Invisible social incentives may encourage customer loyalty over time.
Invisible social incentives may encourage customer loyalty over time
Why do we see loyalty to companies such as Apple, or Sony, even if the products released by these companies are inferior? Why do people in America attach emotionally to certain "name brands"?
If the theory that behavior emerges from the environment is correct (operant conditioning/behaviorism).
And if it is correct that incentives determine behaviors (microeconomic theory, picoeconomics).
Then we would have to ask what incentives are creating irrational behavior in customers.
If a customer pays more for an Apple phone which has the same or worse features than a phone without the Apple name then it means customers are paying for the Apple name. This is because to be seen as a good person in society (to be socially desirable) might require using certain products even if those products are inferior or cost a lot more.
The concept of "Social Credit" which China uses is explicit and determined by the government. The social credit exists everywhere though and China did not invent it. Anywhere we see social rewards and social punishments we are seeing "social credit".
Social desirability bias reflects the fact that there are different social rewards and social punishments for different behaviors. If wearing an Apple iPhone makes a person look better to potential mates then they will do it. If being loyal to Apple (or Chinese equivalent Huawei) results in positive social consequences then people will do it. This is the case if all behavior is determined by perception of expected rewards weighed against expected punishments.
Because social rewards are invisibly distributed (unlike Social Credit in China) we have no way to really know whether customer loyalty is a natural trend or if it's a status competition side effect.
Summary
Humans may buy certain products due to the perception that it will make them more socially desirable. Similar reasons exist for why people may choose to obtain a college degree (signalling)
There may exist invisible social reward distributions in society. If the group of persons classified as the "good" are added to the whitelist then they would receive the rewards. If buying a certain product is perceived to get a person put on the "good" side or whitelisted then many people would buy the product and be loyal to the company as well if buying products from that company get them perceived as good.
If certain companies are seen as "good companies" and customers who buy from these white listed companies are seen as "good people" then an invisible social credit system exists. The perception of being good is to be socially desired, and this is a reward. To be socially undesirable is the social punishment.
When all of your purchases are transparent then there is no way to determine which of your purchases were for fashion or because you actually prefer that product.
References
- https://edition.cnn.com/2018/12/11/business/huawei-apple-china-tech-us/index.html
- https://en.wikipedia.org/wiki/Signalling_(economics)
- https://en.wikipedia.org/wiki/Social_exchange_theory
- https://en.wikipedia.org/wiki/Microeconomics
- https://en.wikipedia.org/wiki/Behavioral_economics
- https://www.picoeconomics.org/
- https://en.wikipedia.org/wiki/Social_desirability_bias
- https://en.wikipedia.org/wiki/Reward_dependence
Apple has always been lifestyle and fashion firm. Good and bad?
I can answer that best when I hold shares in Apple. I don't currently hold shares.
you do not need to hold shares in a company in order based upon available information to assess it under certain criteria, the same way you do not need law school diploma to comment law, or security clearance to distinguish democracy from tyranny.
You do if you want your assessment to be useful and appropriate. I cannot pretend to care about the fate of a company I have no stake in and then say my comments make sense. Just like I can give completely worthless legal opinions which amount to nothing more than "I like ice cream" and "I like the color blue" and who cares what I like?
The law cannot be interpreted easily without a legal degree which is why lawyers get paid such good money. I have an easier time making sense of medicine than I do law to be honest. I can interpret medical journals to a certain extent but law is like a totally different language to me.
When I'm discussing laws it's the equivalent of me telling the world how a certain law "tastes" to my mind. The taste of a law is so personal, so subjective, that what I think a certain law tastes like wouldn't be what another person thinks it tastes like.
To some other person the new law could be like their favorite food while to me it could be the most disgusting tasting smelling thing I've seen.
And neither of us who merely can express how the law tastes has any understanding of what the ingredients are or anything other than how it tastes to our limited sensory understanding.
The same can be said of music. A person who doesn't know much about music might think some pop song sounds good. A person who is classically trained might prefer some Jazz or something more sophisticated.
We don't ask a common person to read music notation to compare songs. We simply let them listen to it and tell us what they enjoy more. The laws are experienced by us non lawyers in the same way we experience a good or bad song. We don't know how to make a song, and most of us can't read music notation, but we know if it sounds good to our ears or not.
The "sounds good" is sentiment. Everyone has an opinion about anything (sentiment). Laws can be ranked by popularity (sentiment). This doesn't mean the people feeling or thinking a certain way about a certain law even know what the law does or what it means. We simply live through it.
So yeah, I don't need a law diploma to tell you if a law is pretty or ugly to me. Do lawyers care if I think a law is pretty or ugly? They just want me to follow the law regardless (which I do).
I said that to say, your perspective on goodness and badness is influenced by your position. If you're a big stakeholder in Apple then you are positioned to be positively or negatively influenced by the current perception of the company. The share price might go up or down based on this.
A "good" company in a quantitative sense is a company which produces profit for it's shareholders. In a qualitative sense it is a company which makes the world "better". Better is a value judgement which is subjective and at best determined as a sort of consensus.
Someone could be moral to their community if they think Apple isn't making the world better but Huawei is. They could receive all the praise, the social rewards, the prestige, from supporting Huawei instead of Apple. So how can someone like myself who has no economic stake in Apple (I don't hold shares), and no understanding of how my community feels or thinks about Apple, hope to answer the question? I cannot.
I think that good-bad taxonomy of companies or other collectives is ... baby talk.
In the brain of a person, any average person is going to have some subconscious internal scoring system. Mess up enough and you get put on the "bad" side of their mind. That simply means their internal score or reviewing system puts you as bad.
Sentiment is everything in business. A business can sell products easier if perception of the business is good.
Like in Godfather? Repeating 100 times ''nothing personal it is all business'' and at the end ''in business everything is personal''?
Personal means to be focused on the persons and not on what the business is doing. Business is about supply and demand. A service or product is in demand and a business supplies what is in demand. Personal is bad for business if it interferes with supplying the demand.
Is demand constant? Business is for-persons. Are they incentivised to supply or to be supplied?
I don't understand your reference.
How supply-demand are related? increase supply from zero to something, how it affects demand?
Humans are more like babies than robots. Mathematically speaking if you are trying to be precise about it then taxonomy of companies should be by score with ranges from the good to the bad range. The credit scoring systems are this way and are used to rate companies now.