Science of influencing consumer behavior

transcript

SCIENCE OF INFLUENCING CONSUMER BEHAVIOR

@TejDesaiJan 12, 17

… requires as much an understanding of human psychology as much as that of media!

CONSUMER JOURNEY

One quality that binds them together…

… is their need for simplicity!

‘You’ll see I wear only gray or blue suits. I’m trying to

pare down decisions. I don’t want to make

decisions about what I’m eating or wearing.

Because I have too many other decisions to make.’ The simple act of making decisions degrades one’s

ability to make further decisions.

Do you know how many decisions do we make daily on an average?

35,000 decisions daily

…causing decision fatigue!

“The more choices you make throughout the day,

the harder each one becomes for your brain, and eventually it looks for shortcuts…

One shortcut is to become restless… the other is the ultimate energy saver:

do nothing!” ~ John Tierney

Six jars of jam on display Twenty four jars of jam on display

Source: Sheena Iyenger and Mark Lepper 2000. – Journal of Personality and Social Psychology

Which sample would attract more people?

Six jars of jam on display Twenty four jars of jam on display40% stop & taste 1-2 types of jams60% stop & taste 1-2 types of jams

Source: Sheena Iyenger and Mark Lepper 2000. – Journal of Personality and Social Psychology

Which sample would attract more people?

Which of those people would actually buy?

Six jars of jam on display Twenty four jars of jam on display40% stop & taste 1-2 types of jams

BUT31% of those who stop, purchase

60% stop & taste 1-2 types of jamsBUT ONLY

3% of those who stop, purchaseSource: Sheena Iyenger and Mark Lepper 2000. – Journal of Personality and Social Psychology

Which of those people would actually buy?

Six jars of jam on display Twenty four jars of jam on display40% stop & taste 1-2 types of jams

BUT31% of those who stop, purchase

60% stop & taste 1-2 types of jamsBUT ONLY

3% of those who stop, purchaseSource: Sheena Iyenger and Mark Lepper 2000. – Journal of Personality and Social Psychology

So how do marketers tackle this dilemma of consumers’

inability to make decisions?

THEN NOW

iPhone 5: 16GB, 32GB, 64GB iPhone 7: 32GB, 128GB, 256GB

• Price decoys- From AED 2199- From AED 2599- From AED 3099

• High reference price• Obscure the reference

price so there’s no point of comparison

THE DECOY EFFECTThe decoy effect is a phenomenon where

consumers change preference for one of two items when a third is introduced.

CENTRE-STAGE EFFECTIt is the belief that consumers will prefer the middle product when presented with a line of items.

FRAMING EFFECTThe framing effect is an example of cognitive bias, in which people react to a particular choice in different ways depending on how it is presented; e.g. as a loss or as a gain.It is a way to describe or label a product in order to get customers to focus on the value instead of the price.

BANDWAGON EFFECTA psychological phenomenon whereby people do something primarily because other people are doing it, regardless of their own beliefs, which they may ignore or override

ANCHORINGEFFECTAnchoring or focalism is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions.

Source: Eric Johnson & Daniel Goldstein

f driv

Defaults and donation decisions

• Flowery language: "handcrafted, triple-basted, slow-cooked, golden-brown, hand-selected"—makes a dish seem more enticing

• Price decoys- Surf and Turf …………… 45.00- Salmon …………………....28.00- Fish & Chips ……………. 16.00

• Covert currency / Pricing in letters known to increase spends by 30%

• Golden Triangle• Subconscious scheming (Top two items,

last item – highest margin)• Limited choice• Nostalgia (Grandma’s Apple pie)• Layout: Most have uniform description

length except the key items• Negative space: crammed vs open space

for attention• Upsell items

The long pour: Have you ever seen a bartender pouring a drink and bring the bottle way far from the shaker/glass while they are pouring?

This gives the illusion that they are dumping huge amounts of liquor into the drink, when in fact it's all based on the timing.

CONSUMER JOURNEY

Source: Little Springs Design

I GO TO MY REGULAR BANK AND THE OTHER BANK THAT REMEMBER FROM THE

GREAT TVCS

I EXPLAIN MY REQUIREMENTS TO THE BANK STAFF

BOTH OFFER ME OPTIONS. I SEEK MY

ACCOUNTANT FRIENDS’ OPINION

I CHOOSE THE OPTION THAT WORKS BEST

PERSONAL LOAN CONSUMER JOURNEY - 1995

I NEED A PERSONAL LOAN

Source: Sujay Nanavati

SUPPLIER

PROBLEM

SOLUTION

PRODUCT

I START WITH GOOGLING MY PROBLEM AND EXPLORE MY OPTIONS OF LOANS ONLINE,

COMPARISON SITES ETC

I READ REVIEWS, DESCRIPTIONS, SOCIAL INFORMATION, BY EXPERTS AND PEOPLE LIKE ME AND FROM THE BANK

THAT I TRUST

I CHOOSE THE LOAN THAT BEST FIT MY NEEDS AND

FEELINGS BASED ON THAT INFORMATION

THEN I CONTACT THE

BANK THAT OFFERS THE

PROBLEM

SOLUTION

PRODUCT

SUPPLIER

PROBLEM

SOLUTION

PRODUCT

SUPPLIER

PERSONAL LOAN CONSUMER JOURNEY

PROBLEM

SOLUTION

PRODUCT

SUPPLIER

PROBLEM

SOLUTION

PRODUCT

PERSONAL LOAN CONSUMER JOURNEY

PROBLEM

SOLUTION

PRODUCT

SUPPLIER

PROBLEM

SOLUTION

PRODUCT

It was critical to have great TVC to

generate high awareness

It is critical to be found in the

research stage of the journey

BRANDING & CONTENT ARE OF

PARAMOUNT IMPORTANCE

… THUS IT IS VERY IMPORTANT TO BE PRESENT ACROSS THE DIGITAL CONSUMER JOURNEY

… AT THE SAME TIME, WHAT PEOPLE SAY ABOUT A BRAND IS MORE IMPORTANT THAN WHAT A BRAND SAYS ABOUT ITSELF… SOCIAL & CONTENT STRATEGIES ARE KEY!

When people want to find, do or buy something, they expect IMMEDIATE RESULTS.In these micro-moments, brands have an opportunity to meet consumers’ needs and shape their decision.

PRETAIL AND CROWD-SOURCING HAVE

DISRUPTED INDUSTRIES BY ALTERING

CONSUMER JOURNEYS

TESLA: Sold over 180,000 cars in a day netting over US$8 billion!

First crowd-funded album: Marillion's Anoraknophobia

XIAOMI: Ranks No. 4 in Smartphone Sales in less than 6 years

• Purpose: Bring the accouterments of finer living to the middle class

• Direct access: ecommerce• Flash Sales: One day sales (control inventory)• High word of mouth + robust social media

strategy• Competitive Pricing• Loyalty: 30million registered users• Long term strategy: Build an eco-system

(Software apps, Cloud services, Consumer electronic products

“The next revolution will be psychological, not

technological”- Rory Sutherland

RCES • Dan Ariely

• Sheena Iyenger• Richard Thaler & Cass Sunstein• John Tierney• Charlie Sorrel• Ed Coburn• Quincy Smith• David Aaker• Rory Sutherland

Science of influencing consumer behavior

Marketing