Do Consumers Think too Linearly?
The demand for sustainable products that are produced in a socially responsible manner increased in the last couple of years. To tag such products, and potentially change consumer behaviour in a certain way, very often, food labels are used. The deliberate design of labels might steer consumption in a socially desired way – known as "nudging" in behavioral economics. However, the design of labels could also be used to brand and advertise products. The focus of the project is to investigate to what extend the design of labels changes the willingness to buy sustainably produced products or the willingness to pay higher prices for them.
Together with the Nuremberg Institute of Technology, we investigate in an experimental conjoint study, how the design of the animal welfare label, which is commonly used, changes the demand for sustainably produced products. In its current version, the label implies a linear relationship between its different levels with respect to animal husbandry or welfare.
The actual relationship between the levels, however, is non-linear. This divergence of the real relationship and the linear interpretation of the displayed label levels might influence consumption behavior and thus demand for certain products. To analyze this effect, an online experiment was conducted, experimentally varying the visualization of the label between two experimental groups to measure the influence of the visualization of the label on sustainable consumption.
Since product labels aim to give consumers orientation and help to make certain product qualities and attributes tangible, marketers need to understand how the design of a product label affects consumers’ perception of such labels and, thus, consumption behavior. In this project, we give first insights by showing that label design could lead to biased perception that leads to biased consumption with respect to preferences.
- Product labels should contain information that makes products of different label or quality levels directly comparable.
- If this information is missing, consumers tend to make assumptions about the quality.
- This leads to consumption of products which do not match their preferences.
- This is especially true for price-conscious consumers who are more likely to chose the higher-quality and higher-priced product when all necessary information is available.