Labels on products showing ‘healthier’ information, may not be telling the whole story.
Anita Rao, Beyer Family associate professor at the McDonough School of Business at Georgetown University, tells us why.
Anita Rao, Beyer Family Associate Professor at Georgetown University’s McDonough School of Business, is an empirical marketing researcher. Her work focuses on causally measuring consumer reactions to deceptive practices such as false claims, fake news ads and misinformation. She was recently a visiting scholar at the Federal Trade Commission, Bureau of Economics and is a senior policy scholar at Georgetown McDonough’s Center for Business and Public Policy. Rao was named a 2019 Marketing Science Institute (MSI) Young Scholar and a 2023 MSI Scholar.
The Impact of Voluntary Labeling
Firms often engage in selective marketing showcasing features to convince consumers to buy their product. In many cases these selective features can be informative, for example, a “gluten-free” label can help a consumer looking to avoid gluten easily pick the product. In other cases, such features can be misleading. A label stating “contains 7 essential vitamins and minerals” could mislead consumers into thinking the product is healthy and cause them to ignore other relevant attributes like the sugar content of the product (which in the absence of the label they might have paid attention to).
We examine this practice with the “no high fructose corn syrup” or the “no HFCS” label. HFCS was used as a substitute for sugar, but it soon became a controversial ingredient. Today, however, the consensus is that any form of added sugar is bad and singling out any one caloric sweetener can be misleading. So, the question is does the voluntary “no HFCS” label serve as an informative feature for those wishing to steer clear of the controversial ingredient, or could it obfuscate consumers causing them to ignore a product’s overall sugar content, leading them to make a less healthy choice.
We examined products across 24 different categories and found that products using the “no HFCS” label were more sugary compared to their counterparts.
We also found, through two online shopping experiments, that in the presence of the label participants were buying more sugary products and also spending less effort searching.
These results showcase how voluntary labels can impact consumers and inform managers and policymakers of whether and how voluntary labels should be displayed.
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