,” says Simonson. “That fundamentally changes how people make decisions, and there’s all kinds of implications and potential new research questions and theories.” Marketing executives, brand managers, and sellers both online and offline are hungry for more information about how consumers think and make decisions when surrounded—even overwhelmed—by information.

Consider brand names. One of the main functions of brands has been to serve as proxies for quality. But “if you can access better information about a product’s quality, perhaps you’re less likely to rely on imprecise proxies like brand names, price, and where a product is made,” Simonson says. Researchers might study shoppers’ regard for an item’s brand name in light of online reviews and other information about its quality.

Another area to consider is whether old-fashioned drivers of product adoption—such as the ease of observing and trying innovative products — still matter. Today’s consumers can view product demonstrations on YouTube, read comments on social media, and download PDFs of product specifications and owners’ manuals. “We have a great deal of information about products, sometimes even before they’re introduced,” says Simonson. Researchers could study how those and other types of online information affect consumers’ acceptance of new products.

Simonson also suggests that, ironically, even though researchers have finally persuaded the general public that people are often irrational, the new information sources actually make people less susceptible to irrationality. For example, it is much harder today for marketers to lead consumers to buy Product A by showing them a Product B that appears less attractive than Product A. The reason is that consumers can easily check out Products C, D, and E to determine whether A is truly desirable or simply less undesirable than B.

Determining how consumers pick and choose among the vast amount of information in cyberspace is another area that marketers still know little about. What factors influence what information they select and how they sort and organize it? This is a key question because what consumers choose to see and how they view it can largely determine what they buy, he says.

Online reviews, for example, are everywhere, but more study is needed to determine whether reading them leads consumers to give less weight to other factors such as brand name and price. What makes consumers ignore reviews and how conflicting reviews affect purchase patterns are still largely unknown.

Traditionally, the set of products a shopper browsed, or “consideration set,” was predictable and limited to only a few well-known brands or less expensive models, says Simonson. But today’s consumers often consider both familiar and unfamiliar options that appear on search results at the time that they are about to make their decision, significantly broadening the consideration set.

These kinds of questions, says Simonson, “put consumer behavior front and center and are important for studying decision-making and marketing in general.”

This piece was originally published by Stanford Business and is republished with permission.

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