why people really buy brands Signal vs Substance

Next time you’re at the gym, have a look at everyone’s socks. The crew socks pulled up to the calf crowd are one tribe. The ankle sock people are another.

And somewhere in between are the half mast wearers, socks hovering awkwardly above the shoe, not entirely sure who they want to be yet.

Nobody thinks they’re choosing deliberately. But we are. I catch myself doing it. Some mornings it’s not even about the brand on the sock, it’s the length, and the length is doing the talking. Pulled up says one thing. Scrunched down says another. We feel comfortable one way or the other depending on which tribe we want to stand near.

That small, slightly ridiculous decision is the entire answer to why people buy brands. And if you’ve ever wondered why you keep losing work to competitors who frankly aren’t as good as you, this is probably why. You’re selling what your product does. Your market is buying what it says about them.

This guide covers what the signal vs substance effect is, the science behind it, how to work out which one your brand should lead with, and the signs your positioning is currently selling the wrong one.

Contents

What the signal vs substance effect is

The signal vs substance effect describes the two reasons anyone buys anything. Substance is what the product actually does. Signal is what buying it says about the person who owns it.

A plain black t-shirt is substance. It needs to be breathable, durable and fit well. Job done. A premium activewear top needs to do both. It has to perform in the gym, and it has to tell the room something about the wearer. That they take their training seriously. That they’re disciplined. That they belong to a particular tribe.

Function makes a product useful. Signalling makes it desirable. And desirability is where margin lives.

Most established businesses I meet have spent years perfecting substance and roughly zero minutes defining their signal. Then they wonder why they can’t differentiate themselves. This is a brand strategy problem, not a marketing one.

The science behind why we buy signals

Humans have been buying signals for a lot longer than we’ve been buying products.

The economist Thorstein Veblen named it back in 1899. Conspicuous consumption, the idea that we buy visible things partly to communicate status. The theory is 127 years old and the behaviour is far older.

Evolutionary biologists call it costly signalling. A peacock’s tail is expensive to grow and useless for survival, which is exactly why it works as a signal. Only a healthy peacock can afford one. The waste is the message.

More recent consumer research (Jonah Berger’s work on identity signalling is the best of it) shows we’re most brand-sensitive in categories that are visible to others. Cars, clothes, watches, phones, the coffee we carry into a meeting. And here’s the part I find fascinating: we don’t just signal to join tribes. We signal to avoid being mistaken for the wrong one. That’s the sock thing. Nobody’s cold ankles are at stake. The choice is about which group you’d rather not be confused with.

Harvard researchers even found what they call the red sneakers effect. In the right context, deliberately breaking the dress code signals more status than following it, because it says I’m established enough not to care. Signalling runs deep, and it runs in every direction.

None of this makes buyers shallow. It makes them human. Your brand either works with that or gets flattened by it.

Signal vs substance: how they compare

Substance Signal
What it is What the product or service actually does What buying it says about the buyer
What you must prove Performance, reliability, results Meaning, identity, belonging
How buyers evaluate it Specs, reviews, case studies, testing Gut feel, aesthetics, who else buys it
Where it fails Product doesn’t perform as claimed Brand says nothing, or says the wrong thing
Pricing power Capped by comparison. Someone can always match the spec High. Meaning is hard to copy
Typical categories Utilities, tools, ingredients, infrastructure Fashion, vehicles, hospitality, professional services

The uncomfortable truth in that table is the pricing row. If you compete purely on substance, you’re always one spreadsheet away from a price war. Signal is what stops your offer being a line item.

Which one should lead for your brand

Almost every brand needs both. The strategic question is which one leads and which one supports.

Ask yourself two questions. Are people buying my brand for performance? Or are people buying my brand for what it says about them?

If you sell substance, your job is proof. Demonstrations, results, guarantees, case studies. Make the performance undeniable.

If you sell signal, your job is definition. You need to decide, in writing, what buying your brand says about the person who buys it. Not what you do. What they become. That’s brand messaging work, and most businesses have never done it.

If you’re doing both, the visible categories tip towards signal leading. If your product is worn, driven, displayed, or named in front of other people, signal leads and substance supports. If it’s consumed privately or measured ruthlessly, substance leads and signal supports.

Why B2B brands are not exempt

Here’s the one that stings for service businesses. B2B buyers signal too. They just signal to a different audience.

When a procurement manager shortlists you, they’re not only asking will this supplier perform. They’re asking what does choosing this supplier say about me to my board, my boss, my team. It’s the old line about nobody getting fired for buying IBM. That’s not a substance decision. That’s a safety signal.

So when you lose a tender to a competitor and the feedback is they looked more professional, you weren’t out-performed. You were out-signalled. Their brand identity gave the buyer confidence to defend the decision. Yours made them nervous.

Demoralising, I know. Also fixable.

Examples of signal-led, substance-led and hybrid brands

R.M. Williams (signal leads, substance supports). The boots really do last decades. But nobody pays that price for stitching alone. A pair of RMs says something specific about the wearer, which is why they turn up on tradies, graziers and prime ministers alike. Same boot, same signal: I’m the real thing.

Toyota HiLux (substance leads, signal supports). Built its name on being unbreakable, which is pure substance. But in Australia the HiLux has quietly become tribal. It says something about who you are before you’ve said a word on site.

Rolex (signal leads, almost entirely). A $50 Casio keeps better time. Accuracy was never the product. The product is what’s understood about you when you check the time in a meeting.

Bunnings (substance leads, almost entirely). Range, price, availability. Nobody buys a signal at Bunnings, and the brand is smart enough not to pretend otherwise.

Notice none of these brands are confused about which one leads. That clarity is the positioning.

Signs your brand is selling the wrong one

You might be leading with substance in a market that’s buying signal (or vice versa) if:

  • You’re forever justifying your price. Buyers who purchase signal rarely haggle. Buyers comparing substance always do.
  • You keep losing to competitors who are objectively weaker but look more polished.
  • Your marketing lists features and capabilities, and the response is polite silence.
  • Clients can’t tell you why they chose you beyond price or availability.
  • You’ve invested in a new website, new logo, ads, and nothing changed, because you upgraded the execution without ever defining the signal. This is the most common pattern I see, and it’s usually the trigger for proper rebranding work rather than another round of surface fixes.
  • Your own team describes what you do but can’t describe what choosing you means.

Two or more of those and it’s not a marketing problem. It’s a positioning problem.

FAQs

What is the signal vs substance effect in branding?

The signal vs substance effect is the principle that people buy brands for two distinct reasons: what the product does (substance) and what owning it communicates about them (signal). Strong positioning decides which of the two leads. Weak positioning ignores signal entirely and then competes on price.

Why do people buy brands instead of just products?

People buy brands because purchases communicate identity, status and tribe membership, not just utility. Research on identity signalling shows this effect is strongest in categories visible to others, like clothing, vehicles and professional services. A product solves a problem. A brand says something about the person who chose it.

What is brand signalling?

Brand signalling is the meaning a purchase transmits about the buyer to the people around them. It answers the question what does choosing this brand say about me. Brands that define their signal deliberately become desirable. Brands that don’t leave the meaning to chance.

Should my brand lead with signal or substance?

Lead with signal if your product or service is visible to others when it’s bought or used, and lead with substance if it’s evaluated privately on measurable performance. Most brands need both, so the real decision is which one fronts the positioning and which one supports it.

Does signalling apply to B2B and service businesses?

Yes, B2B buyers signal to their own stakeholders, not to the public. Choosing a supplier says something about the decision maker’s judgement, so a credible, confident brand gives buyers a decision they can defend internally. This is why polished competitors win tenders against better operators.

How do I find out what my brand currently signals?

Ask recent clients what choosing you said about them, and ask lost prospects what held them back. The gap between those answers and what you intended is your positioning problem, and closing it is the core of brand strategy work.

My takeaways

Substance gets you considered. Signal gets you chosen.

Before you spend another dollar on marketing, give the two questions a straight answer. Are people buying my brand for performance? Or for what it says about them? Then make sure your positioning, your identity and your message all lead with the right one.

Because your buyers are already reading the signals. Every sock in the gym proves it. The only question is whether your brand is saying something on purpose, or saying nothing at all.

If you want to go deeper on positioning, there’s plenty more in the insights hub.