Last summer I went on holiday to New York, and on my trip my wife commented on the large number of Dr Dre Beats headphones you see on people walking around the city. What is so special about these headphones? Aside from an apparent good sound quality, they are unlike most headphones in that they are recognisable, flashy and obviously belong to this brand.
When the idea for a flashy brand of headphone first arose, backed by a famous music star/producer, industry insiders dismissed it. These industry experts explained patiently to the representatives of this music star that the industry was moving towards smaller and more discreet headphones – not ostentatious and ‘show-offie’ ear based listening devices. If the headphones came without cord and the bud could be hidden in the ear – that would be their idea of the future. However, it turned out that those industry experts were WAY wrong. In 8 years Beats by Dre have gone from zero to the biggest brand in headphones, purchased by Apple for $3.2bn and make up 64% of the US market in the >$100 category.
In a similar way, in California, specifically Southern California, when solar panels first became (reasonably) economically viable the companies who installed them would assess the sun’s trajectory and install them on either the front or back of the house, depending on which would give the greatest solar yield. However, more than 90% of the buyers said that they wanted them on the front of the house, without regard for the greater efficiency of the panels if they were installed on the back. This was much to the bafflement to the panel providers who assumed (apparently wrongly) that customers were getting these primarily to reduce energy bills and help the environment.
So what is going on in these two examples? Customers seem to not be behaving as industry professionals are predicting. Well, what these industry insiders didn’t consider was the power of Signalling.
Signalling theory denotes that we, consumers/people/humans, will use observable & extraneous details to signal to others that we are in some way superior. A bit like the peacock’s tail (although that example is more specifically sexual selection), we find things to display as social cues to those around us.
What Beats headphones’ distinctive style denotes is that I can afford these premium headphones, that I care about music quality, and I am therefore, in some way, a ‘desirable’ person as a result of these factors. Homeowners with solar panels on the front of their Californian houses show their neighbours that they care about the environment and are wonderfully considerate people.
So our lesson from those examples (and for the record, there are many more) is that we all want flashy and ostentatious cues of wealth, status and style.
Interestingly however, Signalling theory does not work for everything, and does not work in product isolation without a powerful brand behind it. Take Google Glass. Google Glass should actually be a great example of industry insiders not considering the power of signally theory. Commentators have frequently complained that the glasses need to look less like someone has strapped a video camera to their face, and more like some delicate reading glasses – however, according to signalling theory Google might actually want to make their glasses MORE ostentatious – so that no one could possibly mistake this high-end tech for some mediocre reading glasses. However, now comes the power of brand. Google Glass wearers have been hugely tarnished with the brush of ‘Glassholes’, which has meant that it has become disadvantageous to signal.
So what have we learned? With a strong brand (Beats) or strong ‘social/moral’ good (solar panels) or even both (think Toyota Prius), signalling can have a large impact on consumer choice. In addition, it highlights the facileness of ‘industry experts’ sometimes being too navel-gazie and not considering the broader world and the intricacies psychology has on motivation.
Brands and markerters can use the knowledge of signalling theory to help inform their own promotional efforts, in conjunction with strong brand investment.
Now, please excuse me whilst I go move my solar panels.
(Full Post on the Delineo Blog - https://www.delineo.com/blog/branding/signally-theory-displaying-peacock-tail/)