The Fog Light Effect

Why do consumers pay more for product features they never use? The answer is complex, but cracking it can provide insights that would help most businesses.

The fog light effect

Consider this: Fog lights are not compulsory under Australian Design Rules for car design; in fact incorrect use of fog lights is illegal in most places. According to the Australian Bureau of Meteorology, heavy fog within Australian cities is not a critical climactic condition and we all know anecdotally that Australian drivers hardly ever encounter fog. Yet, six out of every ten Holden Commodores (Australia’s most popular car) are sold with fog lights.

  • Spoilers, speedometers measuring far beyond the car’s theoretical top speed (let alone the legal speed limit) and side air intakes are other logic defying examples of what we’ve dubbed the fog light effect, and it applies to much more than just the automotive world.
  • Premium audio speakers with operational frequencies up to 80 kHz, well above the audible maximum of the human ear of 20 kHz.
  • Digital SLR cameras with a wide array of manual control yet most people never take their camera off its automatic setting.
  • Luxury watches with multiple dials, displays, buttons and functions etc. when all most people want to do is check the time.
  • The vast majority of SUV and 4WD vehicles

These examples demonstrate that consumers will purchase something more expensive for functionality they do not use.

Aspirational motives

One compelling argument could be that fog lamps, complex watches and manual control cameras are status symbols, and reflect what people aspire to rather than what they actually do.

Returning to our fog lights example, these provide a relatively simple, low cost and modular way to differentiate the appearance and visual hierarchy of a car. Overtly visual product features help justify the price difference between product variants. The advertisement of a product’s status represents both aspirational and avoidance behaviour. The base model product is instantly recognisable as being devoid of the features found on more expensive models. Consumers can be swayed to selecting a more expensive model as they don’t want to be seen to be purchasing the cheapest product.

In its most recent Consumer Trends Report, Monash University’s Australian Centre for Retail Studies presents another potential explanation. The report, suggests the growing trend of the ‘Bored Consumer’. The Bored Consumer demands more variety, greater involvement and more personalised products.

Giving the consumer more customising choice in their product gives them a greater feeling of engagement. The Consumer Trends Report points to an increase in the Bored Consumer looking for cosmetic customisation options in their product purchases.

Ruth Mugge in her PhD research for Delft University of Technology suggests that mass customisation is a method of increasing consumer attachment to products. The product becomes more self expressive of the user’s identity, self expression in turn having a positive effect on the level of attachment to the product.

Turning fog into profit

What does all this mean for companies developing and marketing new products, or reinvigorating existing product lines?
Separate to branding, although not mutually exclusive, pre-planned levels of product features give consumers an aspirational hierarchy. Product features that can be optioned on in a modular fashion also give the purchaser more ownership of and involvement in the purchase. Whilst features naturally add cost to the product, as a product moves up the aspirational hierarchy, per unit profit margin can be increased by the manufacturer. That is, add $2 but charge an extra $10.

A key element in achieving an aspirational hierarchy and the ability to offer mass customisation is the design for manufacture (DFM) of the product. DFM in conjunction with the product’s manufacturing systems can be employed to improve the flexibility of the product offering. This leads to the manufacturer being able to offer products with increasingly diverse features and options, broadening their market appeal.

Not all products are subject to the fog light effect. But those that are should be carefully designed to allow people to indulge their aspirations.

http://books.google.com/books?id=RUDTFBbb7jAC&pg=PA248
Australian Consumer Trends Report 2010, The Australian Centre for Retail Studies, Monash University, Faculty of Business and Economics, 2010
Pine II, J. (1992). Mass Customization: The New Frontier in Business Competition. Boston, Mass.: Harvard Business School. ISBN 0-87584-946-6.
http://www.icsid.org/feature/current/articles563.htm