Love, middle path and the Ikea effect

The effect works in marketing a product only if it's used in a practical way, writes Mukund Setlur

If you value and love something, you will probably assign more value to it. That is an inherent cognitive bias in us. We don’t need a behavioural psychologist to tell us about it — it is intuitive.

However you need psychologists to conduct experiments to prove such a bias exists and that is what three scientists — Dan Ariely, Michael Norton and Daniel Mochon —did. They called it the Ikea effect.

As part of the experiments, a set of people was asked to make origami “frog” or “flower” based on instructions. And another set was asked to assemble their own Ikea furniture, based on instructions. In both cases, they valued their creation and were willing to pay more for the items they created. In fact, they were ready to pay more than a professional for their effort.

Unique designs, clever retailing, and quality have made Ikea popular all over the world. Bulk procurement combined with flat shipping reduces transportation and breakage costs. The company does not assemble furniture. It encourages the customer to assemble the furniture which makes the cost of the product seem lower.

The consumer justifies the effort of assembling the furniture as it saves him the labour cost. This is called “effort justification”.

Once the assembly is complete, there is a sense of accomplishment. Many use this to indicate their social competence. This is another component of effort justification.

This combination of rational and emotional justification keeps the customer invested in the brand. This investment can allow companies to charge more for their product or service. Hence the investment is of immense value to customers.

Behaviour scientists recommend that the customers consider missed opportunity costs and add them to the product before purchasing a product or service that has the Ikea effect component.

How does the effect work?

Suppose you are not a do-it-yourself manufacturer or a hobby kit manufacturer. Can you use the Ikea effect?

When you allow the consumer to participate as the co-creator (or a creator in the case of Origami) of the product/ service, you are using the Ikea effect. Choosing pizza toppings or ice cream toppings is the simplest example.

It is worth exploring ideas of how to get the Ikea effect to work for you because the customer gets elevated from being just an owner to a co-creator of the product.

When you choose your own set of flavours and toppings in an ice cream store, the possibility of you regretting “your choice” is still there. However, the ice cream shop gets a reprieve because you have decided on the toppings.

Here are a few things to consider if you want to use the Ikea effect on your service or product.

Love and Labour cost: Developed countries have higher labour costs compared to the developing world. This is the first consideration before you venture into creating the do-it-yourself versions. In developing economies it is better to concentrate on a sense of achievement and social signalling benefits rather than rational reasons.

Reduce the initial price barrier: You can offer the basic version of the product and the add-ons can be given as do-it-yourself features. For example, a motorbike company could offer customers a series of accessories which can be purchased anytime and fitted by the customer himself. Similarly, a SAAS product integration with API or the company CRM as a do-it-yourself (DIY) option is priced at a lower value.

Difficulty and the middle path: Ikea effect, if planned well, can make a customer advocate the product in his/her circles. The co-creation process must be intuitive and complete with instructions. Good use of an Ikea effect “frames” simple modifications as new variations. Compared to the older versions of Microsoft, the newer versions have added multiple intuitive options to make the creation of reports and presentations easier. A bake-your-own cake brand launched in the US decades ago failed because it was too easy to make. All one needed to do was add water. When the same brand was re-launched, the company asked the customer to add eggs before baking. Select the middle path if you want Ikea to work for you.

Points of failure: Successful execution of a “Do it yourself” project creates a positive Ikea effect. If the process of assembly or co-creation is complex and consumes a lot of time, it leads to customer dissonance. The likelihood of the customer assuming responsibility for incorrect assembly will be minimal. The product or service helpline or the communication from the company will be blamed. A rigorous testing process to explore points of failure must be examined. Some of the aspects could be the sequence of assembly or the simplicity of communication.

With an increasing number of products and services being sold through the web commerce mode, marketers can definitely create structures of co-ownership. This effect can add more value to the brand.

(The author is a marketing professional)