Behavioural economics: how to turn human understanding into business advantage (Jonathan Gable - Brainjuicer)
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Behavioural economics: how to turn human understanding into business advantage (Jonathan Gable - Brainjuicer)

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Humans are influenced in our daily behaviour not by rational decision-making but by multiple conscious and sub-conscious factors such as priming, framing, anchoring, copying etc. We are now able to ...

Humans are influenced in our daily behaviour not by rational decision-making but by multiple conscious and sub-conscious factors such as priming, framing, anchoring, copying etc. We are now able to drawn some conclusions for advertising market that can help us turn human understanding into business advantage for our clients.

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    Behavioural economics: how to turn human understanding into business advantage (Jonathan Gable - Brainjuicer) Behavioural economics: how to turn human understanding into business advantage (Jonathan Gable - Brainjuicer) Presentation Transcript

    •     Behavioural  Economics:     From  Human  Understanding   to  Business  Advantage  
    • System  1  and  System  2  Thinking   2  
    • We  think  much  less  than  we  think  we  think   3   3 J a
    • System  1  decision-­‐making  is  faster  and  less  efforDul   50  bit/sec   System  2   System  1   11,000,000  bit/sec   4  Zimmerman,  M.  (1989)  "The  Nervous  System  in  the  Context  of  Informa@on  Theory".    
    • yfgfgfyuygj   5  
    • iouijlkjlkjoij   6  
    • ddgjkliojkjkl   7  
    • yellow   8  
    • “A  bat  and  a  ball  cost  $1.10  in  total.   The  bat  costs  $1  more  than  the  ball.   How  much  does  the  ball  cost?”  “People  are  not  accustomed  to  thinking  hard,  and  are  oRen  content  to   trust  a  plausible  judgement  that  quickly  comes  to  mind.”       Daniel  Kahneman,     Nobel  Prize  Winner   9  
    • Human  behaviour  driven  by  two  decision-­‐making  Systems,  1  &  2  …   “We  are  not  thinking   machines  that  feel;   we  are  feeling   machines  that  think”     Antonio  Damasio   System  2   System  1   Slow   Fast   Explicit   Implicit   AnalyWcal   ExperienWal   EfforDul   InsWncWve   CogniWve   EmoWonal     10  
    • DECISIONS
    •          Priming        Framing    Accessibility  Defaults   DECISION
    • Environment   “Just as no building lacks an architecture, so no choice lacks a context.”   Thaler  &  Sunstein,  Nudge   13  
    • Priming:  When  our  exis0ng  memories  are  ac0vated  by  something  we  see,  hear,  smell,  taste  or  feel   Sales 5:1 Sales 1:2 14   A. North, D. Hargreaves and J. McKendrick (1997)
    • Framing:  The  way  that  informa0on  is  presented  affects  your  percep0on  of  its  value.       Pre-­‐2007  0ps  were  roughly  10%.                 AEer  2007  it  jumped  to  22%.     15  
    • Social  Proof      Copying              Consistency                  Reciprocity  DECISION
    • Social   “The true nature of mankind is that of a super-social ape. We are programmed to be together; sociability is our species’ key evolutionary strategy.”   Mark  Earls;  Herd:  How  to  change  mass  behaviour   by  harnessing  our  true  behaviour   17  
    • Social   People  pay   2.76  Wmes   more  on   average   when  eyes   are  present   18   Bateson  et  al,  2006  
    • Copying:  When  we  see  other  people  do  something  we  oEen  copy  them  –  whether  consciously  or  not.     No  accomplice     Seated  accomplices     ea0ng  pretzels   ea0ng  pretzels  Propor0on  of  passengers  buying  pretzels:   1/12   1/6   19   Herrmann et al, 2011
    • DECISION EmoIon   Visceral  States   Habits   Hyperbolic  discounIng    
    • Personal   “Perhaps there is no such thing as a fully integrated human being. We may, in fact, be an agglomeration of our multiple-selves.”   Dan  Ariely;  Predictably  Irra@onal;  The  Hidden   Forces  that  Shape  our  Decisions     21  
    • Personal:  Feel  Do  Think   Anxious   S Those  happy   Buy  fewer   as  they  start   their  shop   items  on   spend   promo0on   around  10%   more  than   those  who   arent  happy.   Buy  fewer   impulse  items   10%   S Anxiety  makes  us   more  cauWous,  less   impulsive  and   more  likely  to  use   System  2   Happy   22  
    • Average  Monadic  Purchase  Intent  for  Ambient  Food  Concepts   % Def/Prob buy Context  changes     % Probably would buy % Definitely would buy the  way  we     * 47 * feel,  think     and  behave   42 40 37 34 31 27 38 32 30 29 26 25 19 8 10 9 10 8 8 5 l ot d t d l d el ta h ol ite te H ig w To C ci xc n R Ex /u st e Ill Ju ot 23   N Significance shown at 95% levelJan  11   2 3
    • Hyperbolic  DiscounWng:  The  tendency  for  people  to  have  excessively  stronger  preferences  for  immediate  gains  rela0ve  to  future  gains.  Would  you  rather  be  given  £50  today,  or  £100  tomorrow?    Would  you  rather  be  given  £50  today  or  £100  a  year  from  now?  Would  you  rather  be  given  £50  a  year  from  now  or  £100  a  year  and  a  day  from  now?  Most  people  will  make  commitments  long  in  advance  that  they  would   never  make  if  the  commitment  required  immediate  ac0on.     24  
    • DECISIONS
    • Behaviour  change  needs  to   be  Fun,  Fast  &  Easy   26   2 6
    • Applying  Behavioural  Principles    to  Pack  TesWng   27  
    • Packaging  &  Comms   Brand  A  IntuiWve  &  emoWonal  packaging            “Helps  quick  decision-­‐making”                   Brand  B    InformaWon-­‐based,  message-­‐heavy        packaging              “Makes  people  think  too  much”                    Jan  11   28  
    • What  if  we  could  simulate  System  1  decision-­‐making?     50 * % of all single and multipacks selected 44 41 40 39 System  1   37 condiWons   more   30 indicaWve  of   sales  reality   20 Brand A Brand B Brand A Brand B System 2 Conditions System 1 Conditions (Unrestricted Time) (Restricted Time)Jan  11   Significance shown at 95% level 29  
    • Applying  Behavioural  Principles    to  Screening   30  
    • Too  many  choices…   31  
    • The  Wisdom  of  the  Crowd     Why  the  Many  Are  Smarter  Than  the  Few   James  Surowiecki  (2004)   32  
    • PredicWve  Markets  called  the  US  elecWon  clearly  &  correctly           – –     3 3 TradiWonal  Polling  (“Who  do  you  think  you  will  vote  for?”):   PredicWve  Markets  (“Who  do  you  think  will  win  the   perhaps  more  entertaining,  as  the  elec0on  race  was  made   elec@on?”):  clearly  much  more  predic0ve  and  accurate  -­‐   to  appear  exci0ng  un0l  the  very  last  day  and  hour…   and  therefore  perhaps  much  more  useful  when  you’re     making  investment  decisions  instead  of  newspaper   headlines!   Jan  11   33  
    • Unreliable  witnesses  to  our  own  behaviour   We  are  self  deceit  machines  …   Yet  good  at  anWcipaWng  the   behaviour  of  others   34  
    • How  a  PredicWve  Market  works     ‘Imagine  you  owned  shares  in  all  these  ideas...’   (Consumers  Shown  up  to  15  Ideas  From  Set  at  Random)   Probably  Buy  Shares  In...   Probably  Sell  Shares  In...   Probably  Buy  Shares   Normable  Benchmark   One  To  Double  Shares  In...   One  To  Sell  All  Shares  In...   %   Net  Preference   %   Ranks  Ideas   35 35  
    • Works  well  in  ‘everyone’s  a  winner  cultures’  like  Nigeria   Please  select  which  one  of  these  ideas  you  would  immediately  sell  /  double  your  shares  in     25 Net Preference Strength of Portfolio Most Successful - would double shares 76 15 13 Least Successful - would sell shares 57 20 9 15 7 Portfolio Norm This Test 10 20 20 -3 -4 16 -9 13 5 -5 -­‐24  % of respondents 8 8 7 4 4 0 -5 -6 -7 -7 -5 -10 -9 -11 -17 -10 Performance  v  norms    Top  QuarWle    2nd  QuarWle   -28 -15  Boeom  50%   -20 -25 Chill Sangria Palm Extra Gold Chief Jewel Djembe Emperor -24 Bold %s  based  on  total  seeing  each  concept:  c500   Sep  09   36  
    • So  if  System  1  is  so  influenWal,  how  do  we  measure  it?  FaceTrace®:  award  winning  measure  of  emoIonal  engagement   “Which  of  these  faces  best  expresses     how  you  feel  right  now?”   “To  what  degree  do  you  feel     [selected  emoIon]?”   “And  what  is  it  that’s  making     you  feel  this  way?”   Captures  ‘Reasons  for  EmoIon’   37  
    • Applying  Behavioural  Principles    to  Consumer  Understanding   38  
    • Irresponsible  Drinking  in  Britain  Brighton Newc astle f NewC ardif cast le ghamLeed s N ottin d Glouces Wa tfor te r 39   3 9
    • Meet  Our  DetecWves   Team   Team   Marple   Poirot   The  case  for  Individual   The  case  for   Factors   Social  Factors   Team   Team   Columbo   Holmes   The  case  for  Choice   The  case  for  Local   Environment   Environment   40   4 0
    • The  Case  for  Environmental/Architectural  Factors  “Could  I  have  a  ginger  ale  please?”   “Two  beers  please  –  can  I     pay  by  card?”  “Did  you  want  gin  or  vodka  with  that?”   “Sure  –  minimum  spend  £10   on  the  card  though”   “OK  –  I’ll  get  four  beers   then,  please”   “A  gin  and  tonic  please.”   “Double?”   41   4 1
    • The  Case  for  Environmental/Architectural  Factors   42   Cartoon by Anna Af Hallstrom 4 2
    • The  Case  for  Social  Factors   “A  lot  of  us  started  off  by   buying  rounds  of  pints/ spirits  which  is  probably  one   of  the  main  reasons  that   lead  to  drinking  too  much  -­‐   everyone  feels  they  should   buy  a  round  and  so  a  lot  of   booze  goes  down.”   Cartoon by Anna Af Hallstrom 43   4 3
    • The  Case  for  Individual  Factors   “A  lot  of  people  knew  that  theyd  probably  had   enough  to  drink,  but  they  decided  to  carry  on   anyway.  The  classic  Oh  go  on  then,  one  more!   tagline  cropped  up  a  few  0mes  (myself  included).”     44   4 4
    • Exercise!   Challenge  1:  Iden0fy  the  individual  /  social  /  environmental  factors  that   could  influence  your  target  group  to  drink  irresponsibly     Challenge  2:  Consider  poten0al  interven0ons  that  could  change  the   behaviour.    (hint:  not  just  what  could  stop  exis0ng  behaviours,  but  also   what  could  trigger  new,  responsible  behaviours)     S  Group  one:  18-­‐24  year  olds  in  bars  /  pubs   S  Group  two:  25+  in-­‐home  consump0on   S  Group  three:  parents  of  8-­‐17  year  olds  –  how  can   they  be  a  more  posi0ve  influence   45   4 5
    • Hints  page  Individual  What  role  does  mood  &  how  they’re  feeling  have  on  behaviour?  What  about  their  established  rou0nes,  do  they  do  things  ‘just  because’?  What  role  does  ego  play  in  their  decisions?    Social  Who  are  they  with  and  what  influence  might  they  have?  What  is  the  social  dynamic?  How  does  the  group  define  ‘normal’  /  what  are  the  social  norms?    Environmental    What  environmental  primes  might  influence  behaviour  &  the  atmosphere?    E.g.  furniture,  décor  etc  Where  are  drinks  stored,  where  are  they  drunk?      How  are  drinks  served  /  kept?    What  impact  does  this  have?  How  are  drink  choices  presented?   46   4 6
    • Some  of  our  ideas  Environment  Serve  ¾  pints  as  standard  and  name  them  ‘large’  Ensure  low  abv.  beers  /  wines  are  the  majority  Sell  wine  glasses  with  unit  lines  rather  than  ml  Prominently  display  non-­‐alcoholic  beers  /  in  home  store  booze  in  non-­‐prominent  place  Encourage  sea0ng  areas  in  pubs  Ensure  there  are  ‘quiet’  areas  in  bars  where  music  doesn’t  drown  out  conversa0on  Introduce  word  primes  and  other  auditory/olfactory  interven0ons  to  bars    Social  Provide  jug  of  water  &  glasses  with  each  round  of  drinks  Stop  ringing  the  11:00  bell  signalling  last  round  Discourage  large  round  buying  (e.g.  maximum  number  of  drinks  in  one  transac0on)  A  mobile  app  that  shows  you  what  you  will  look  like  in  20  years  0me  if  you  drink  x  amount  per  week,  share  it  on  Facebook  Prominently  display  pictures  of  irresponsible  drinkers  and  their  ‘crime’;  drinking  licence?    Personal  Factors  Table  service  to  break  consump0on  momentum  Your  hung-­‐over  self  writes  a  message  to  your  future  Friday  night  self  to  stop  drinking  If  buying  on  a  tab,  regular  reminders  about  how  much  they’ve  spent  –  keep  price  salient  Put  up  ‘responsible’  signs  such  as  ‘give  blood’   47   4 7
    • Any  QuesWons?  48