behavioural economics: how to turn human understanding into business advantage (jonathan gable -...
Post on 22-Oct-2014
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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.TRANSCRIPT
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System 1 decision-‐making is faster and less efforDul
System 2
System 1
50 bit/sec
11,000,000 bit/sec
Zimmerman, M. (1989) "The Nervous System in the Context of Informa@on Theory".
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“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
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Human behaviour driven by two decision-‐making Systems, 1 & 2 …
Slow Explicit
AnalyWcal EfforDul CogniWve
System 2
Fast Implicit
ExperienWal InsWncWve EmoWonal
System 1
“We are not thinking machines that feel;
we are feeling machines that think”
Antonio Damasio
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“Just as no building lacks an architecture, so no choice lacks a
context.”
Thaler & Sunstein, Nudge
Environment
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5:1 1:2
A. North, D. Hargreaves and J. McKendrick (1997)
Sales Sales
Priming: When our exis0ng memories are ac0vated by something we see, hear, smell, taste or feel
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Pre-‐2007 0ps were roughly 10%.
AEer 2007 it jumped to 22%.
Framing: The way that informa0on is presented affects your percep0on of its value.
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“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
Social
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Seated accomplices ea0ng pretzels
No accomplice ea0ng pretzels
1/12 1/6 Propor0on of passengers buying pretzels:
Herrmann et al, 2011
Copying: When we see other people do something we oEen copy them – whether consciously or not.
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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
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Buy fewer impulse items
Anxious
Happy
Buy fewer items on promo0on
S Those happy as they start their shop spend around 10% more than those who aren't happy.
Personal: Feel Do Think
S Anxiety makes us more cauWous, less impulsive and more likely to use System 2
10%
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Jan 11 23
8 8
26
3742
31
47
40
27
34
89 105
10
2919
3830
25
32
Total
Excite
d
Not ex
cited Hot
Cold
Just
Right
Ill /unwell
% Def/Prob buy% Probably would buy% Definitely would buy
Average Monadic Purchase Intent for Ambient Food Concepts
Context changes the way we feel, think and behave
* *
Significance shown at 95% level
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Hyperbolic DiscounWng: The tendency for people to have excessively stronger preferences for immediate gains rela0ve to future gains.
Most people will make commitments long in advance that they would never make if the commitment required immediate ac0on.
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?
Jan 11 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 29
What if we could simulate System 1 decision-‐making?
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44
41
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20
30
40
50
% o
f all
sing
le a
nd m
ultip
acks
sel
ecte
d
*
System 2 Conditions (Unrestricted Time)
System 1 Conditions (Restricted Time)
Brand A Brand B Brand A Brand B
System 1 condiWons
more indicaWve of sales reality
Significance shown at 95% level
33 Jan 11
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–
–
PredicWve Markets called the US elecWon clearly & correctly
TradiWonal Polling (“Who do you think you will vote for?”): perhaps more entertaining, as the elec0on race was made to appear exci0ng un0l the very last day and hour…
PredicWve Markets (“Who do you think will win the elec@on?”): clearly much more predic0ve and accurate -‐ and therefore perhaps much more useful when you’re making investment decisions instead of newspaper headlines!
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Unreliable witnesses to our own behaviour
Yet good at anWcipaWng the behaviour of others
We are self deceit machines …
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Probably Buy Shares In... Probably Sell Shares In...
One To Double Shares In... One To Sell All Shares In...
Net Preference Ranks Ideas
% %
Probably Buy Shares Normable Benchmark
‘Imagine you owned shares in all these ideas...’ (Consumers Shown up to 15 Ideas From Set at Random)
How a PredicWve Market works
36 Sep 09
-‐24
-5-7 -7 -6
-10 -11 -9
-17
-28
20 2016
13
8 84
74
15 13
9
7
-5
-9
-24
-4-3
-25
-20
-15
-10
-5
0
5
10
15
20
25
Chill Sangria Palm Extra Gold Chief Jewel Djembe Emperor Bold
% o
f res
pond
ents
Net PreferenceMost Successful - would double sharesLeast Successful - would sell shares
Please select which one of these ideas you would immediately sell / double your shares in
Strength of Portfolio
5776
Portfolio Norm This Test
Performance v norms Top QuarWle 2nd QuarWle Boeom 50%
%s based on total seeing each concept: c500
Works well in ‘everyone’s a winner cultures’ like Nigeria
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“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?”
So if System 1 is so influenWal, how do we measure it? FaceTrace®: award winning measure of emoIonal engagement
Captures ‘Reasons for EmoIon’
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Irresponsible Drinking in Britain
Brighton
Cardiff
Leeds Nottingham
Newcastle
Newcastle
Gloucester Watford
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Meet Our DetecWves
Team Marple The case for Individual Factors
Team Poirot
The case for Social Factors
Team Columbo
The case for Choice Environment
Team Holmes The case for Local Environment
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The Case for Environmental/Architectural Factors
“Could I have a ginger ale please?”
“A gin and tonic please.”
“Did you want gin or vodka with that?”
“Double?”
“Two beers please – can I pay by card?” “Sure – minimum spend £10 on the card though” “OK – I’ll get four beers then, please”
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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
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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).”
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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
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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?
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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’