Information Cascades in Advertising Methods
In class we learned about the concept information cascades, which occurs when a person observes the actions or behaviors of others and follows regardless of their own predispositions or private information. The “cascade” occurs when people sequentially follow the crowd based on the decisions of people made before them. In this article, this idea is applied for branded products and how information cascades have affected how businesses and companies advertise their brand and products.
In this age of quick knowledge transfer through the internet and social media, as well as the prevalence of online shopping and websites dedicated to reviewing product quality, information is transferred from person to person incredibly fast. Specifically, people can find information regarding products and reviews for the at the palm of their hands. Information from other buyers about the product quality can be read and interpreted by potential buyers, affecting their decision to buy the product. This information cascades to other potential buyers. This differs from the past, where people could not easily find information about products, and had to use their own judgement to decide whether or not to buy a product.
This article discusses how consulting firms have been moving companies to switch focuses in their advertising. Due to the cascading of information as a result of internet reviews, people in general have become more skeptical of commonly known brands and such brands have been losing loyalty. Rather than people only seeing the product as it was originally marketed, they also observe the actual merits and demerits of a product. As a result, companies have been moving to advertise more “authenticity” in their brands. Surveys have showed that people value such “defined heritage” and “well-defined values” in their companies. This is in attempt to display to potential customers that their products, perhaps despite what other people say, have defined values and “honest.”