“Today, depending on group norms and circumstances, status can be derived from factors as diverse as academic achievement, one’s skills as a sea turtle advocate, and even the ability to drink a lot of beer.” 

So, what is Signalling?

Signalling and countersignaling are hidden methods of communicating with each other. We do it all the time as a way to ‘prove’ we are who and what we claim to be.

Signalling is the area where you live and the car you drive. It’s how you take your coffee and whether you drink alcohol or not. It’s the shoes you wear, the newspapers you read, how you spend your Friday nights. The fact is we all make choices that signal what we wish to convey.

Most of our everyday actions and purchases can be traced back to some form of signalling or status seeking.

For example a watch: A Rolex isn’t better at telling the time than a Titan – but a Rolex signals something about its owner’s economic power and social standing.

Signalling does not only explain luxury purchases but also consumption of all sorts of other goods: Green products signal a prosocial attitude and an IIM degree, intelligence and a future chance of success. We all know how publicly displaying the name of donors increases contributions made to charity.

Other consumption signals could include loyalty to a specific subculture (e.g. band t-shirts), athleticism & health consciousness (athleisure clothing) or intelligence (e.g. Rubik’s Cube).

As a matter of fact, in humans a lot of New Product Adoption is driven by our need to signal – be it status, intelligence, being part of a group or being different from others.

The first people who bought a pager, a fax machine or telephone didn’t really buy it for convenience now,  is it ? You need many others to adopt it before the network benefits start kicking in, else you would be calling and messaging no one. 

Think why e-vehicles are not yet the norm and why TESLA needs to make them look so sleek.

But these early adopters truly bought one because it helped them tell the world about how they were different, it helped them singal something to the world about themselves.

Obviously, companies then pool these profits to fine tune the early product ideas and also get more and more people to buy them. Eventually, so many people have one that a world without it makes no sense.

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