Behaviour science for brand growth (James Redden, 2CV research)
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We are not rational, value-maximizing beings. Instead, emotion and mental short-cuts drive our behaviour and decision-making. These short cuts (or cognitive biases) play a significant role when we buy products and services. And as they are typically unconscious to the buyer, they can be capitalized on via marketing and communications to push buyers towards your brand and improve your marketing effectiveness. This paper firstly touches on how our brain works, and then explores some key cognitive biases and how they can be leveraged in marketing to change consumer habits and achieve brand growth.
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Behaviour science for brand growth (James Redden, 2CV research)
- 1. Using Behaviour Science For Brand Growth James Redden, Managing Director @ 2CV Asia April 2018
- 2. 2 QUESTION 1 A bat & ball cost a $1.10 in total. The bat costs $1.00 more than the ball. How much does the ball cost? __________ Source: Kahneman, D. (2011). Thinking, Fast and Slow
- 3. 3 QUESTION 2 Which is lighter, square A or B? Adelson, E. (2005). "Checkershadow Illusion“. See https://en.wikipedia.org/wiki/Checker_shadow_illusion
- 4. 4 THE ‘ANSWERS’ BOTH ARE INCORRECT! QUESTION 1 QUESTION 2 10c SQUARE B
- 5. 5 A bat & ball cost a $1.10 in total. The bat costs $1.00 more than the ball. 5c $1.05 + $0.05 = $1.10 QUESTION 1 Source: Kahneman, D. (2011). Thinking, Fast and Slow
- 6. 6 2. THE CORRECT ANSWER They are both the same! Adelson, E. (2005). "Checkershadow Illusion“. See https://en.wikipedia.org/wiki/Checker_shadow_illusion
- 7. 7 2. THE CORRECT ANSWER They are both the same! Adelson, E. (2005). "Checkershadow Illusion“. See https://en.wikipedia.org/wiki/Checker_shadow_illusion
- 8. 8 2. THE CORRECT ANSWER They are both the same! Adelson, E. (2005). "Checkershadow Illusion“. See https://en.wikipedia.org/wiki/Checker_shadow_illusion
- 9. 9 WHAT’S HAPPENING? | We have two thinking systems Slow Logical Controlled Effortful Self-aware System 2 Fast Emotional Uncontrolled Effortless Unconscious System 1 Gives us quick & intuitive answers ‘Thinking’ in the traditional sense Source: Kahneman, D. (2011). Thinking, Fast and Slow
- 10. 10 Fast Emotional Uncontrolled Effortless Unconscious Slow Logical Controlled Effortful Self-aware System 2System 1 WHAT’S HAPPENING? | We have two thinking systems 5 x 2 = ? 17 x 24 = ? Source: Kahneman, D. (2011). Thinking, Fast and Slow
- 11. 11 Fast Emotional Uncontrolled Effortless Unconscious System 1 SYSTEM 1 THINKING DOMINATES OUR DECISION-MAKING… An easier way to think So we rely on it wherever possible Important to account for this when we try to change consumer behaviour Source: Kahneman, D. (2011). Thinking, Fast and Slow
- 12. 12 SYSTEM 1 THINKING USES VARIOUS COGNITIVE BIASES System 1 thinking does not happen randomly It is driven by various cognitive biases Biases = short-cuts & stereotypes we employ in specific contexts We can leverage these biases to influence consumer behaviour
- 13. 13 BIASES RELEVANT TO CONSUMER BEHAVIOUR 1. Social proof 2. Loss aversion 3. Pratfall effect 4. Price relativity 5. Scarcity value
- 14. 14 1. SOCIAL PROOF The bias: we are more interested in things if we see others are interested
- 15. 15 WE SEE THIS IN SINGAPORE – PEOPLE CAN’T RESIST A QUEUE!
- 16. 16 SOCIAL PROOF | EVIDENCE An experiment in a hotel chain to encourage re-use of towels 1. The environmental benefits Noah J. Goldstein, Robert B. Cialdini and Vladas Griskevicius (2008). A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels. Journal of Consumer Research 35% of guests 49% of guests 2. Most past guests in their room re-used towels Two alternative in-room messages were used:
- 17. 17 LEVERAGING SOCIAL PROOF IN MARKETING Convince people your brand is highly popular Where the brand isn’t yet popular, be creative e.g. use terms like ‘fastest growing’ or ‘the number 1 brand in market X’
- 18. 18 EXAMPLES OF SOCIAL PROOF IN MARKETING Raw numbers, without context
- 19. 19 EXAMPLES OF SOCIAL PROOF IN MARKETING Claims around growth
- 20. 20 OTHER SOCIAL PROOF TACTICS Showing where brand has been featured Media Logos on website E.g. The number of followers or likes Social Media Proof Genuine customer testimonials Reviews
- 21. 21 2. LOSS AVERSION E.g. lose $100 E.g. gain $100 https://www.nytimes.com/2013/12/09/your-money/overcoming-an-aversion-to-loss.html The bias: we feel the pain of losses more than the pleasure of (equivalent) gains
- 22. 22 LOSS AVERSION | EVIDENCE Would you take this bet on a coin toss? Tails would mean you lose $1,000 Heads would mean you win $1,800 Among Singaporean millennials… 32% 68% Would take the bet Would NOT take the bet Source: 2CV client research (2018)
- 23. 23 LEVERAGING LOSS AVERSION IN MARKETING Frame offers in terms of the loss that will be incurred for not choosing your brand TimeMoney Health Talk about losses in terms of …. Emotion …whatever is relevant
- 24. 24 EXAMPLES OF LOSS AVERSION IN MARKETING Framing an offer as a loss (if not taken up), rather than a gain (if taken up)
- 25. 25 EXAMPLES OF LOSS AVERSION IN MARKETING Focusing on losing money
- 26. 26 3. THE PRATFALL EFFECT Who is more likeable? Jennifer Lawrence Melania Trump OR
- 27. 27 SHE’S LOVED AS SHE’S IMPERFECT – JUST LIKE US Some believe she is well-liked as she has flaws – e.g. she tripped while receiving her Oscar in 2013 https://psych2go.net/pratfall-effect-imperfect-makes-likeable/
- 28. 28 3. THE PRATFALL EFFECT People often don’t trust marketing claims… The bias: we feel more positive towards things if they have faults …However admitting to limitations can enhance trust… …And make other brand claims more believable
- 29. 29 THE PRATFULL EFFECT | EVIDENCE Two groups were played the same recording of a man answering quiz questions One group also heard the man ‘accidentally’ knock over a cup of coffee The group which heard the spill rated the man significantly more likeable https://psych2go.net/pratfall-effect-imperfect-makes-likeable/
- 30. 30 EXAMPLES OF PRATFALL EFFECT IN MARKETING Avis admitting they were only #2 – but offered the best service
- 31. 31 Admitting not everyone loves the taste of Marmite – but it is memorable (Potential for Durian?) EXAMPLES OF PRATFALL EFFECT IN MARKETING
- 32. 32 EXAMPLES OF PRATFALL EFFECT IN MARKETING Admitting to limited service perks, but lower prices as a result
- 33. 33 EXAMPLES OF PRATFALL EFFECT IN MARKETING Admitting you’re not the cheapest (but the best)
- 34. 34 A 2CV! Humour to compare your brand to more expensive alternatives EXAMPLES OF PRATFALL EFFECT IN MARKETING
- 35. 35 4. PRICE RELATIVITY The bias: we can be persuaded to spend more by seeing a higher priced item, which makes the item we purchase seem better value https://www.jeremysaid.com/blog/how-to-use-the-decoy-effect/
- 36. 36 PRICE RELATIVITY | EVIDENCE Consider this real offer from The Economist magazine: 1. Online subscription $59 2. Print subscription $125 3. Online & print subscription $125 3 price options pushed people towards a higher priced option In experiments, respondents were asked to choose one: Option 3 seems like the best option WHEN SHOWING THE 3 OPTIONS: 1. Online subscription for $59 2. Print subscription for $125 3. Online & print subscription for $125 16% chose 0% chose 84% chose WHEN SHOWING OPTIONS 1 & 2 ONLY: 1. Online subscription for $59 2. Print subscription for $125 68% chose 32% chose Ariel, D. (2008). Predictably Irrational: The Hidden Forces That Shape Our Decisions
- 37. 37 EXAMPLES OF PRICE RELATIVITY Including a ‘Premium’ offer to make the middle offer look better value
- 38. 38 EXAMPLES OF PRICE RELATIVITY Including a decoy medium size to push buyers towards the large size
- 39. 39 5. SCARCITY VALUE No limit on purchase: 3.3 cans purchased per customer ‘Limit of 4 cans per person’: 3.5 cans purchased per customer ‘Limit of 12 cans per person’: 7 cans purchased per customer The bias: when we perceive something to be scarce, it has a greater value in our eyes https://foodpsychology.cornell.edu/sites/default/files/unmanaged_files/Anchoring-JMR-1998.pdf
- 40. 40 EXAMPLES OF SCARCITY VALUE IN MARKETING Airline booking pages – X # of seats left
- 41. 41 ‘Limited time only’ EXAMPLES OF SCARCITY VALUE IN MARKETING
- 42. 42 EXAMPLES OF SCARCITY VALUE IN MARKETING
- 43. 43 FINAL THOUGHTS Working with relevant biases will make it more likely your brand feel like the easy choice 1 2 Use them to guide marketing decisions Identify biases relevant to your category