Branding

A view from a Behavioral Economics perspective

Choice Architecture

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20

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60

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Denmark

Netherl

ands

United K

ingdom

German

y

Austria

Belgium

France

Hungary

Poland

Portuga

l

Sweden

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4

% o

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gans

Organ donations?

Johnson & Goldstein (2003)

Time Discounting

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ire

Nextweek

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ire

Nextweek

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Des

ire

Nextweek

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Des

ire

Nextweek

Nextyear

Year&week

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ire

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Choice Architecture+

Time Discounting=

Trivial decision

Significant decision

Trivial decision

Significant decision

Trivial decision

Emot

iona

l

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”

External SignalingSelf Signaling

Signaling

Signaling

SignalingTo others

SignalingTo others

SignalingTo others To self

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”

Social coordination

Social coordination

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”

Expectations

Expectations

Expectations

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”

Fluency

Fluency

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”

Reward Substitution

Reward substitution

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”Habits

Habits

Significant decision

Trivial decision

Emot

iona

lEm

otio

nal

Com

puta

tiona

l “Emotional computation”Habits

External SignalingSelf Signaling

Signaling

Social coordination

Expectations

Fluency

Reward Substitution

Other forces• Defaults*

• Emotions*

• Spotlight effect

• Conceptual consumption

• Price quality inference

• Encoding / Retrieval Match

• Elimination by aspects

• Habits

The spotlight effect

The spotlight effect

Final words• Branding taps many aspects of human decision

making

• Not all brands and not all products tap the same psychological mechanisms

• Understanding where your brand falls on the “significance / computational map” is a crucial first step*

• Once you understand your brand’s location -- it should be clearer what actions you should take!