Mind Your Decisions

The Game of Free Food: Why We Should Just Say No

12 August 2008

Every Tuesday is a Game Theory article at Mind Your Decisions

photo by jbcurio

How do you shop for food? Whether you realize it or not, every time you enter the store you are engaged in a game with food companies. You want to get the best deals. They want to make the most profit. The game is about dividing the surplus that exists between the cost of the product and the highest price you are willing to pay. Who should win this game?

On the surface, we consumers should because we have a strategic advantage of moving second. We can comparison shop. We can switch to other brands. And if store food is not suitable, we can often buy directly from farmers. Being responsive should give us power, but that isn’t always how it works. Food companies can overcome our better judgment–just ask any parent. Just the other day I saw a kid complain about the cereal at Trader Joe’s: “No mom, I don’t want these. I want the ones I see on TV.” The kid had already committed to a set of products before entering the store–now that’s good marketing, but bad game theory.

There are many ways that food companies influence our buying decisions. Today, I want to consider one of those strategic methods: giving out free samples. Why might companies do it? How does it influence us?

I motivate the discussion with three stories. Then I give my opinion on how samples affect us more generally. I conclude that free samples put us consumers in a bad negotiating position. I urge you to think twice when taking free food.

Three tales of free food

Beer

My friend primarily drinks Budweiser beer. He used to enjoy more brands, but during college he developed a taste for the great American lager. The situation reminds me of a story my relative told me.

In Boston, about twenty years ago, beer companies used to send trucks outside the dorms. The company representatives–men dressed like superheroes and scantily clad women–would unload the kegs and gave out free beer along with branded trinkets. Students loved this and eagerly waited for the next beer party. Administrators were not as happy and quickly put an end to the practice. But the beer parties have had a long-lasting effect: my relative has fond memories of the beer and continues to buy that brand.

Candy

I used to have a favorite brand of candy while growing up. It was from a company that had an office in my town. I enjoyed the candy because in a very small sense, I had a role in its creation. While I was in fifth grade I was a student candy taster, which entailed getting free candy in exchange for honest answers. It was exciting because I could try the newest stuff, some times candy that had not hit market, and my opinion helped marketing and product development. I was loyal to them. So when Halloween came around, you can be sure which candy I told my mom to buy.

Ice cream

From an interesting article:

When McDonald’s introduced ice cream to its franchises operating in Indonesia, it faced a problem: many people had lactose problems and would not buy the product because it made them sick.

So what did they do? They gave ice cream cones away for free.

Can you guess what ended up happening?

You’d be surprised at what people will consume when its free, regardless of the associated nausea. After repeated exposure to dairy products, the allergic reaction diminishes such that people can enjoy the dairy product without any significant consequences. So sure enough, after a while the target market in Indonesia had lost its intolerance. This made McDonald’s (and I suppose the Indonesians?) happy.

The strategy of the game

What’s similar in all three stories? They are all different instances where companies have used free samples to gain lifelong or long-time customers. It was the free samples that contributed to such tremendous loyalty.

That the strategies worked is not too surprising because companies are diligent when handing out samples. They don’t give out things with the hope customers will respond. It is costly to give free samples, so they must be reasonably sure that extra customers and extra sales will more than offset the sampling costs. This is nothing sinister—it is simply good business.

Businesses take calculated risks, so it is natural to ask: which products would make the most sense to be sampled? It’s not the initial taste that matters, as the ice cream example illustrates. It’s the ability to develop loyal customers who would go to long lengths to get their fix. Psychologists have a term for such a product: it is addictive. Brand loyalty turns changes customers from merely “wanting” a product to thinking they “need” it.

The sinister part is that companies research in advance and have a better understanding of what’s addictive. It is difficult for customers to keep up. Smoking has taken lots of heat for marketing to children, but food can be addictive too, as the three stories illustrate.

Wait, food is addictive?

We know that drugs are addicting. So the first story about beer isn’t a shocker to anyone. Alcoholics are often facing more than willpower. As Nora Volkow, M.D., discusses in an article on the science of addition, while the initial choice to consume is voluntary, repeated use can cause brain changes that impair a person’s ability to exert self control. Perhaps a similar process shapes people to acquire tastes for particular brands.

It appears addiction can happen with more conventional food products, as the second story about candy story suggests. Most of us have had sugar cravings at some time or another, so we might suspect it’s some kind of addiction. Research discussed in the Society of Neuroscience in October 2003 shows some confirmation about our long-held feelings—sugar might be an addiction.

What about ice cream? Is it an addiction? It turns out there might be a reason we chase the ice cream truck as kids. For ice cream, along with other dairy products, contains something we would not expect.

The discovery was made in 1981 when researchers saw that cow’s milk contained traces of a substance that looked a lot like morphine. They tested and tested to figure out what it might be. What they concluded was the substance was in fact, morphine. It’s not a lot, but it is interesting to note milk contains something that can be highly addicting.

Neal Barnard, M.D., of Physicians Committee for Responsible Medicine, explains this opiate-like effect is most felt with cheese, which is concentrated in milk protein and an array of opiates known as casomorphines. I guess that might explain why virtually every fast food joint puts cheese on everything, and why places like Subway and Dunkin Donuts have added pizza to the menu. My local supermarket samples new kinds of cheeses daily. I used to try and buy, but now I realize the sampling could distort my better judgment and I skip it entirely.

The bottom line

Notice that it was only relatively recently that cheese could be considered to be addicting. What other food might be addicting? What ingredients might be added to overwhelm our judgment?

As smart as any shopper can be, it’s likely that businesses will be ahead of the curve. Think about how MSG was put in everything from potato chips to salad dressing until recent awareness campaigns. Weaning off of a taste is hard stuff. After you repeatedly consume something you acquire a taste, like the Indonesians for McDonald’s ice cream. The best time to stop an addiction is before it starts.

So here’s my own advice: keep your better judgment when shopping. It cannot make a difference if you take a sample of something you were going to buy any way. I love fresh bread and have no issues with the samples I take from my local bakery. But it’s best to be cautious of new food. I still try new things but I do so by buying the product. That adds one additional screen that I can do research in advance and make the decision more consciously. It’s not perfect, but it’s a step in the right direction.

So say no to free, and free your mind for better shopping decisions. Let’s tip the advantage in the shopping game back to consumers.

Related reading

I’ve written about food topics many times before. Here are some of my favorites:

How to split bills fairly

Misleading cereal packaging

Why “40 percent reduced fat” is not what it sounds like

Why 98 or 99 percent fat-free foods can make you fat