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Brand Power?

With a blizzard coming, Bryan Caplan was surprised by what he found at the grocery store:

…By the time I got to the grocery store last night around 11 PM, many of the shelves were unsurprisingly empty.

Many, but not all.  They were out of milk and bread, but there was still plenty of cheese and chocolate.  That was easily explained – people knew they could shop again in a few days, so they only needed to stock up on staples.  But the more I looked around, the more puzzled I was. 

Here’s what I noticed: For any given type of product, the most popular brand always sold out first. There were no Eggo waffles, but plenty of Wegmans brand waffles.  All the national brands of hot dogs and sausages were gone, but there were plenty of obscure sausages still on the shelves. If you broadened the categories, the pattern remained.  In produce, all the bananas were gone, but there were still plenty of apples.

You might say, “What’s the puzzle?  Of course the most popular stuff sells out first.”  But that’s a feeble explanation.  After all, if X is ten times more popular than Y, then you’d expect stores to simply carry ten times as much X as Y.  Why would X sell out faster in a blizzard if stores have already taken its greater popularity into account?

The modeled behavior blog offers something sensible but I don’t think it fully explains what’s happening:

The driving factor here is that the amount of shelf space devoted to a product has an impact on it’s sales. In marketing science they refer to this influence as space elasticity. One reason this occurs is because of exactly what Bryan observed: the more space you have, the less likely a product is not going to be there when you want it. More important than this though, is that more product space gets peoples’ attention, and probably signals something about the demand for that product. If there’s a lot of space devoted to a product that means a lot of people buy it, which influences people via social proof. There’s an interesting behavioral story here about why space influences demand, but for now suffice it to say that it does.

I think there are multiple factors (all working together): In times of stress our brains turn towards familiarity (Bias from stress-influence nudges us towards the availability bias). If we’ve had a good experience with Kraft Dinner in the past and we know a storm is coming we don’t want to take a chance on a store-brand (uncertainty avoidance).

We are also creatures of habit—if we normally buy Kraft Dinner and it sells out, we do what we normally do which likely doesn’t lead to buying the store brand (we substitute with something else).

There is also an element of scarcity—subconsciously we know national brands will be more desirable to others so we desire them more.

And then there is signalling. After the national brands noticeably start selling more there is also an element of social proof that comes into play (KD is selling quick, everyone is buying it; I need to buy it…).