Rooting for the small guy
2 minute read
The business world has witnessed a trend in the last few years where large conglomerates like Pepsi, Colgate and Unilever are taking over small natural brands to signal a shift in their portfolio strategy towards natural and healthy products. However, do customers perceive these natural products differently when produced by large firms when compared to small independent setups? We try to find out.
A group of researchers in the US set about undertaking a few experiments with students to answer the questions whether consumers perceive products as more natural when produced by a small firm as compared to a large firm.
In the first experiment they informed they divided the students into 2 groups and asked them to read the product description of a towel (which informed them that the material was produced by a mix of organically grown cotton as well as regular cotton) as well as feel a small sample of the towel. After examining the products they were asked to rate the product from (1-7) on how natural they thought the towel felt. The first group was informed that the towel was produced by a small independent company of 20 employees while the second group was informed that the towel was produced by a large firm of 20,000 employees.
Upon examining the results the researchers observed that even though the towel sample was the same for both groups the group that was informed that the towel was produced by a small firm rated the towel 5.24 on the naturalness index compared to 3.65 for the group that thought the towel was produced by a large firm.
The researchers repeated this experiment but this time they changed the product to a hand soap and asked additional questions (Beyond perceived naturalness) to ensure the specificity of the question wasn’t influencing the results. They asked questions regarding packaging and soap feel as decoys.
The results were consistent with the first experiment where the group informed about the small size of the firm perceived the hand soap to be significantly more natural when exposed to the above advertisement compared to those who thought the soap was produced by a large firm
These insights really makes one question the merit of the take-over strategy of large firms trying to get a natural makeover by acquiring small firms. In order to gain market share they may very well be destroying value for the very thing they lack.
Original research by Ana Scekic and Aradhna Krishna