Sunday, July 26, 2009

Conceptual consumption

Rob Walker’s column in today’s New York Times Magazine uses the example of the retail chain “Lululemon” to expand on the concept “conceptual consumption” that Dan Ariely and Michael Norton recently coined as a new technical term. Lululemon is one of the brand examples where the actual product usage is going further and further away from its original core product benefit, in this case practicing Yoga in the appropriate clothes. Lululemon’s product are bought increasingly by consumers who have never done Yoga and who have no intention of every practicing, they are buying into a particular life style and attitude that the brand represents.

This notion is not a truly new concept. The whole SUV category lived for a long time on consumers who never really needed the functional benefits of a SUV but who wanted to be part of a particular life style, being the Hummer as its most extreme representation. Another good example is Nike’s extension of its running shoe usage beyond real running. Most Nike’s running shoes will never experience a speed of over 3mph, but they carry the emotional benefit of the “Just do it” potential.

But Dan Ariely and Michael Norton still have a relevant new idea that warrants attention. Their compelling distinction between physical and conceptual consumption reveals instances where consumers are willing to trade off negative physical consumption aspects with a higher perceived conceptual consumption. Most marketers heavily used distinction between rational and emotional benefits of a particular product or service does not seem to be necessarily wrong but Ariely’s work suggests a deeper understanding of consumer’s behavior. Any brand manager needs to realize that the rational and a large part of the emotional benefits of a brand remain on the physical level of consumption. Ariely and Norton demonstrate how our understanding of the interaction between physical and conceptual consumption are critical to understand consumer and a particular brand in their lives.

Lululemon is in the good position to provide comfortable and attractive clothing while offering a conceptual consumption aspect that ensures premium prices. The high price for a Hummer as part of its conceptual consumption worked only as long (despite all its clearly physical/functional deficits) as it was able to allow the consumer to experience its conceptual values. When the conceptual context and surplus of the Hummer brand started to disappear, its functional failures in non-war like situation became too apparent.

Behavioral economists like Ariely and their concepts will increasingly influence the field of marketing. We should be welcoming it.


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