why we buy

If you didn't know anything about marketing, you might think it was important to advertise what a new product does. The makers of HeadOn aren't so naive. Their commercials have an actor repeating "HeadOn. Apply directly to the forehead" while another presses what appears to be a glue stick to her brow. No one mentions that the substance is supposed to cure headaches homeopathically. Early ads did, but focus groups showed that the superrepetitive version made people remember the name the most.
It's not a bad strategy, considering how consumers respond to names that they recognize. A flurry of new research is shedding light on people's tendency--when presented with a known object and an unknown one--to assign more value to the thing they've heard of, even if they don't know anything else about it. It's easy to imagine the evolutionary roots of a go-with-what-you-know principle--avoiding poisonous plants, say--but these mental shortcuts suit certain modern problems as well. For example, studies have shown that people are able to pick which of two foreign cities is larger or who will win Wimbledon just by employing the assumption that if a name is recognized, it's likely to be more important.
Enter the world of marketing. The power of name recognition helps explain the multibillion-dollar business of plastering brand names on everything from ballpoint pens to NASCAR racers as well as the thriving cottage industry of reviving brands that have fallen out of mainstream use, like Ovaltine chocolate malt and Westinghouse televisions. "We tend to believe, If I've heard of [a product] before, it's probably because it's popular, and popular things are good," says Dan Goldstein, an assistant professor of marketing at London Business School.
In 2002, he and Gerd Gigerenzer, a psychologist at Berlin's Max Planck Institute for Human Development, dubbed this effect the recognition heuristic and started detailing how it is used to manipulate consumer decision making. Gigerenzer's new book, Gut Feelings: The Intelligence of the Unconscious, describes a study in which people tasted peanut butter from three jars. Each jar contained the same peanut butter, but 75% of participants thought the contents tasted better in the jar that had a name-brand label on it. In another study, published this month by researchers at Stanford University, children given the same French fries and chicken nuggets in different packaging preferred the taste of the food delivered in McDonald's wrappers. "Ideally, a manufacturer increases the quality of a product, and that in turn increases word of mouth and media coverage," says Gigerenzer. "But advertising shortcuts this process. There's no longer a connection to quality."
That's true even when the stakes are high. A study published last year looked at how we choose an airline. Researchers at Germany's University of Cologne asked participants to pick between two carriers--one familiar and one unknown. Predictably, an overwhelming number chose the airline they recognized. What was surprising was that many stuck with it even as the researchers gave negative cues about its safety. With three troubling bits of information--like past accidents--67% of study participants remained loyal to the airline they knew.
But, as that paper argued, going with what you know isn't inescapable. Brain-scan studies indicate that choosing among items is a two-step process, with the first being a subconscious decision whether to rely on the recognition principle. But you can also deliberately opt out. Why is it that you always buy Crest? you might ask yourself. It's not such a crazy question in a consumer culture in which we often know brands simply because advertisers want us to.