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An introduction to Behavioural Economics
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An introduction to Behavioural Economics

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  • 1. Getting people to do what you want *Lavender TC Miles - Planning Director
  • 2. What is Lavender* Brand design Campaigns Advertising SHORT TERM Lead systems Dialogue Relationships 1:1 programs MEDIUM TERM Satisfaction Interfaces Systems of Applications LONG interaction TERM Communities
  • 3. Clients
  • 4. Our Heritage Direct Marketing Behavioural Change Our Philosophy Ideas that people want to spend time with
  • 5. Traditionally the end of the process !"#$%&%''( 012#*(3$#&4($%#556( 7&4%$'*#&4(8%9( Advertising methodology is focused on: !4:%$.',&;(8%*2/4/5/;6((2#'( )&*%$%'*( 3%%&(#3/7*(2/"("%($%5#*%(*/( - how we relate to people <%/<5%(=(>/-7',&;(,&-$%#',&;56(/&( %8/.:%(,&',;2*'( - emotive insights ?$%4,-#*%4(/&(*2%(3%5,%>(*2#*( +%',$%( 8/'*(4%-,',/&'(#$%(*2/7;2*( #3/7*( & the belief that most decisions are thought through and have to be prompted !-./&(
  • 6. Most people act first and think later
  • 7. A different way to look at things !"#$%& 4(-&)$5($%(&-$&0"-& - Most decisions are not thought through '()*+(& 6((2& - Behaviour is driven by channel as much as attitudes - what’s happening in the moment ,%-(+()-& 78*%/& - Focus on the how & not so much the what .*/(01*2*-3& 69-9+(&*%-(%#$%&
  • 8. The most effective campaigns understand this 2009 Effie Gold Winners
  • 9. Behavioural Change Why do we do things? How do we behave? What influences our decisions?
  • 10. A lot of answers lie in “Behavioural Economics”
  • 11. Am I going to go on that How much should I pay for second date? that cup of coffee? Should I get another drink? Is it worth saving? Shall I ask that person for a Am i going to pay for a favour? parking ticket? Am I happy with those jeans?
  • 12. Overall finding: We are complex people living in a complex world An innate desire Bad at making Influenced by Hate parting to fit in decisions surroundings with things Social Norms Paradox of Choice Relative Positioning Loss Aversion
  • 13. Remember, every consumer has the option of doing nothing
  • 14. So how do we help people to do what we want?
  • 15. 1. Spend more time appealing to satisficers Maximisers Satisficers Show-offs, competitive, seeking the best/new Fitting-in, risk averse, tried & tested. Happier
  • 16. So do everything you can to minimize risk Latest technology Tried & Loved Wide Colour Enhancer 1 million sold Digital Noise Filter
  • 17. & Reinforce a good decision made or about to be made !"#$%&'()#*+(#,-)./#$0(*)(#1*00#,*12# Thousands are coming If phones are busy, please testimonials call back back every week
  • 18. 2. If you’re looking to change behaviour appeal to social norms Georgetown University Saskatchewan Ministry of Health Drink Consumed – down 12%, men fighting – down 33%
  • 19. Helping people to compare themselves creates good results 25%
  • 20. 3. Get people to make a decision for the future (or take away the pain today) What would you like to eat What would you like to eat in a weeks time? now?
  • 21. The Save Tomorrow Pension 10% of any future pay rises go direct to your pension 200% increase in pension sign-ups
  • 22. 4. Reduce people’s choice 24 to 6 Jars 26 to 15 varieties 5x sales +10% sales
  • 23. Lack of choice also makes you happier
  • 24. 5. Always have a default option 16gb 64gb WiFi Only WiFi & 3g
  • 25. Help people make the compromise choice Maximum Rule of 3 x Minimum
  • 26. Never make it a ‘yes’, ‘no’ decision
  • 27. 6. Help people anchor their decisions
  • 28. If I was to offer you any off the following at the same price: - A week in Alberta - A week in Dawson City - A week in Dawson City with meals included
  • 29. Adjacencies - chips & dips - cheese & wine
  • 30. 7. Appeal to people’s values
  • 31. 8. People respond to positive experiences Tested in Glamorgan & Thames Valley police – reduced speeding by 35%
  • 32. Make it a conversation + 40% Conversion !"#$%&'( )#*&+,%"-(
  • 33. 9. Do someone a favour Mints – surprise & delight – unprompted 14% increase in tip amount. An extra mint = 23%
  • 34. .... and in the office.... Always use a post-it note 69% response rate
  • 35. and finally if you’re trying to negotiate a pay-rise.... Your environment really matters
  • 36. Summary - Creating action is the most important thing you can do - Help people minimize risk - Help people fit in - Take away the pain of buying - Restrict Choices - Help people anchor their decisions - Appeal to people’s values - Make it a positive experience - Do someone a favour
  • 37. Further Reading http://nudges.org/ http://timharford.com/ http://freakonomics.blogs.nytimes.com/ http://danariely.com/
  • 38. Thank You* *The agency for the consumer age.