the hidden value in consumers' decisions
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The Hidden Value in Consumers’ Decisions
26th June 2012
An Introduction
Marketing is about influencing consumers’ decisions…
But how much do marketers really know about how people make decisions?
And shouldn’t we be thinking differently about it now?
• Explosion of information• Proliferation of choice• Decline in the power of brands• A “golden age” of understanding behaviour and how
humans make decisions
“Golden Age” of decision sciences
• Breakaway from “Homo Economicus” with establishment of Behavioural Economics
• Popular interest in behaviour, decision-making (Gladwell, Lehrer, Wray)
• Growing community of scientists studying and experimenting in decision sciences and related areas
• Improvement and accessibility of neuroimaging and biometric technology
• OUR CONCLUSION: THE ONLY WAY TO DEVELOP REAL
UNDERSTANDING IS TO ALIGN OURSELVES WITH THE SCIENCE…
… so we set up the Institute of Decision Making
• Committed resource – full time global head and key members in market
• Built relationships with academics and experts• Advisory board of Global Capability Leads• Three campuses worldwide (SF, Chicago, Vienna) and more
to follow
• With a focus on the instinctive or intuitive aspects of decision making
Instincts, intuitions or gut feelings are judgements
1. That appear quickly in consciousness Closer to 6.5 milliseconds than 6.5 seconds
2. Are strong enough to act upon They drive action, so they matter to the individual, and
matter to clients
3. Whose underlying reasons the individual is not fully aware of Cannot be explained by the individual in research
Michael Gilbert, author “The Disposable Male” and senior fellow at Center for Digital Future
“We daily test the electronic frontiers of cyberspace, but there are cavemen – and cavewomen – at the keyboards. Yet the motivational implications of our natural history, the neural and genetic “hard drives” powering so much of consumer behavior, go largely unexplored, even in sophisticated marketing circles”
Why this is interesting
• Intuitions are evolved capacities, so are part of our evolutionary development
• They are universal – affecting all people, across cultures, and across decision types
• They are often the dominant force in our decisions• They can make us feel very good… or very, very bad.
What we are doing
• Building relationships with the best minds to improve our understanding and stay at the forefront of the exploration
• Building this into agency thinking and processes• Running specific “decision consulting” workshops with
relevant experts to bring a decision-centric approach to marketing problems
NEWREALITIES 3.0Consumer Decision Making inToday’s New Information World
Today
3 forcesaffect decision
making
Explosion of product information- not only from manufacturersbut also from the new public
“experts” and advocates
Today3 forces
affect decision making
Consumer empowerment - “here I am,this is who I am, and what I want”
…and for marketers tocustomise their offerings
Today3 forces
affect decision making
Dramatic advancement inunderstanding how people
make decisions
ROLE OF RATIONALTHOUGHT VS. INTUITION
BEHAVIOURAL ECONOMICS
NEUROSCIENCE ANDNEUROECONOMICS
Today3 forces
Affect decision making
NEW REALITIES EXPLORES WORLDWIDE
…and what we can do about it for brands
These 3 forces Their effect on consumer decision making
Are they frustrated or confusedby all the new information?
What goes into a product decision today?
What personal and social benefits come alongwith their product research?
What’s the role and importanceof brand advocates?
How has experiential media changed the landscape and consumer expectations?
DECISION MAKERTODAY’S
2011METHODOLOGYOUR
INTERVIEWS US, BRAZIL, CHINA,INDIA AND GERMANY
600+/– ONLINE INTERVIEWS,PER COUNTRY:Men and womenInterviewing Oct. 26 - Nov. 10, 2011
Completed first wave ofresearch in 2009: US, China, Germany
CHINAUS BRAZIL INDIA GERMANY
With additional layers:Exploration of universal drivers through Institute of Decision Making and academics in neuro and behavioural sciences
Discussions with local teams to understand cultural/societal differences
OURMETHODOLOGY
1. Are we drowning in information?
3 FINDINGS TO TALK ABOUT THIS MORNING…
3. Information based approach to segmentation
2. The decision process doesn’t stop at the decision
IS INFORMATION OVERLOAD
A GROWING PROBLEM?
WHAT FRUSTRATION? WHAT CONFUSION?
US BRAZIL CHINA INDIA GERMANY
4.8 6.2 5.4 6.9 4.6
6.8 6.4 3.9 7.3 7.0
2.9 3.1 3.7 3.5 2.8
2.9 3.3 3.9 3.7 2.8
Helped you beat the system
Smarter
Frustrated
Confused
Feelings about Available Product Information (Mean Ratings; 1-10)
The Information Explosion Is Under Control
IN REALITY PRODUCT INFORMATION HAS MANY POSITIVE ASPECTS
THE SPECIESHAS EVOLVED
Information is my friend
Information gives me controlin my buying decisions
Information availability has mademe more confident in brand choices
I always seek out trusted sourcesfor information on brands
Increased information has alsoincreased my satisfaction with brands
US % BRAZIL CHINA INDIA GERMANY
63 64 52 54 58
64 62 49 58 51
53 61 55 57 38
53 62 55 59 52
46 58 49 55 31
STRONGLY AGREEING
COMPLAINTS ABOUT INFORMATION OVERLOADARE NOTHING NEW
“The abundance of books is a distraction”
Seneca the Elder, 1st Century AD
AREN’T CONSUMERSMEANT TO BE OVERWHELMED?
WHY MIGHT CONSUMERS BEMORE POSITIVE ABOUTMORE INFORMATION?
Not all information is the same.
High-noise information -- stuff that stresses us out and demands we pay attention or requires we do something.
People see most marketing as low-noise information -- free ofobligation and not a big part of the information overload.
As far as consumers are concerned better decisions, more available information = better decisions.
SEEKING POST-DECISIONAL BLISS
WE ARE INCLINED TONOTICE OR SEEK OUT PRODUCTINFORMATION AFTER PURCHASE
Ignore
Notice/Seek Out
0% 100%
898481 8680
11 16 1914 20
US % BRAZIL CHINA INDIA GERMANY
*Journal of Neuroscience 2011
Studies from the Brown Institute forBrain Science* show that confirming acorrect decision activates the dopaminereward system (the same ”feel good”chemical that is activated byaddictive drugs).
WHAT DRIVES THIS“POST-DECISION” RESEARCH?
WHAT DRIVES THIS“POST-DECISION” RESEARCH?
Making the “right” decision feels good… and we don’t want to spoil the party.
Seeking information to reaffirm our choices: a low risk venture.
After a decision, choice-supportive bias leads us to discount all butthe most overwhelming suggestions that we have made the wrong choice, and inflates evidence and memories that support our choice.
36 44 35 53 23
34 45 43 51 26
27 38 42 52 18
25 41 37 49 19
27 40 37 49 21
POST DECISION RESEARCH FEEDS“SOCIAL CURRENCY”
People value me and my knowledge about certain product categories
I have personal pride in knowing a lot about certain brands or products
My knowledge about certain brands enhances my self-esteem
Other people admire me because of my expertise
The reason I stay informed about certainproduct categories is to be helpful to others
US % BRAZIL CHINA INDIA GERMANY
WHAT DRIVES THE DESIRE TO SHARE PRODUCTKNOWLEDGE?
Although respondents attribute it to “helping others”, there is a deep intrinsic motivation.
From Jean-Jacques Rousseau’s 18th Century philosophy, to Freud, and now through neuroscience, the connection between self-esteem and belonging have been seen as fundamental to our mental health.
Simply posting information has beenshown to increase self-esteem.
“When people feel confident about their decisions two things happen. First they derive more utility from the product, and second their excitement makes their decision contagious”
- Professor Baba Shiv: Sanwa Bank, Limited Professor of Marketing, Stanford Graduate Business School
IN MORE THANONE WAY
GOOD NEWS FOR MARKETERS,
BUT NOT ALLDECISION MAKERS ARE ALIKEWe have identified 5 segments of decision makers
…with dramatic differences in how they view information, how they viewthemselves, and how they make decisions
BUT NOT ALLDECISION MAKERS ARE ALIKEWe have identified 5 segments of decision makers
Information ObsessedResearch deeply and extensively, get emotional fulfillment and brand satisfaction
“I research most of my decisions, and often enjoy the research as much as the product itself”
BUT NOT ALLDECISION MAKERS ARE ALIKEWe have identified 5 segments of decision makers
Information SelectiveSimilar to “obsessed” but less so, selective in categorising the research,motivated by self esteem and personal reputation
“I like to be expert in areas I‘m interested in, and it makes me feel really good when people ask for my advice when they are making those purchases”
BUT NOT ALLDECISION MAKERS ARE ALIKEWe have identified 5 segments of decision makers
Information FunctionalPurely functional users of information, least likely to value brand reputation
“I don’t enjoy searching for it, but you need information to make the right decisions.”
BUT NOT ALLDECISION MAKERS ARE ALIKEWe have identified 5 segments of decision makers
Information PassivesDefault to well known brands to make fast decisions, somewhat frustrated and confused by information
“I just want to make quick decisions, so will ask friends or chose the most popular brands”
BUT NOT ALLDECISION MAKERS ARE ALIKEWe have identified 5 segments of decision makers
Information HatersFrustrated and confused by all the information, least likely to getsatisfaction from research
“Help!”
New Realities Wave 2: International Comparisons
CHINAUS % BRAZIL INDIA GERMANY
31 36 52 61 33
26
15
14
14
20 10
16
12
12 257
26 1912 235
12
19 10 6 8
Selective
Haters
Passives
Functionals
Obsessed
SEGMENTDISTRIBUTIONS
There is a symbiotic relationshipbetween segments
ECOSYSTEM AN INFORMATION
Higher engagement segments (Obsessed, Selectives) are more likely to be an influencer or advocate…
…while the less engaged segments (Functionals,
Passives) say they are more likely to seek opinions from
others
THAN AN “AGE SET”MORE A MINDSET
“Digital Natives” don’t report being better or worse at dealing with information than “Digital Immigrants”.
Woman generally less“information enamored” than men.
Beyond demographics, psychographics, and product usage profiles…
“Decisiongraphics” – viewing how your category’s decision makers are segmented, and developing marketing programs that deliver the most appropriate information and experience programs.
RE-THINK SEGMENTATION ALL POINTING TO AN OPPORTUNITY TO
SUMMARY
Our research shows that consumers seeinformation as an ally. Consumer who areconfident as they approach choice makebigger, bolder and faster decisions.
Studies show that not only do they getmore satisfaction from their choice, butthey actually derive more utility from theproduct or service.
FEEL CONFIDENT IN DECISIONSIS A WIN/WIN
HELPING CONSUMERS
AND TOMORROW’S CONSUMERS
KEEP IT SIMPLE FOR TODAY’S
Marketers can serve theirobjectives and help consumers reduce negative feelings associated with choice by understanding how toremove, or at least reduce,confusion.
MORE THAN AN AFTERTHOUGHT
AFFIRMATION OF THEIR DECISION SHOULD BE
Our research shows that a significant amount of consumers continue their research after they have purchased.
This research spotlights the need for “social currency”. And neuroscience shows that affirmation of choice creates a feel-good expression in our brain’s reward system. Not only are these good feelings associated with the brand, but they create a sense of excitement, which creates irresistible advocacy.
Welcome to “decisiongraphics”
Understand the decision making segments, identify the key target segments and their unique characteristics, design and execute custom programs to meet up withtheir decision making styles
Uncover those consumers who celebrate their “soapbox”, who valuethe social currency of product knowledge…and who live for their advocacy and influencing.
Turn these advocates into mass connectors—a new, powerful (and relatively inexpensive) media channel
RECOGNISE THAT NOT ALLDECISION MAKERS ARE THE SAME
NEW OPPORTUNITYFOR MARKETING
NEW REALITY OF MARKETING
Marketing shouldn't simply be about getting consumers to a purchase decision that favours the marketer…
We need to activate the power of our consumers feeling good about the decisions they are about to make or have made.
A framework
for influencing
decisions
How do people make purchase decisions?The power of the Emotional Brain
System 1
(Emotional brain)
System 2
(Rational brain)5%
Source: Daniel Kahneman, Nobel for Economics, 2002
95%
The New Realities Research backs this up
Emotional campaigns tend to lead to greater sales success……and this is also true
for ‘rational’ categories
» Emotional strategies are more profitable
Campaign strategy
“I’ve never been particularly good at numbers, but I think I’ve done a reasonable job with feelings. And I’m convinced that it is feelings—and feelings alone—that account for the success of the Virgin brand in all of its myriad forms.”
Richard Branson
“Emotion leads to action,while reason leads to conclusions”Donald Calne, neurologist
Rational mind fallacy
Emotional mind reality
Source: Tim Ambler, London Business School
New Realities Research:Post-purchase research stimulates greater
enjoyment & advocacy
Our research shows that a significant amount of consumers continue their research after they have purchased.
And neuroscience shows that affirmation of choice creates a feel-good expression in our brain’s reward system.
Not only are these good feelings associated with the brand, but they create a sense of excitement, which creates irresistible
advocacy.
Influence Framework: From No to Volcano
Influence Framework: From No to Volcano
FMCGe.g. face creams
IMPULSEe.g. ice cream
DesireATL
PR reviewsGirlfriends’
dressing tables
TriggerRun out
BuyPack standout
Offer?
Post-rationalisaton
On pack(ATL/PR)
EnjoyFeel
Bio-feedbackCompliments
AdvocacyGirls night in
DesireATL
Social media
TriggerSun comes
outPavement
media
BuyMenu board
PackagingShopper
Post-rationalisation
On pack(ATL/SM)
EnjoyInstant
gratification
AdvocacySocial media
Influence Framework: From No to Volcano
HIGH RISK
e.g. cars
IMPULSEe.g. ice cream
DesireOn road
PR reviewsProgramming
TriggerExpensive
MOTPCP expires
BuyTest drive
NegotiationFinance
Post-rationalisation
HandoverWelcome pack
& CRMRoadside presence
EnjoyFeatures
experienceSmell
+ve comment
AdvocacySocial media
In the pubOwnership
surveys
DesireATL
Social media
TriggerSun comes
outPavement
media
BuyMenu board
PackagingShopper
Post-rationalisation
On pack(ATL/SM)
EnjoyInstant
gratification
AdvocacySocial media
Pre-rationalisation
WebsiteReviews
Expert adviceConfigurator
Influence Framework: From No to Volcano
In summary…
Decision making is simple, complex, fast, slow, variable….
….our role is to understand exactly which buttons to press when….
…so our customers feel good about their decisions…
….for maximum effect & maximum return
Thank you
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