Product signals and market beliefs

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We often use hidden dimensions from attributes we can observe. We always rely on product signals that communicates underlying quality of products^[2].

For example: Someone trying to sell a used car makes sure that the exterior is clean and shiny.

When we have incomplete information about the product, we often base our judgements on our beliefs about covariation; the associations we have among events that may or may not actually influence one another^[3]. For example other signals or attributes consumers tend to believe coexist with good or bad products include well-known brand names, country of origin, price and the retail outlets that carry the products^[4].

                                                                  Country of origin                                                                 Brand name                                                     Retail outlet

                                                                               ^{[5]                                                   [6]                           [7]}      

Market beliefs

We constantly form assumptions about companies, products and stores. These market beliefs then become the shortcuts that guide our decisions-regardless of whether these beliefs are accurate.

Common market beliefs are:

Brand: The best brands are the ones that are purchased the most.

Store: Larger stores offer better prices than small stores, locally owned stores give the best service, newly opened stores usually charge attractive prices.

Product/packaging: Largest-sized containers are always cheaper per unit than smaller sizes, new products are expensive when they are newly introduced.

Higher price = Higher quality

The price-quality relationship is one of the most pervasive market belief. Many consumers consider price as the only relevant product attribute. For the most part, this belief is justified-we get what we pay for.

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For example: iPod shuffle offers the fewest features and is priced the lowest, whereas the iPod with video offers the most features and thus, priced the highest.

Country of Origin

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A product's "address" matters. Americans like to buy Italian shoes, Japanese cars and clothing imported from Taiwan.  A product's country of origin often is a determinant attribute in the decision making process. Consumers strongly associate certain items with specific countries, and products from those countries often attempt to benefit these linkages. For example: Consumers prefer French wine vs. American wine.

Ethnocentrism is the tendency to prefer products or people of own's culture to those of other countries^[10].

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Ethnocentric consumers are likely to feel it is wrong to buy products made elsewhere , particularly because this may have a negative effect on the domestic economy.

For example, in Bend It Like Beckham, Pinky says, "Why go to so much grief when there's so many good-looking Indian boys to marry?" 

The book talks about Swadeshi movement started in India in the Nineteenth century. This movement was started by Mahatma Gandhi in reaction to the British decision of dividing India into separate provinces^[12]. Swa means self and desh means country, so Swadesh is own country and Swadeshi would mean "of one's own country". This movement was started to attain self-sufficiency by using local products by boycotting foreign products^[13].