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.
How consumers use technology and the impacts on their lives
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
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
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
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1. SOCIAL PROOF
The bias: we are more interested in things if we see others are interested
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WE SEE THIS IN SINGAPORE –
PEOPLE CAN’T RESIST A QUEUE!
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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’
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
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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
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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)
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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)
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A 2CV!
Humour to
compare your
brand to more
expensive
alternatives
EXAMPLES OF PRATFALL EFFECT IN MARKETING
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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
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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