Too Funny, for Everybody? How Fun Elements in Labels Decrease Willingness-to-Pay and Intentions as a Function of Risk Propensity Renaud LUNARDO, KEDGE Business School Francois DURRIEU, KEDGE Business School Bradley RICKARD, Cornell University AAWE Conference, June 10th-14th 2018

Motivation Companies have started to move away from the tradition of typical labels and are trending towards labels that incorporate fun elements

Research question Funny labels ≠ typical as usual  incongruity  confusion ? Differences among consumers? What individual difference may explain those differences? Goal of this research: to present a model of – and provide empirical support for – the effects of fun elements in labels and the moderating role of risk propensity in these effects.

Background on typical labels 2 conflicting theories The “preference for prototype” theory (Whitfield, 1983)  typicality increases aesthetic appreciation and purchase intent (Blijlevens et al., 2012; Campbell and Goodstein, 2001; Hekkert et al., 2003). Inverted U curve (Blijlevens et al., 2012; Meyers-Levy and Tybout, 1989; Schoormans and Robben, 1997)  a moderate degree of typicality that is preferred, over highly and lowly typical objects. Fun elements might lead in a decrease in positive consumers responses Fun elements might lead in an INCREASE in positive consumers responses

Positive effecst of fun elements Negative effecst of fun elements Background on fun elements in labels Positive effecst of fun elements Negative effecst of fun elements Enhances source judgments (Markiewicz, 1974)  lead to positive evaluations of the source. For feeling-oriented product categories (Weinberger & Gulas, 1992), redirects attention from claims, and distract from counterarguing, leaving consumers more susceptible to persuasive influence (Festinger and Maccoby, 1964). Evokes incongruity and a lack of fit with the usual visual codes usually employed  risk perceptions  more processing (Nabi, Moyer-Guse, and Byrne, 2007). May elicit more counterarguing (Petty and Cacioppo, 1986)  more discount of the message.

Positive effecst of fun elements Negative effecst of fun elements Hypotheses about fun elements in labels Positive effecst of fun elements Negative effecst of fun elements  Hypothesis 1: Labels that are perceived high (versus low) in the presence of fun elements in labels will lead to lower reassuring impressions.

Hypotheses about fun elements, intent and WTP People widely refer on physical appearance to judge objects (Fang, Singh, and Ahluwalia, 2007; Janiszewski and Meyvis, 2001). As visual cues, labels have the ability to generate evaluative judgments with consumers (Boudreaux and Palmer, 2007; Orth and Malkewitz, 2008), among which quality (Orth and Malkewitz, 2008) Hypothesis 2: Reassuring impressions will increase quality perceptions (H2a), thus mediating the indirect effect of funny labels on quality perceptions (H2b). Hypothesis 3: Quality perceptions will increase WTP (H3a) and purchase intentions (H3b); quality perceptions will thus mediate the indirect effect of reassuring impressions on WTP (H3c) and purchase intentions (H3d).

Background on risk propensity When consumers perceive high risk associated with a purchase, the congruently designed product is preferred to the moderately incongruent product (Campbell and Goodstein, 2001).  Risk is likely to moderate the effects of fun labels. Humor has been found to be related higher level of participation in risky hobbies (Martin et al., 2002) people who are more likely to engage in risky behaviors may also be more likely to respond favorably to humorous messages.  People high in risk propensity may react more positively to fun labels.

Hypotheses on risk propensity Hypothesis 4: Risk propensity moderates 1/ the effect of fun elements on reassuring impressions, such that labels that are high in fun elements will lead to less reassuring impressions for people who are low in risk propensity (H4a); 2/ the indirect effect of fun elements in labels on perceived quality through reassuring impressions (H4b), with a stronger negative indirect effect of fun elements for consumers who are low in risk propensity. Hypothesis 5: Risk propensity moderates 1/ the positive effect of reassuring impressions on quality perceptions, with a stronger positive effect of reassuring impressions on quality for consumers who are high in risk propensity (H5a); 2/ the indirect effect reassuring impressions on purchase WTP (H5b) and purchase intentions (H5c) through perceived quality, with a stronger positive indirect effect for consumers who are high in risk propensity.

The theoretical model

Method & Sample Between-subjects experiment, manipulating the degree of fun elements in labels (low vs. high). Sample: 271 US residents (59% male, MAge =33.69, S.D. = 8.84, ranging from 20 to 59) recruited online via a panelist.

Stimuli selection and pretest 3 steps: Selection on the Internet of a sample of 100 California (to avoid potential biases due to terroir) wine labels; A professional judge was asked to select 20 that vary in fun. Pretest: out of the initial sample of 20 labels, 54 American individuals evaluated online how fun and typical were 10 labels which they had been randomly assigned to.

Pretest ANOVAs with labels being included as the random factor and individuals as the fixed factor revealed a significant difference in fun across labels (F(1, 51) = 9.34, p < .05). No interaction between labels and respondents emerged (p > .05). Same pattern of results with typicality as the DV, with a significant difference in typicality across labels (F(1, 51) = 2.88, p < .001) and no interaction (p > .05). Two labels were selected for the experiment, based on their significant differences in how funny they were perceived (MHigh fun = 5.96, MLow fun = 4.26, p = .022) and the lack of differences in their perceived typicality (MHigh fun = 4.95, MLow fun = 3.88, p = .27).

Stimuli selection and pretest The label high in fun elements The label low in fun elements

The study: measures

The results: fun elements, reassuring impressions and quality (H1-H2) 95% CI = -.949; -.515 Reassuring impressions β = -1.19, t = -7.24, p < .001 β = .59, t = 10.49, p < .001 Fun elements in labels Quality perceptions

The results: reassuring impressions, quality, intentions and WTP (H3) 95% CI = 2.183; 3.983 Reassuring impressions Quality perceptions 95% CI = .294; .493 Purchase intentions β = .74, t = 13.02, p < .001

The results: risk propensity and reassuring impressions Negative effect of fun elements (β = -2.29, t = -5.94, p < .001) Positive effect of risk propensity (β = .18, t = 2.99, p < .01)  Cool Significant interaction (β = .28, t = 3.00, p < .01)  Still cool  Low risk-takers feel less reassured impressions than high-risk takers when exposed to the labels, but significantly more in the condition of the label that contained a high degree of fun elements.

The results: risk propensity and reassuring impressions Fun elements in labels Quality perceptions  The negative indirect effect of fun labels on quality perceptions through reassuring impressions is stronger for people who are low risk takers. 95% CI = .154; .980 Risk propensity - 1 S.D.: 95% CI = -1.306; -.740 + 1 S.D.: 95% CI = -.793; -.158

The results: risk propensity and quality Non-significant effect of reassuring impressions on quality perceptions (β = .11, t = .79, p < .01) Negative impact of risk propensity (β = -.35, t = -2.37, p < .05) Their interaction (β = .09, t = 3.02, p < .01)  Reassuring impressions lead more strongly to quality perceptions for individuals who are high (versus low) in risk propensity.

The results: risk propensity and quality WTP Reassuring impressions Quality perceptions Purchase intentions 95% CI = .154; .980 Risk propensity -1 S.D.: 95% CI = .814; 2.797 +1 S.D.: 95% CI = 2.472; 4.742

The results: risk propensity and quality WTP Reassuring impressions Quality perceptions Purchase intentions 95% CI = .017; .119 Risk propensity - 1 S.D.: 95% CI = .106; .372 +1 S.D.: 95% CI = .338; .579

The results: a sum-up

Overview of our Results When consumers face a label that incorporates a high degree of fun elements, they perceive the label less reassuring, leading to a decrease in perceived quality, and ultimately WTP and purchase intentions. These results differed depending on how much people were risk-takers: consumers react more positively to funny labels when they are high in such tendency to engage in risky behaviors.

Managerial contributions To be cautious when designing labels. Incorporating fun elements could be judged as relevant to attract attention, but the negative effects of funny labels on reassuring impressions, quality perceptions and ultimately on WTP and purchase intentions suggest integrating fun elements may primarily be considered with some distance. Segmenting their target on the basis of risk- propensity and design front labels with fun elements only for high- (versus low-) risk-taking consumers.

Thank you! Brad Rickard bjr83@cornell.edu