Virtual advertising- Why so expensive?

You may heard that it costs more than thousand pounds for just exposing the brand in the foot-ball stadium for a minute. Does it really worth it? It does not explain anything about the brand or a product, why is it still so expensive to expose just the brand logo in such places. This can be explained by heuristic.

Availability heuristic is defined as a ‘cognitive heuristic in which a decision maker relies upon knowledge that is readily available rather than examine other alternatives or procedures (Tversky & Kahneman, 1973).  Availability means something that can be accessed easily at any time. People would believe that something can be recalled must be important.  People tend to recall or remember something that they experienced or saw very recently. For example, if a consumer who is willing to buy a phone and if he remembers that he saw a ‘Samsung’ logo on the street, there is possibility that it pops up in his mind unconsciously and would look for a new phone in Samsung.

Representativeness heuristic was also defined by Tversky & Kahneman (1973) as a cognitive bias in which an individual categorizes a situation based on a pattern of pervious experiences or beliefs about the scenario. For instance, when a person was walking down the street and faced with a bulldog. If the image of the bull dog matches with the image of ‘dangerous creatures’, the person would avoid that dog. The person really do not know whether the bulldog is trained dog which is very friendly to humans or not. Since, the person compared the image of the bulldog with the prototype in his memory, he avoided the bulldog.

Tversky & Kahneman (1983) supported the idea of representativeness heuristic with an empirical evidence. The experiment is also known as ‘Linda Problem’. The subjects were exposed to the status saying that “Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti- nuclear demonstrations. After this explanation, the participants to state which of the following status is more probable.

1.       Linda is a feminist.

2.       Linda is a bank teller.

3.       Linda is a bank teller and active in the feminist movement.

The result shows that the participants chose number one the most and then number 3. This result is really different from the reality. The probability of Linda being a feminist cannot be larger than Linda being a bank teller since the absolute number of bank teller is much bigger than the number of feminists in real life. This result can be explained by the ‘representativeness heuristics’.  The participants believed that feminist can be more representative rather than the bank teller.

Grether (1992) also supported this idea with some empirical evidences. The result demonstrated in this paper showed that the majority of the participants in behaved reasonably but of those lacking financial incentives a larger proportion gave absurd responses.


Positioning is one of the marketing strategies which uses this representativeness heuristic. The number one brand in most of the markets is considered to be most representative of that market. For example, Coca- cola is considered to be most representative when people think about cola.

Therefore, if the consumers are merely exposed to certain brands, they would think that the brand represents that specific market. This would definitely affect the consuming behavior of the customers. 

References

Tversky, A., & Kahneman, D. (1973). Availability: A heuristic for judging frequency and probability. Cognitive psychology, 5(2), 207-232.

Tversky, A., & Kahneman, D. (1983). Extensional versus intuitive reasoning: The conjunction fallacy in probability judgment. Psychological review, 90(4), 293.

Grether, D. M. (1992). Testing Bayes rule and the representativeness heuristic: Some experimental evidence. Journal of Economic Behavior & Organization, 17(1), 31-57.