The IKEA Effect – Explained

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When the prominent instant cake mix brand Betty Crocker wanted to increase sales, they hired a psychologist named Ernest Dichter. Mr. Dichter after studying usage patterns and consumption data, had one simple suggestion – get consumers to add fresh eggs to the mix themselves instead of the company adding egg components.

Surprisingly, this suggestion became a legend of sorts in the business world with Betty Crocker starting to do incredible sales numbers. However, today we associate this idea with an even bigger brand – IKEA (aptly named the IKEA effect).

What is the IKEA effect?

In simple terms, the IKEA effect implies that we tend to value an item more when we have played a part in creating it. The name comes from the practice of consumers assembling IKEA furniture themselves and giving it a higher value than what is considered reasonable by others.

Food brands do this all the time with initiatives like “Suggest a flavour”, “Make your own toppings” etc. When we look at how many of these flavour ideas actually become household names, the numbers are dismal but they do effectively serve a different purpose. And that purpose is to get you the consumer involved in the process of creating the product thereby making you value it more.

There is also a famous Origami experiment where amateurs who designed Origamis themselves valued their own creation more than that of others which also included works of actual Origami experts.

More than tables, chips & paper swans

Women who were made to undergo an intensive process to join a group/society placed greater value in their membership and the group than the ones who didn’t go through the intensive process. (1)

Brands ranging from Build-A-Bear that makes people assemble their stuffed animals to prominent tech companies like Basecamp and Wistia, use this effect to build consumer loyalty and create a more inviting experience.

The effect is so universal that even animals and birds like rats and starlings respectively prefer to obtain food from sources that require effort on their part. [2]

Why does this happen?

There are a few indicators that point towards this being a combination of multiple psychological and social factors. The most prominent of them are the endowment effect and the effort-justification effect.

Endowment effect is when people value an item they own way more than an identical item that is not owned by them.

Effort-justification effect is when people attribute a greater value to an outcome in which they had to put effort into creating than the actual value of the outcome.

IKEA effect & the blank page problem

Consumers often walk away from using a product when they do not know what to do with it – also known as staring at a blank page. Thereby, reducing this churn becomes critical since a lot of customers will not come back if they feel unsure or…

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