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Is Behavioral Economics Really a Game Changer for Marketers?

Much has been written, and said, lately about the impact of behavioral economics on marketing. Some pay no attention to it, some fear it and some adapt it to their own particular cause. But, in reality, does behavioral economics really change anything?

Read more about this at the CMA Blog. Click here (or anywhere, actually)

Filed under: Behavioral Economics, , , , , , , , , ,

The Secret of Life Revealed

“When we think about it, nothing is as important as we think it is when we think about it.”

This delightful sophism is an extension of the original quoted by Ogilvy UK Vice Chair Rory Sutherland in a discussion published last August in Research (Questioning the Nature of Research). The quote is attributed to a certain Paul Dolan who is identified as “the government’s well-being advisor” (presumably the UK government as no North American government in power is particularly interested in well-being unless it is of the financial kind.  To be fair to the good Mr. Dolan, I added the first “when you think about it” in order to create a certain mind-fuckness about the thought.

Actually, the Sutherland piece came to our attention via a LinkedIn post that posed the question posted by Edward Appleton: “What’s market research’s response to behavioural economics?“.  Also worth reading.

Filed under: Behavioral Economics, , , , , , , , , , ,

Rats Have Feelings Too

Yes. In a recent experiment (as reported in the Montreal Gazette — why am I not surprised?) researchers at University of Chicago sought to find out whether a rat would release a fellow rat from an unpleasantly restrictive cage if it could. The answer is yes! Click on the rats for the full article.

Even better news is that they will only rescue other rates of they’re real rats — the researchers tried the experiment with a bound and gagged toy rat and NO, it was not rescued by the other rat.

I am convinced that there is some deeper meaning to this, but, honestly, it escapes me at this moment. But, it’s worth pointing out that no person is trying to break through the door to rescue me from the confines of my office.

Filed under: Uncategorized, , , , ,

Sex and advertising: Retail therapy | The Economist

This little gem published in the Economist is worth reading. In fact, it’s must reading as it highlights the everything-new-is-old and what-comes-around-goes-around theories of the world.

Sex and advertising: Retail therapy | The Economist.

Going back some years, Ernest Dechter invented the world of “soft-side” qualitative research: getting beyond the rational response and learning about non-rational responses. Or, triggering non-rational responses.

Not to boast, but we have been doing this for the past fifteen years: we have understood that behaviour toward brands and products is determined to a large (but not total) extent by unconscious motivations. We, that is Bruce Barnes and I, have focused on typology, specifically typology as defined by Carl Jung and referred to as archetypes. But, as we have said over and over again, identifying archetypes is only part of the process: the real power, form a marketer point of view, comes from understanding how the archetypal energies respond to stimuli from the world around them.

Most recently, Daniel Kahneman (qv) has studied this phenomenon and explains it in practical terms: the brain functions via 2 systems. We respond to everything immediately via our System 1 brain, which is entirely unconscious and we have no direct control (or awareness) of it or its machinations. Our response is moderated by our conscious, thinking brains: System 2. Depending on a number of factors, our system 2 brain can and will override our system 1 response, or it will let it go. Which results in spontaneous, sometimes illogical, sometimes bang-on behaviors.

So, from Freud (Superego, ego) to Dichter (emotions and unconscious whims) to Kahnemann (system 1 and system 2) to Bernstein and Barnes (unconscious typologies) the one theme is constant: we are hardly in control of what we do, BUT, with the right approach, marketers can develop a general understanding of why we do it.

Both Dichter and Kahneman come from the idea that what goes on in our subconscious can be influenced by factors of which we are not and never were consciously aware — that we absorb information that we are not aware of. For instance, we can be exposed to something (let’s say, for instance, the word “sex”) for a very short period of time — so short that we do not consciously notice it — and our sub-conscience will pick up on it and store it away. If it is repeated often enough (Kahneman) or relates to some base motive or need, we will associate it with other stimuli (for instance a brand name), and this will influence how we respond to the brand name.

Yes! Vance Packard may have been right all along. What did Dichter really insert into the ads for Chrysler for which he became famous, or, more obviously, Esso:

 

Are we, modern advertising people, in our eagerness to be smarter and more in control, doing a disservice to our brand clients by denying the power of subliminal advertising.?

O,r are we in fact NOT using subliminal advertising? Does anybody really know what lurks in the folds of Apples famous iPod ad?

I wonder.

Filed under: Behavioral Economics, Uncategorized, , , , , , , , , , , , , ,

Is Branding Nothing More than a Frequency Play?

Whatever happened to frequency, or why do we overcomplicate this thing called brand?

In the book “Thinking, Fast and Slow” Daniel Kahneman discusses a theory mooted and proven by psychologist Robert Zajonc that he called the “mere exposure effect”. It’s worth reading all about it (“Thinking, Fast and Slow,” Daniel Kahneman, Doubleday Canada, page 66), but the gist is quite simple: the more often someone sees a word, the more favourably they rate the word in terms of meaning. In other words, the mere fact that someone sees a word frequently cause them to believe the word “means something good”.

Not only this, but, the person does not have to be aware of having seen the word – the rule holds true for words exposed to people so quickly that they do not consciously notice them.

This all ties into Kahnemann’s demonstration of the two system brain (fast and slow thinking), and the basic default our lazy minds have toward something he calls cognitive ease. Combine this with Kahnemann’s two cognitive illusions, the illusion of truth (the ease with which a thought or conclusion comes to mind biases that conclusion toward the fact being believed as true) and the illusion of remembering (if a word – or name — is consciously or unconsciously familiar to you, you will have the impression that you remember something about it or the person, even if you have never seen anything but the word or simply read the name somewhere).

So here it is: if we see a word repeatedly we will “remember” something about it, that something will be favourable and we will be convinced it is true.

No, really!

This explains what I have often called the “Japanese Theory of Brand Building,” which goes back to the days when Japanese brands (Sanyo, Sony, etc.) were first breaking into the American and European markets. The strategy was always to simply buy high visibility outdoor signs – the bigger and brighter the better – and simply show the name and word-mark or logo. It worked then, and worked subsequently for LG, which has achieved iconic brand status globally without ever having given any meaning to the name itself.

It also explains something much closer to our hearts: in-store brand selection. When faced with an array of unfamiliar products on a supermarket shelf we may well gravitate toward a specific brand name. Lately we have been developing theories about why we gravitate toward a specific brand – often we talk about the brand having made an emotional connection. But could it be quite simply that we have seen the name often, believe we remember having heard something positive about it, think of it more favourably than the other brand-names on the shelf that we have seen less often, and have the confidence that our conclusion is right?

Which brings me back to the question of frequency. One part of brand building is nothing more complicated than exposing people to the brand name, in no specific context, more frequently than the competition expose their brand name.

Filed under: Behavioral Economics, , , , , , ,

Behavioural Economics and Research: Cognitive Illusions

Understanding how our brains work and the limitations of reality is essential to understanding the reasons people do what they do (which is, at the end of the day, the underpinning of all brand work).

Cognitive illusions, which Dan Ariely describes more cogently than anybody I have ever heard, are an important component of what makes our world real to us, but maybe not so real in real reality.

 

Dan Ariely – Market Research – Predicting The Irrational.

Filed under: Uncategorized, , , , , ,

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