Brand heuristics: how we have all bought into the murky world of murketing.

I was recently sent a preview of New York Times' consumer columnist Rob Walker's soon to be released book Buying In and at the same time I was looking at some recent published research on the role of heuristics in consumer choice. It was timely.

Walker's book, also subtitled The Secret Dialogue Between What We Buy and Who We Are, underlines two main ideas - what he calls murketing and the creation of a desire code - as the basis of this "secret" dialogue.

Murketing, Walker defines, in two parts. First, it refers to what he describes as the increasingly sophisticated tactics of marketers who "blur the line between branding channels and everyday life", and secondly, through the "consumer embrace of branded, commercial culture" or what I would describe as participant marketing, "the modern relationship between consumer and consumed defined not by rejection but by frank complicity".

The second part of Walker's thesis surrounds something he calls the Desire Code, "the complex of factors, rational and otherwise, that spark us to make particular purchase decisions" but what he was really doing was identifying what neuroscientists and those at the sharper end of branding already have a name for - brand heuristics.

Brand heuristics IS the basis for the creation of the desire code. Essentially, heuristics are simple, efficient rules we use which are hard-wired by evolutionary processes or are learned via experience. They explain how people make decisions, come to judgments and solve problems, typically when facing complex problems or faced with incomplete information such as when they go to buy a particular product or consider a service. Heuristic rules work well under most circumstances, but in certain cases lead to what are described as systematic cognitive biases.

It is these cognitive biases which branding trades on. For example, in his 1899 book, The Theory of the Leisure Class, economic theorist Thorstein Veblen identified a penchant for people to perceive more expensive goods as being better than inexpensive ones (providing they are of similar initial quality or lack of quality and of similar style). He found this even holds true even when prices and brands are switched; so putting the high price on the normally relatively inexpensive brand is enough to lead people to perceive it as being better than the the other product that is normally more expensive. It's the typical Pepsi vs Coke taste test, which Walker also cites in his book.

Brand heuristics (and I have struggled to find a single simple definition) so here's mine: is a system of organised and systemic visual, verbal, olfactory and emotional cues and evidence that trade on and or create cognitive biases. In effect, this is Walker's desire code.

Walker sees the goal of branding to "narrow the range of actual differences in commodity attributes" to create "a different kind of value". And he's right. Brand heuristics puts in play, for good or better, the great sleight of hand. How else do you explain the desire to buy Hermes' Birkin Bag (see pic of Roger Federer from a recent campaign) for $16000 with a waiting period of six years versus an eBay knockoff for $169.99, which you can get now. Both, as Walker acknowledges, are likely to be of similar quality with little variation. So it's back to the desire code, the brand heuristics.

Or, as I have noted in DIFFUSIONblog 14/7/05 Replacing place, the specificity of luxury brands, what happens when Prada begins manufacturing their bags in the same factories that produce bags for Target?

It is murketing, as Walker puts it, that is being used to affect a great change in how we perceive and participate in brands. He cites examples of people signing up with "word of mouth" firms to become what are commonly called "brand ambassadors" you see on CraigsList postings who can spread the news about some new product or the hundreds of thousands of people submitting their own reviews of services and product offerings in places like Yelp.com and Trip Advisor.

So while Walker doesn't present us with a lot of new ideas here and he hasn't looked around at the research, he's good at filtering the ideas and packaging them up in a readable way. While many of these same examples cultural and brand critics have been citing for some time (it's the usual suspects like Timberland, American Apparel, Red Bull and iPod), what he does do successfully is popularise the idea of what I call participant marketing and the use of "desire codes" as a simulcra for brand heuristics, the successful and perhaps somewhat accidental exploitation of these hidden biases by both brand owners and their agencies.

Walker's book is released in the United States on June 3.

Prada at Kmart: luxury brands and status abandonment.

It's only a small thing. But as we all know small things can lead to big things.

But the release of a new Prada fragrance, Tendre (selling for $79.00) in the Sydney Mother's Day catalogue for Kmart Australia, certainly signals to DIFFUSION that Prada seems to be heading down the same road of luxury brand dilution that destroyed the once great Pierre Cardin, nearly brought down the house of Calvin Klein and which threatens so many brands in this market.

Sure you might argue that it's only perfume and for this brand a cheaply priced one at that, but the democratization of luxury brands seems to be destroying those aspects of a luxury brand (exclusivity, price, access, aeesthetic) that denote these brands.

It's fact we noted in our blog The Defining Essence 20 October 2005 and one that seems to have escaped Prada's owners as they take the brand into the mass luxury market.

Perhaps the Prada licensees haven't read the definition of luxury that in 2000 the European Commission used to review Prada's role in the market as part of a ruling on it and LVMH's acquisition of Fendi. What's important about this ruling is that it is one of the few non-academic reviews of the operation of luxury goods.

The Commission described "luxury products" as "high quality articles with a relatively high price, marketed under a prestige trademark". As such luxury goods were considered to operate in a single product market because of two factors "substitutability from the demand side: the idea of acquiring a luxury good is linked to prestige rather than consumption of a precise item" and "substitutability from the supply side" or where most of the producers of luxury goods manufacture a broad range of products such as ready to wear, leather goods, fashion or, in this case, perfume.

This definition fits in comfortably with our understanding of both the pricing and accessibility attributes of luxury brands. More importantly, the definition attaches the generally accepted idea that prestige is also linked to acquisition and not the actual consumption of the item. Which is probably to say that a lot of women will see the Kmart catalogue and think "I have to have this Prada perfume because it is a such a luxe brand".

What's also interesting from this ruling is the Commission also connects both the transactive distance of luxury brands and the aesthetic of their environmental setting to their definition, noting that Prada itself indicated that "the common denominator is the importance of qualitative requirements designed to maintain the image of prestige, exclusivity and the high quality of the brand (e.g. location, the nature of the external appearance of neighbouring shops, decoration and fittings of the outlet which should reflect the prestige of the brand)."

This hardly sits well with my knowledge of my local Kmart located in a suburban shopping mall which hosts a Baker's' Delight, Go-lo and a Wendys and where Prada perfume is likely to sit alongside the latest offering from Paris Hilton in aisle six.

So, by their own definition Prada not only seem to be falling out of the luxury goods market in their attempts to market mass luxury but also are defying some of the basic principles of luxury brand management. These are:

1. creating distance, a no-mix area or barriers to entry for those who are not invited and by necessity of protecting clients from non-clients;

2. selective pricing and and exclusive distribution as well as the aesthetic dimension of the products; and,

3. the recognition and acknowledgement of its luxury status by all.

By all three counts Prada is failing. First, by not maintaining and enforcing these barriers to entry and allowing their licensee to flout it. Second, by using a selective pricing model more recognisable as that of a democratic, basic brand model (other brands of perfume can sell at Kmart at similar prices) and finally, there appears to be both an acknowledgement of its luxury status by very inclusion on the front page of the catalogue, and also an argument for a case of status abandonment by Prada's Australian licensee and, I suspect, its international license holders, for this latest distribution deal. I'm sure it won't be first such breach.