By the late 1940s, instant cake mixes — which required the addition of only water — had been around for a couple of decades¹. More than 200 companies sold these cake mixes in a wide range of flavors².
However, after an initial spurt of market growth, sales had plateaued³. One leading market player selling cake mixes under the Betty Crocker brand, General Mills, hired Ernest Dichter⁴, a consumer psychologist, to find out why⁵.
Dichter was the pioneer behind the focus group. His preferred approach was to do depth interviews with customers and — while ignoring what his subjects said verbally — listening between the lines to their encoded or unconscious desires⁶.
After interviewing over a hundred housewives, Dichter discovered that by requiring no contribution from them whatsoever, using an instant cake mix left them feeling guilty instead of proud of the cake they baked⁷.
He formulated an actionable business insight for the company: insert a non-trivial task in the cake-making process — like adding an egg. This, he predicted, would create the illusion for housewives that they had indeed baked the cakes themselves, leading to increased sales.
This is an early successful illustration of the Ikea Effect, a cognitive bias that makes consumers place a higher value on products they participated in creating⁸.
Or so we are told.
In popular renditions of this business story, lots of details are compressed, omitted or even factually altered⁹. But every re-telling invariably builds up towards one inescapable conclusion: this is the Ikea Effect in action!
But to understand why the Ikea Effect shouldn’t be the takeway from this story, we have to understand the difference between what Dichter found and his recommended actions as a result of it.
Dichter’s discovery overturned the underlying category assumption that every instant cake mix manufacturer took for granted — that convenience was the highest-order value a woman wanted in the kitchen.
While true for most kitchen products and many women — Dichter identified a specific exception to that rule. His accomplishment was to uncover an untapped (and eventually larger) adjacent market — that of cake making where home cooks, because of cultural and traditional imperatives, didn’t place a premium on total convenience.
Contrary to legend, Dichter didn’t dream up the innovation of adding eggs (a patent for such a cake mix already existed¹⁰); his real contribution was crafting the rationale for why that’s culturally, commercially and competitively viable¹¹.
Following Dichter’s advice, General Mills tweaked their cake mix formula, recipe, packaging and even marketing to emphasize the central role women would play in baking with the new and improved cake mixes.
Over time (and many years), the new cake mix tipped and usurped the whole market¹². It probably also helped that adding fresh eggs before baking yielded a vastly better taste than egg powder in a cake mix.
So, what conclusion should you be drawing from this story?
If you want to channelize the spirit of Dichter in your work, look for the untested market assumptions and category generalizations that are lurking all around us. Don’t be afraid to dig deep to look for exceptions and insights that can inform a breakthrough strategy.
Instead, if you generalize (erroneously) from his recommendations (from this specific cake mix instance), you’ll end up assuming that every commercial artefact around us — including what you are currently designing — is begging for an Ikea Effect intervention.
Assuming and generalizing — you know where that took the instant cake mix industry in the 1950s.
1. In 1930, a Pittsburgh company named P. Duff and Sons applied for a patent for an “invention [that] relates to a dehydrated flour for use in making pastry products and to a process of making the same.” In what would become U.S. patent no. 1,931,892, Duff’s mix for gingerbread involved creating a powder of wheat flour, molasses, sugar, shortening, salt, baking soda, powdered whole egg, ginger, and cinnamon that the home cook could rehydrate with water, then bake. (bon appetit : A History of the Cake Mix, the Invention That Redefined Baking)
2. Some of the flavours available were Devil’s Food, Spice Cake, fudge cake and white cake. (bon appetit: A History of the Cake Mix, the Invention That Redefined Baking | BBC: Why cake mix lacks one essential ingredient)
3. Sales of complete (including powdered eggs) cake mixes doubled between 1947 and 1953. However, sales rose only 5% between 1956 and 1960 precipitating the research into why more families weren’t using cake mixes.
(Snopes: Requiring an Egg Made Instant Cake Mixes Sell?)
4. Ernest Dichter had arrived in America from Vienna in 1938 — when Freudian psychology was gaining ground. He himself had studied psychoanalysis in Austria, but with Alfred Adler and Wilhelm Stekel, not Freud himself. (The Economist: Retail Therapy)
5. For General Mills and Pillsbury, the leading manufacturers, the impetus to sell cake mixes was driven by the need to sell more flour. (BBC: Why cake mix lacks one essential ingredient)
6. Dichter’s radical approach was referred to as ‘Motivational Research’. He believed that marketplace decisions are driven by emotions and subconscious whims and fears, and often have little to do with the product itself. To understand people’s true motivations, he preferred a deep, psychoanalytical approach instead of quick questionnaires. As he put it, “If you let somebody talk long enough, you can read between the lines to find out what he really means.” (The Economist: Retail Therapy)
7. Dichter own words describing his insight were more eloquent and provocative. As he saw it, baking is an expression of femininity and when a woman pulls a cake or loaf out of the oven, “in a sense it is like giving birth”. (The Economist: Retail Therapy)
8. Named in a 2011 paper in the Journal of Consumer Psychology by Michael Norton, Daniel Mochon and Dan Ariely, the IKEA effect asserts “that labour alone can be sufficient to induce greater liking for the fruits of one’s labour”. (The Conversation: The IKEA effect: how we value the fruits of our labour over instant gratification)
9. Seth Godin’s recent blog post is a good example of how this much-retold story has retained only the faintest semblances of truth: “When Betty Crocker (not her real name) first started selling cake mixes, all you had to do was add water. They failed.” (Seth Godin: The Cake Mix Insight)
10. In 1933, even as the Duff Company received its patent for an instant cake mix incorporating powdered eggs, it had filed a fresh patent for a cake mix that required the home baker to add fresh eggs. (bon appetit : A History of the Cake Mix, the Invention That Redefined Baking | US Patent 2,016,320)
11. Prior to Dichter’s research, manufacturers were concerned that powdered eggs made for an inferior product. But they balked at changing things, believing that requiring the addition of fresh eggs would invalidate any claim of convenience. (Mabus Agency: Add Two Eggs And Your Product Becomes An Experience)
12. The market took a divided approach even after Dichter’s discovery. General Mills and Duncan Hines went the add-eggs route, Pillsbury stuck to the just-add-water method and switched over only much later. (bon appetit : A History of the Cake Mix, the Invention That Redefined Baking)