My thinking has certainly been shaped by the likes of Dan Ariely, Richard Thaler and particularly Daniel Kahneman. More importantly, I have seen the consideration of relevant behavioural biases and influences support improvements for clients with marketing or innovation challenges. I therefore embrace Behavioural Economics as something that offers actionable benefits for brand leaders.
However, before marketers get too immersed in opportunities to nudge behaviour I hope the big themes of Behavioural Economics will reaffirm some of big rules for brand growth. To support this I suggest two practical considerations for brand growth based on big ‘themes’ from Behavioural Economics findings.
Respect the challenge of changing behaviour
Getting closer to Behavioural Economics as well as revealing opportunities should remind us how difficult changing behaviour actually is.
People tend to stick to the status quo, prefer what is familiar, avoid risky changes and select evidence that confirms their established beliefs. People don’t like change. As Daniel Kahneman explains we tend to act according to two ‘modes’ of thinking: System 1 and System 2. Much of our time is spent in the mode of System 2 in which we act fast, employ little effort and are governed by habit. Our beliefs and behaviours according to Kahnemann are ” difficult either to modify or to control.”
So a first key consideration based on Behavioural Economics I suggest is to understand and work with your consumer or customer’s established behaviours, beliefs and associations. Put another way, aim to ask them to change as little as possible. For brand growth planning this means ensuring your offer fits with what they do, think and remember today.
This supports a focus on the big rules of brand growth that Byron Sharp and his Ehrenberg Institute colleagues evidence in “How Brands Grow”. These are rules that reflect the reality that change is difficult and effortful – particularly when the current choice is perfectly acceptable. In particular:
Be where your category buyers are. Ensure your brand, product and services are where they happily and habitually go already.
Be easy to buy (and use). Don’t ask them to make mental or physical effort to find, choose, or pick up your brand.
Be easy to notice. Grab attention from consumers who are looking for their usual choice.
Stay familiar / recognisable. Create and consistently use distinctive brand assets to be instantly recognised and remembered.
Stay competitive. Deliver what is expected and avoid additional elements that could stop some buying.
The rules outlined by Byron and colleagues remain fundamental and a first ‘port of call’. Empirically supported they are consistent with the observations of Richard Thaler (co-author of “Nudge”) who highlights that removing obstacles can often do more to enable desired behaviours.
Carefully consider the context for choices
Behavioural Economics findings remind us of the flaws and vulnerability of our decision-making. These are influenced by the way choices are presented and the context. We can be primed to act in certain way and we look to those we respect to make the right ‘individual’ decisions.
We see a relative value of one thing over another, rather than its absolute value. This means the value of a purchase can vary depending on the context. So how a brand’s offer sits in an ‘architecture’ of choices will impact perception and behaviour. (That’s why selling a Rolls-Royce at a boat show is a good idea, by the way).
The context and influences on a consumer or customer’s choice are unlikely to be well represented in an organisation’s communication or innovation processes.
Concept development, for example, supports a focus on ‘persuasive argument’ and research encourages a rational appraisal without social influence. But, as attempts to tackle the obesity crisis show there is a limit to what persuasive information can achieve and often a (big) disconnect between claimed and actual behaviour.
We therefore need to work hard to ensure we see the context for choices and action in the same way potential consumers, shoppers or customers will.
Part of this is ensuring we balance asking people with observing how they actually behave in context. For example, assessing how a brand, product or message is responded to when alongside competitors on a shelf.
It is also about recognising the magnitude of the behaviour change required. New products and services bring excitement and (usually) new benefits. But these may also require a change in buying and usage behaviour. Instructions for a new product are no substitute for the development of intuitive features based on robust observation.
Of course, internal project decision-making will be shaped by context and behavioural influences. Internal discussions on communication will involve a lot of system 2 (i.e. effortful, serious thinking) yet customer responses will often be governed by System 1. Ideas by others (including competitors) will be valued less and project ownership will increase the ‘aversion’ to changes or delays.
So, in summary two big theme considerations to retain as you delve deeper into Behavioural Economics:
1. Respect the challenge of changing behaviour
Don’t expect consumers to change behaviour and work with their habitual action, beliefs and associations. Avoid an over-reliance (and over valuation) of ‘persuasion’ and seek to find ways to minimise effort and behaviour change.
As a starting point consider the rules in Byron Sharp’s “How Brands Grow”.
2. Carefully consider the context for choices
Work hard to ensure you see the context for choices and actions in the same way potential consumers, shoppers or customers will.
Invest in observation. Carefully consider context and influences to ensure you understand the barriers to change and how you can work with current behaviour.