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 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)
- 2. System 1 and System 2 Thinking 2
- 3. We think much less than we think we think 3 3 J a
- 4. 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".
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- 8. yellow 8
- 9. “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
- 10. 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
- 11. DECISIONS
- 13. Environment “Just as no building lacks an architecture, so no choice lacks a context.” Thaler & Sunstein, Nudge 13
- 14. 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)
- 15. 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
- 16. Social Proof Copying Consistency Reciprocity DECISION
- 17. 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
- 18. Social People pay 2.76 Wmes more on average when eyes are present 18 Bateson et al, 2006
- 19. 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
- 20. DECISION EmoIon Visceral States Habits Hyperbolic discounIng
- 21. 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
- 22. 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 aren't happy. Buy fewer impulse items 10% S Anxiety makes us more cauWous, less impulsive and more likely to use System 2 Happy 22
- 23. 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% level Jan 11 2 3
- 24. 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
- 25. DECISIONS
- 26. Behaviour change needs to be Fun, Fast & Easy 26 2 6
- 27. Applying Behavioural Principles to Pack TesWng 27
- 28. 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
- 29. 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
- 30. Applying Behavioural Principles to Screening 30
- 31. Too many choices… 31
- 32. The Wisdom of the Crowd Why the Many Are Smarter Than the Few James Surowiecki (2004) 32
- 33. 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
- 34. Unreliable witnesses to our own behaviour We are self deceit machines … Yet good at anWcipaWng the behaviour of others 34
- 35. 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
- 36. 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
- 37. 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
- 38. Applying Behavioural Principles to Consumer Understanding 38
- 39. Irresponsible Drinking in Britain Brighton Newc astle f New C ardif cast le gham Leed s N ottin d Glouces Wa tfor te r 39 3 9
- 40. 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
- 41. 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
- 42. The Case for Environmental/Architectural Factors 42 Cartoon by Anna Af Hallstrom 4 2
- 43. 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
- 44. The Case for Individual Factors “A lot of people knew that they'd 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
- 45. 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
- 46. 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
- 47. 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
- 48. Any QuesWons? 48