Occupy Wall St. -Capitalism and Democracy Clash

Democracy cannot live in a Capitalist system.

The idea of democracy is that people have equal voice and vote in decision-making. The capitalist idea is that people working in their own self-interest will result in public good. These ideologies clash in the American system because capitalism corrupts true democracy. Capitalism allows those with the most resources (corporations and the wealthy) to buy a BIG voice for their self-interest. Their single voice is so large that it drowns out the smaller, disparate voices of the many. It commands more influence than the small voices and wins favorable laws, tax breaks and business incentives from the government. The Occupy Wall Street movement fascinates me because people are uniting their small voices to fight back against corporations. In six weeks, the “Occupy” protest has grown to over 100 U.S. cities. Americans are waking up the fact that capitalism and democracy don’t mix and that “being free” means liberty from big government and big business.

Brand Selection as a Heuristic

Ninety percent of the time I buy Charmin, Colgate and Poland Spring when I’m picking up toilet paper, toothpaste or bottled water. Why am I so brand loyal when the shelf I’m staring at is flooded with parity products?

It’s because in these categories, my brand selection has become a heuristic.

Heuristics are mental shortcuts or rules of thumb that people employ during inductive reasoning and decision-making. Heuristic thinking often occurs at the unconscious level; we are not aware of taking these mental shortcuts as we go through our day. Using heuristic processing allows us to focus our attention on other things, which is an important part of its usefulness. The processing capacity of the conscious mind is limited. You can think about only so many things at once, and it is difficult to do too many things at the same time, such as picking up toothpaste at a busy Wal-Mart and thinking about where you feel like going for dinner.

How does this work for brands?

Throughout a lifetime people acquire information actively and passively about the things of the world.  As we accumulate information through trial, referrals, media and advertising we develop brand preferences, loyalties and ultimately heuristics.

Creating a favorable purchase heuristic for your product is marketing gold. It puts your consumer in tunnel vision mode in which they specifically seek out your brand. It turns brand selection into a mere reflex, rather than a thought-out process: I quickly scan the aisle for Poland Spring and grab it, rather than examining all waters, their prices, current sales, new products, etc.

Many things including the mood of the shopper, the environment, the involvement level of the category, and the likeability and familiarity of the brand contribute to the creation and strength of a brand purchasing heuristic.

Heuristics are valuable to people because they require minimal cognitive resources. In terms of decision-making, heuristic thinking can be adaptive because it allows for quick decisions rather than weighing all of the evidence each time. How many brand purchase decisions have become a heuristic in your life?

Price Matching: the Bane of Retailers

Price match guarantees are not good for brand building. These policies at stores like Staples, Best Buy, Wal-Mart and Home Depot work to commoditize their brands, not build them.

Last week I went shopping for a DVD player. I had a $10 gift card to Best Buy, so I committed myself to that store. I compared the DVD players on the shelf, picked my favorite and then took out my smartphone to get a quick price comparison. Scanning the barcode of the Samsung DVD player with the ShopSavvy app instantly brought up other stores’ prices for the same product. It even showed what the DVD player was going for on Amazon and eBay. In less than 30 seconds I learned that Sears carried the same DVD player for 40% less. Once I had the Sears price, I was able to get Best Buy to match it. At this point, I was no longer shopping at a branded store, paying a premium for the Best Buy brand. I was at a commodity electronics shop. Without ShopSavvy or the price match guarantee I would have purchased the DVD player at BestBuy’s asking price. But, my smartphone enabled me to get information from competitors and I saved money that I would have spent at Best Buy regardless.

Brands exist to differentiate products beyond mere price. A likable and clearly differentiated brand is a powerful emotional reason to purchase one product over another. Price match guarantees are not a good strategy for retail stores because they create parity, not difference. In the past, few people took stores up on price matching policies; however, with today’s technologically empowered consumers, the need for powerful branding and smart retail strategy is essential to profitability.