The quest for cool is never-ending. Accountants rev up their Harleys to the dismay of hard-core bikers. Soccer moms trade in minivans for hipper Land Rovers. Yellow rubber wristbands — signaling support for cancer research — appear instantly, then just as quickly disappear.

There is a fine line between cool and not-so-cool.

New research provides insight into how consumers use products to signal membership in social groups, but swiftly abandon those same products when the original message is diluted as other groups co-opt the trend. In a paper titled, Where Consumers Diverge from Others: Identity Signaling and Product Domains, Wharton marketing professor Jonah Berger and Chip Heath, professor of organizational behavior at Stanford University’s Graduate School of Business, explore the power of social identity in the demand for consumer products.

According to Berger, much of the existing research has focused on the drive for conformity among consumers. “But the process is more complicated than that,” he says. “People want to do something similar to other members of their in-group but may diverge from that choice when outsiders — i.e., members of other social groups — start poaching that taste.”

The most important finding in Berger and Heath’s research is that consumer choices are generated through a blend of conformity and divergence from others’ choices. The authors suggest their identity-signaling approach is different from existing notions of anti-conformity because it is rooted in the initial urge to converge within a social group. “People do not just differentiate themselves from out-groups in whatever idiosyncratic way they happen to choose; indeed, to signal identity clearly, people don’t want to be the only one holding a given taste,” according to the researchers, whose paper was published in the Journal of Consumer Research in August.

People make inferences about others based on the products they buy, and when lots of similar people adopt a product, it can gain meaning as a social signal, says Berger. If lots of tough people ride Harley motorcycles, for example, then driving one may come to signal a rugged identity. But when a certain taste or product is adopted by people beyond the original group, it loses its ability to signal desired characteristics, according to the research, which is based on experiments conducted over the Internet and among undergraduates. If accountants start driving Harleys, then the meaning of driving one may shift, and the bike may come to signal undesired characteristics (e.g., wannabe tough guys).

Berger points out that as new information delivery systems, including the Internet, make the signaling process faster, product trends can explode across mass markets more rapidly than ever before. At the same time, the enormity of those markets can also turn off the original customer base quickly. As the original customers turn away from a product, the followers are likely to do so, too, with major implications for consumer product marketers. For example, hip, young urbanites may discover a rock band and wear that band’s t-shirt, but when people beyond this social group adopt the band in order to be “cool,” that degrades the original power of the band’s meaning.

Jocks and Geeks

In the course of their research, the authors found that certain categories –particularly clothes, music and products linked to social life — are more important in identity signaling than others. The effect of social identity on more functional products, such as bicycle lights or pens, was not as strong.

For example, the researchers studied student reactions to a range of product categories. The students were told the products were owned by 65%, 25% or 10% of the other students. The students said they would be most likely to diverge from others in their choice of CD (67%), followed by favorite musical artist and musical genre. At the opposite end of the spectrum, dish soap was the product that showed the least divergence (6%), followed by stereos, toothpaste and tools.

The research shows a complicated relationship between the desire not just to conform or be different, but also to signal desired identities, Berger notes. Teenagers certainly want to look different than their parents, but within the world of teenagers, there are clearly defined social groups. “The jocks want to be different from the geeks.”

While many teens may shop at Abercrombie & Fitch, he says, different social groups often buy different styles. The jocks might wear t-shirts, for example, while the geeks wear button-down shirts. Each group is doing something different to send desired signals. “Conformity is one of the most basic principles underlying social behavior, yet while individuals want to be both similar and different, little research explains where conformity versus divergence will occur,” the authors write. “We suggest that both the taste domain and the group membership of the other people who are engaging in the behavior play a role.”

In other work, Berger examined the 2004 yellow wristband phenomenon. A research team at Stanford first sold the bands to students living in one dorm. A week later, researchers began selling the wristbands in a neighboring dorm with a stronger academic focus and a social reputation as a “geek” dorm. A week after the wristbands were adopted by the “geeks,” there was a 32% drop in students wearing the bands at the first dorm. The idea is “that people in the original dorm abandoned the wristband to avoid other students thinking they were similar to the geeks,” Berger says.

The process of identity signaling, adoption and abandonment is continuous, he adds. “It is like when you drop a pebble in a pool and the ripples move from the epicenter. The original signal starts to lose its desired meaning as it moves outside the original circle. Slowly, the taste will move outward and the center will hollow out as the original taste holders abandon the taste.”

Colored Washing Machines

Berger outlines some strategies for marketers who could use the researchers’ findings to develop or protect their brands.

One approach would be to proactively create “cool.” For example, he says, manufacturers of a functional product can attempt to imbue it with social properties and increase the likelihood that people will start using it as an identity signal. He notes the recent trend toward more styled home products, such as colored washing machines, which  represents an attempt by appliance makers to add identity-signaling potential to what was once a fairly standard product. “If you think you can ride these waves, then that might work very well for you,” says Berger, but he also cautions that once marketers start making a domain more symbolic, customers are going to be more likely to move on if the signal is co-opted.

Another strategy is to try to respond to both sets of customers — the trendy subculture that drives new tastes as well as the larger market that follows. One way to do that is to keep a brand cool by offering limited edition products appreciated by the trend-setters, but also produce mass-market versions. By keeping the original buyers onboard, the brand can retain its cachet — and avoid hollowing out — even as some of the product line grows in its appeal to the masses.

According to Berger, Nike does a good job of operating this two-pronged strategy by limiting production of certain shoes and distributing them only to select stores where “sneaker heads” delight in hunting them down. Mercedes and BMW also have successfully introduced entry-level models to appeal to a more mass audience while maintaining their prestige status with top-end customers.

In addition, marketers can build barriers to protect a brand from over-saturation. “One thing brands can look to is adding to the cost of acquiring a signal — and not just in money,” says Berger. “Signals can be expensive in terms of time or effort or knowledge.” An example is indie rock bands. “You can’t just decide one day that you want to be an indie guy and buy a package of correct signals. You need to read the right publications, go to shows and engage in other time-intensive activities before you know enough to send the desired signal.” A mohawk haircut or a piercing might add to the strength of the identity signal, he adds, because it might make it harder to find a job, adding cost to the signal.

Brands also have to be careful about how they manage their signals. In 2006, hip-hop mogul Jay-Z launched a boycott of Louis Roederer’s Cristal champagne brand when the new managing director of the firm expressed distress that his brand had been co-opted by rappers. “That was a big mistake,” says Berger. “The hip-hop community was not only responsible for a lot of Cristal’s sales, but had really helped build the image that was driving most consumers to purchase.”

Berger notes that many of the same principles driving the rise and fall of trendy brands operate in other areas of life. Business slang — phrases such as “the bleeding edge” or “herding cats” — is an area where similar processes of signaling drive people to adopt things one day and then abandon them and move onto something else the next. Another example is fashion. “Wildly striped dress shirts for me have long crossed the line from office trend-setter to old news, while dot patterns seem to be ascending among tastemakers,” he says.

“People want to be similar and different,” Berger concludes. “They want to converge as members of their own group but diverge from members of other social groups. Identity-signaling helps explain fads or other fluctuations in product demand. People say fads are abandoned because people get bored with them. We say people abandon them to avoid signaling membership in an undesirable group.”

Where Consumers Diverge From Others: Identity-Signaling and Product Domains