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The Importance of RankOr How Our Brains Constrain Survey ResponsesOr The Enormous Power of Winning
The enormous power of winningThis presentation is about how these inequalities emerge123451234 5
“One is wonderful.Two is terrific.Three is threatened.Four is fatal”~ Larry Light
Retailers (UK)Retailers (China)Auto (UK)Auto (Germany)Sources: Retailers = KWP, Auto = Mintel
Source: Kohli, R and Sah, R. 2003. “Market Shares: Some Power Law Results and Observations”, Harris School Working Paper, ...
Man can bethought ofas perfectlyrationalJohn Maynard Keynes
                    
The „Chicago School‟ of market research   
Nope.Humans haveboundedrationalityHerbert Simon
Markets aren‟t fair
We make good enough choices from a „stacked deck‟Sources: http://www.pepsico.com/Annual-Reports/2008/performance/n-america...
Sources: http://www.datapointed.net/visualizations/maps/distance-to-nearest-mcdonalds
65.138.928.225.224.017.02.51.20.90.70.70.5Newspaper 1Newspaper 2Newspaper 3Newspaper 4Newspaper 5Newspaper 6Usage of brand...
   We do the best we can within our cognitive limits
Get the important bits right and the rest will follow 
The brain is impressive…
The brain is impressive…but it does have limits
BrandBrandBrandBrandBrandBrandBrandBrand BrandBrandBrandBrandBrandBrandBrandBrandBrandBrandBrand
BrandBrandBrandBrandBrandUsedConsiderUsedConsiderUsedBrandBrandBrand BrandBrandBrandBrandBrandBrandBrandBrandBrandBrandBrand
1,058,290respondents1,267studies88countries205categories
3.9MeanStandard deviation = 3.7Data: 1,267 studies, 88 countries, 205 categories, 1,058,290 respondents3.0 2.0MedianModeSo...
Standard deviation = 3.7Data: 1,267 studies, 88 countries, 205 categories, 1,058,290 respondents17.9 23.1 15.6 11.4 8.0 6....
2.3Auto3.3Finance5.0Consumer3.1Energy3.3BusinessServices3.4Technology2.3Polling& Social3.1HealthcareStandard deviation = 3...
Beer2.9Thailand8.5Poland10.1UK8.0Spain8.5France8.7Germany2.8India3.7Cambodia
01020304050607080901000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15#brandsinbrandlistAverage evoked set size0.36 0.13Correlation L...
Evolutionmade us care about
Sources: http://www.supersport.com/olympics/gallery/22921
Sources: http://xkcd.com/1098
Source: https://www.checkmarket.com/2011/06/net-promoter-score
Source: Louw & Hofmeyr (2012) Reality Check: The Relationship Between What We Ask and What People Actually Do
69.5 23.6 11.3 4.1R² = 0.971 2 3 4Shareofwallet(paneldata)Share of wallet rankPower law!Rank 1 brands get most of the shar...
UK laundry detergent | Actual panel data supplied by KWP010%20%30%40%50%60%70%80%90%%ofobservationsShare of walletRank 1Ra...
xylogxlogy
Power law!Source: Krumme, C, et al (2013) The predictability of consumer visitation patternsCaption:“Probability of visiti...
60.2 32.5 18.9 17.7 13.3 10.7 9.0 7.0 5.6 5.4 4.8 3.1 3.9 2.1 3.6 1.4 2.2 2.0 4.1 2.6 2.3R² = 0.931.0 1.5 2.0 2.5 3.0 3.5 ...
too muchinformationIt is possible to measure
First mentioni.e. rank 10.570.280.17All unaided awarei.e. rank 2, 3…Aided awarei.e. All ranksAwareness metricCountries: UK...
Respondent-levelcorrelation with spendUsage metricMost ofteni.e. rank 10.710.58Past 3 months0.37Ever boughti.e. all ranksC...
78 36 36 36Cell 1 Cell 2 Cell 3 Cell 4# attributes in surveyLess measurement; richer data
78.0 17.0 18.0 28.0Cell 1 Cell 2 Cell 3 Cell 4# attributes selected
2.2 3.0 3.2 4.8Cell 1 Cell 2 Cell 3 Cell 4# ticks per respondent
13.0 3.0 3.5 5.5Cell 1 Cell 2 Cell 3 Cell 4Total survey time
ConclusionsHumans haveboundedrationality 
3.9
1 2 3 4
FirstmentionMostoftenLess ismore
DataRespondent TimeMoney
Thank youAcknowledgements:AnnaRetiefElanie deBeerJannieHofmeyrKen Bell BrunoGonçalvesConstantinMichaelKyle FindlaySenior R...
First mentioni.e. rank 10.570.280.17All unaided awarei.e. rank 2, 3…Aided awarei.e. All ranksAwareness metricCountries: UK...
Respondent-levelcorrelation with spendUsage metricMost ofteni.e. rank 10.710.58Past 3 months0.37Ever boughti.e. all ranksC...
The Importance of Rank
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The Importance of Rank

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This presentation looks at the importance of RANK in everyday decision making (we use it as a fast heuristic for decision making - evolution baked this into us) and in the context of business.

To begin with, we briefly review why markets tend towards unequal distributions of market share over time, with market leaders taking more than their fair share. We discuss how these inequalities emerge due to the multitude of individual consumer decisions based on incomplete market information and our brains’ ability to make the best, most resource-efficient decisions with the least amount of information. To understand mental limits, we show how many brands people can keep in mind within a category at one time and that this limit is a function of the human brain, not the number of brands in the market. Finally, we look at popular awareness and usage metrics to evaluate which ones link back to actual consumer behaviour in order to recommend which ones are worth measuring and which add little value and should thus be removed from surveys.

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The Importance of Rank

  1. 1. The Importance of RankOr How Our Brains Constrain Survey ResponsesOr The Enormous Power of Winning
  2. 2. The enormous power of winningThis presentation is about how these inequalities emerge123451234 5
  3. 3. “One is wonderful.Two is terrific.Three is threatened.Four is fatal”~ Larry Light
  4. 4. Retailers (UK)Retailers (China)Auto (UK)Auto (Germany)Sources: Retailers = KWP, Auto = Mintel
  5. 5. Source: Kohli, R and Sah, R. 2003. “Market Shares: Some Power Law Results and Observations”, Harris School Working Paper, Series 04.1“Market share versus rank across 506 foodbrands and 665 sporting-goods brands“ ”Power laws!
  6. 6. Man can bethought ofas perfectlyrationalJohn Maynard Keynes
  7. 7.                     
  8. 8. The „Chicago School‟ of market research   
  9. 9. Nope.Humans haveboundedrationalityHerbert Simon
  10. 10. Markets aren‟t fair
  11. 11. We make good enough choices from a „stacked deck‟Sources: http://www.pepsico.com/Annual-Reports/2008/performance/n-america-csd.html
  12. 12. Sources: http://www.datapointed.net/visualizations/maps/distance-to-nearest-mcdonalds
  13. 13. 65.138.928.225.224.017.02.51.20.90.70.70.5Newspaper 1Newspaper 2Newspaper 3Newspaper 4Newspaper 5Newspaper 6Usage of brand Frequency of purchaseSource: UK newspaper market
  14. 14.    We do the best we can within our cognitive limits
  15. 15. Get the important bits right and the rest will follow 
  16. 16. The brain is impressive…
  17. 17. The brain is impressive…but it does have limits
  18. 18. BrandBrandBrandBrandBrandBrandBrandBrand BrandBrandBrandBrandBrandBrandBrandBrandBrandBrandBrand
  19. 19. BrandBrandBrandBrandBrandUsedConsiderUsedConsiderUsedBrandBrandBrand BrandBrandBrandBrandBrandBrandBrandBrandBrandBrandBrand
  20. 20. 1,058,290respondents1,267studies88countries205categories
  21. 21. 3.9MeanStandard deviation = 3.7Data: 1,267 studies, 88 countries, 205 categories, 1,058,290 respondents3.0 2.0MedianModeSo, just how many brandsdo we realistically hold inmind at a time?
  22. 22. Standard deviation = 3.7Data: 1,267 studies, 88 countries, 205 categories, 1,058,290 respondents17.9 23.1 15.6 11.4 8.0 6.0 4.3 3.9 1.4 0.9 3.91 2 3 4 5 6 7 8 9 10 The rest%ofobservationsEvoked set size
  23. 23. 2.3Auto3.3Finance5.0Consumer3.1Energy3.3BusinessServices3.4Technology2.3Polling& Social3.1HealthcareStandard deviation = 3.7Data: 1,267 studies, 88 countries, 205 categories, 1,058,290 respondents
  24. 24. Beer2.9Thailand8.5Poland10.1UK8.0Spain8.5France8.7Germany2.8India3.7Cambodia
  25. 25. 01020304050607080901000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15#brandsinbrandlistAverage evoked set size0.36 0.13Correlation Linear R21,267 studiesStandard deviation = 3.7Data: 1,267 studies, 88 countries, 205 categories, 1,058,290 respondents
  26. 26. Evolutionmade us care about
  27. 27. Sources: http://www.supersport.com/olympics/gallery/22921
  28. 28. Sources: http://xkcd.com/1098
  29. 29. Source: https://www.checkmarket.com/2011/06/net-promoter-score
  30. 30. Source: Louw & Hofmeyr (2012) Reality Check: The Relationship Between What We Ask and What People Actually Do
  31. 31. 69.5 23.6 11.3 4.1R² = 0.971 2 3 4Shareofwallet(paneldata)Share of wallet rankPower law!Rank 1 brands get most of the sharen=984UK laundry detergent | Actual panel data supplied by KWP
  32. 32. UK laundry detergent | Actual panel data supplied by KWP010%20%30%40%50%60%70%80%90%%ofobservationsShare of walletRank 1Rank 2Rank 3Rank 4
  33. 33. xylogxlogy
  34. 34. Power law!Source: Krumme, C, et al (2013) The predictability of consumer visitation patternsCaption:“Probability of visiting a merchant, as a function of merchant visit rank, aggregated across all individuals. Dashed line correspond to power law fits P(r) , r2a to theinitial part of the probability distribution with a 5 1.13 for the European and a 5 0.80 for the North American database”Retailer visits by rankPower law!
  35. 35. 60.2 32.5 18.9 17.7 13.3 10.7 9.0 7.0 5.6 5.4 4.8 3.1 3.9 2.1 3.6 1.4 2.2 2.0 4.1 2.6 2.3R² = 0.931.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0 10.5 11.0Shareofwallet(paneldata)Performance rankPower law!Top rated (i.e. rank 1) brands get most of the shareUK laundry detergent | Actual panel data supplied by KWP
  36. 36. too muchinformationIt is possible to measure
  37. 37. First mentioni.e. rank 10.570.280.17All unaided awarei.e. rank 2, 3…Aided awarei.e. All ranksAwareness metricCountries: UK, China | Categories: Laundry, Retail Stores | Number of datasets: 5 | Actual panel data supplied by KWPSource: Hofmeyr, J & Louw, A. 2012. Reality Check : The Relationship Between What We Ask and What People Actually Do. ESOMAR 3D Conference 2012, AmsterdamRespondent-levelcorrelation with spend
  38. 38. Respondent-levelcorrelation with spendUsage metricMost ofteni.e. rank 10.710.58Past 3 months0.37Ever boughti.e. all ranksCountries: UK, China | Categories: Laundry, Retail Stores | Number of datasets: 5 | Actual panel data supplied by KWPSource: Hofmeyr, J & Louw, A. 2012. Reality Check : The Relationship Between What We Ask and What People Actually Do. ESOMAR 3D Conference 2012, Amsterdam0.620.56Regularlyi.e. rank 2, 3…Past 1 month
  39. 39. 78 36 36 36Cell 1 Cell 2 Cell 3 Cell 4# attributes in surveyLess measurement; richer data
  40. 40. 78.0 17.0 18.0 28.0Cell 1 Cell 2 Cell 3 Cell 4# attributes selected
  41. 41. 2.2 3.0 3.2 4.8Cell 1 Cell 2 Cell 3 Cell 4# ticks per respondent
  42. 42. 13.0 3.0 3.5 5.5Cell 1 Cell 2 Cell 3 Cell 4Total survey time
  43. 43. ConclusionsHumans haveboundedrationality 
  44. 44. 3.9
  45. 45. 1 2 3 4
  46. 46. FirstmentionMostoftenLess ismore
  47. 47. DataRespondent TimeMoney
  48. 48. Thank youAcknowledgements:AnnaRetiefElanie deBeerJannieHofmeyrKen Bell BrunoGonçalvesConstantinMichaelKyle FindlaySenior R&D ExecutiveKyle.Findlay@tnsglobal.comThe TNS Global Brand Equity Centre
  49. 49. First mentioni.e. rank 10.570.280.17All unaided awarei.e. rank 2, 3…Aided awarei.e. All ranksAwareness metricCountries: UK, China | Categories: Laundry, Retail Stores | Number of datasets: 5 | Actual panel data supplied by KWPSource: Hofmeyr, J & Louw, A. 2012. Reality Check : The Relationship Between What We Ask and What People Actually Do. ESOMAR 3D Conference 2012, AmsterdamRespondent-levelcorrelation with spend0.920.810.68Aggregate-levelcorrelation with spend
  50. 50. Respondent-levelcorrelation with spendUsage metricMost ofteni.e. rank 10.710.58Past 3 months0.37Ever boughti.e. all ranksCountries: UK, China | Categories: Laundry, Retail Stores | Number of datasets: 5 | Actual panel data supplied by KWPSource: Hofmeyr, J & Louw, A. 2012. Reality Check : The Relationship Between What We Ask and What People Actually Do. ESOMAR 3D Conference 2012, Amsterdam0.620.56Regularlyi.e. rank 2, 3…Past 1 month0.960.960.960.980.93Aggregate-levelcorrelation with spend

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