bandwagon-effect

What Is The Bandwagon Effect And Why It Matters In Business

The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What in marketing can be associated with social proof.

Why does the bandwagon effect matter in business?

The bandwagon effect, often referred to as the herd mentality, is the propensity for someone to do something because a lot of other people are already doing it. The singular person often acts subconsciously. That is, they will act even if the values and opinions of the herd contradict their own.

The bandwagon effect is a powerful driver of human behavior and has therefore infiltrated most aspects of daily life.

In the business and marketing spheres, studies have shown that the effect influences not only a consumer’s willingness to buy but also how much they are willing to pay.

Furthermore, consumers are more likely to make a purchasing decision if they can see that others have made successful purchases before them.

Breaking down the bandwagon effect

  • The bandwagon effect describes the often subconscious tendency for an individual to act based on the actions of the many.
  • The bandwagon effect is a simple yet powerful marketing tool that no business should ignore because, to some extent, the consumers are doing the work of marketing the product for the business.
  • The bandwagon effect is most effective for businesses with a history of positive customer reviews. A lack of reviews is negatively correlated with successful marketing campaigns.

Understanding the bandwagon effect

The bandwagon effect is one aspect of consumer behavior that brands and businesses can exploit. The simplest way is for a business to show their product and service in action.

Traditionally, celebrities and other high-profile figures would feature prominently in advertisements. More recently, this technique has become the basis for influencer marketing.

Influencers with large, targeted followings are ideal for the bandwagon effect, for obvious reasons.

But businesses themselves can also jump on the proverbial bandwagon and adjust their product offerings accordingly. Often these trends are driven by popular consumer sentiment relating to technology or perceived status.

Many television manufacturers, for example, are now offering 4K resolution screens – even though most broadcasters do not support 4K resolution.

But since consumers are behind this demand for 4K products, it would be unprofitable for manufacturers to not use the bandwagon effect to their advantage.

Customer testimonials, reviews, and case studies are also crucial to any marketing campaign. A recent study by BrightLocal found that positive reviews make 91% of consumers more likely to buy from a business.

Furthermore, 84% equate positive reviews with recommendations from a friend and a further 53% will not purchase from a business with an average rating under 4 stars.

Amazon, Yelp, and TripAdvisor are all examples of the power of customer reviews in building large and successful businesses.

Drawbacks from the bandwagon effect

The greatest strengths of the bandwagon effect also have the potential to be its greatest weaknesses.

Consumers who act in the interests of the crowd are often not acting in their own interests.

This poor decision making may also extend to businesses themselves, who choose to invest in manufacturing goods or services based on trends and not on the core values of their organization.

Businesses may also find that as they (and their competitors) flock to popular markets, profit margins will be smaller.

Smaller businesses who do not possess long-standing customer reviews might also find that the bandwagon effect is detrimental to their marketing efforts.

Several analyses into landing page conversion rates found that pages with low or no social media share count resulted in a lower conversion rate overall.

In the absence of obvious social proof, businesses must direct consumers to other actions that increase the odds of buying so that this proof can be built organically over time.

Bandwagon effect examples

The bandwagon effect is perhaps more influential and pervasive than many of us realize. With that said, here are a few examples of its presence in life and business.

Consumer behavior

When consumers purchase the same items of clothing as others, they do so because they want to exhibit that they are aware of the latest fashion trends.

This behavior is also known as bandwagon consumption and many brands take advantage of it in their marketing and advertising campaigns.

The bandwagon effect can also be seen in supermarkets. Shoppers sometimes base their purchase decisions on how much of a particular item has been depleted on the shelf.

Items that are nearly out of stock are considered the most popular, so consumers tend to choose those over similar products.

Medicine

Some medical procedures whose effectiveness has been disproven continue to be practiced today because of the bandwagon effect.

These practices are called “medical bandwagons” by Layton F. Rikkers, Professor Emeritus of Surgery at the University of Wisconsin-Madison, who described them as “the overwhelming acceptance of unproved but popular [medical] ideas.

One recent example of a medical bandwagon is the tonsillectomy, or removal of the tonsils.

While the procedure is beneficial in a small number of specific cases, there is no scientific evidence that supports its universal, one-size-fits-all use.

In other words, doctors perform tonsillectomies because they are widely used and not because of their effectiveness or versatility as a procedure.

Investing

The bandwagon effect is also prevalent in the era of meme stock investing. This was exemplified in the short squeeze of GameStop (GME) stock in early 2021 where investors on Reddit were whipped into a frenzy and started purchasing shares in the company.

As short sellers were forced to close their positions, GameStop’s share price increased substantially, resulting in even more investors to deviate from their rational investment strategies and purchase stock.

When buying interest in the company started to decline, the bandwagon effect was over almost as quickly as it had begun.

Politics

In 2017, researchers in Germany conducted an experiment to determine the relationship (if any) between the bandwagon effect and political elections.

Specifically, the research team wanted to know if candidates or parties considered more popular among voters were more likely to win government.

The study handed news content to 765 participants about a fictitious local election in a German town and also information about the history of the candidates. The participants were then divided into three groups.

The first group received a poll showing a candidate losing the election in a landslide, while the second showed a candidate winning the election by a landslide. The third group was not shown any polling information.

Results confirmed the bandwagon effect, with polling information (or perceived popularity) correlated with whether participants believed a candidate could win the election.

Members of the third group without access to polling information used the candidate’s history instead to form an opinion.

Connected Business Concepts

First-Principles Thinking

first-principles-thinking
First-principles thinking – sometimes called reasoning from first principles – is used to reverse-engineer complex problems and encourage creativity. It involves breaking down problems into basic elements and reassembling them from the ground up. Elon Musk is among the strongest proponents of this way of thinking.

Ladder Of Inference

ladder-of-inference
The ladder of inference is a conscious or subconscious thinking process where an individual moves from a fact to a decision or action. The ladder of inference was created by academic Chris Argyris to illustrate how people form and then use mental models to make decisions.

Six Thinking Hats Model

six-thinking-hats-model
The Six Thinking Hats model was created by psychologist Edward de Bono in 1986, who noted that personality type was a key driver of how people approached problem-solving. For example, optimists view situations differently from pessimists. Analytical individuals may generate ideas that a more emotional person would not, and vice versa.

Second-Order Thinking

second-order-thinking
Second-order thinking is a means of assessing the implications of our decisions by considering future consequences. Second-order thinking is a mental model that considers all future possibilities. It encourages individuals to think outside of the box so that they can prepare for every and eventuality. It also discourages the tendency for individuals to default to the most obvious choice.

Lateral Thinking

lateral-thinking
Lateral thinking is a business strategy that involves approaching a problem from a different direction. The strategy attempts to remove traditionally formulaic and routine approaches to problem-solving by advocating creative thinking, therefore finding unconventional ways to solve a known problem. This sort of non-linear approach to problem-solving, can at times, create a big impact.

Moonshot Thinking

moonshot-thinking
Moonshot thinking is an approach to innovation, and it can be applied to business or any other discipline where you target at least 10X goals. That shifts the mindset, and it empowers a team of people to look for unconventional solutions, thus starting from first principles, by leveraging on fast-paced experimentation.

Biases

biases
The concept of cognitive biases was introduced and popularized by the work of Amos Tversky and Daniel Kahneman since 1972. Biases are seen as systematic errors and flaws that make humans deviate from the standards of rationality, thus making us inept at making good decisions under uncertainty.

Bounded Rationality

bounded-rationality
Bounded rationality is a concept attributed to Herbert Simon, an economist and political scientist interested in decision-making and how we make decisions in the real world. In fact, he believed that rather than optimizing (which was the mainstream view in the past decades) humans follow what he called satisficing.

Dunning-Kruger Effect

dunning-kruger-effect
The Dunning-Kruger effect describes a cognitive bias where people with low ability in a task overestimate their ability to perform that task well. Consumers or businesses that do not possess the requisite knowledge make bad decisions. What’s more, knowledge gaps prevent the person or business from seeing their mistakes.

Occam’s Razor

occams-razor
Occam’s Razor states that one should not increase (beyond reason) the number of entities required to explain anything. All things being equal, the simplest solution is often the best one. The principle is attributed to 14th-century English theologian William of Ockham.

Mandela Effect

mandela-effect
The Mandela effect is a phenomenon where a large group of people remembers an event differently from how it occurred. The Mandela effect was first described in relation to Fiona Broome, who believed that former South African President Nelson Mandela died in prison during the 1980s. While Mandela was released from prison in 1990 and died 23 years later, Broome remembered news coverage of his death in prison and even a speech from his widow. Of course, neither event occurred in reality. But Broome was later to discover that she was not the only one with the same recollection of events.

Crowding-Out Effect

crowding-out-effect
The crowding-out effect occurs when public sector spending reduces spending in the private sector.

Bandwagon Effect

bandwagon-effect
The bandwagon effect tells us that the more a belief or idea has been adopted by more people within a group, the more the individual adoption of that idea might increase within the same group. This is the psychological effect that leads to herd mentality. What in marketing can be associated with social proof.

Additional resources:

Scroll to Top
FourWeekMBA