Increasingly, behavioural economics is becoming an important part of the research function as marketers look to understand human behaviour, writes Ciara Reilly.
It has been a very exciting month for marketing with Richard Thaler awarded the Nobel Prize in economics for his work in the field of behavioural economics. Not only does this bring the theory and practice of behavioural economics to the forefront of marketing practice, but it puts a greater focus on the fundamentals of behavioural economics; that to understand human behaviour and propensity to purchase, we must understand humans.
While this may seem an obvious observation, the focus by marketers tends to lean towards thinking that consumers behave rationally, with product choice based on set circumstances and thought out decisions, rather than really understanding all the additional sub-conscious thoughts that influence choice.
Behavioural economics puts a new lens on understanding how humans really behave. It encourages us to examine many different elements that may have previously been over-looked. It looks at the impact of prior exposure or experience (either personal or otherwise) and how this affects judgements and decisions to that product / service (e.g. reluctance to purchase Brand X because the last time it had to be returned with a fault). It looks to take account of the feelings that surface when we think about a particular product or brand and also investigates habits – which to a large degree are subconscious behaviours that sometimes cannot be rationally explained.
Behavioural economics puts a new lens on understanding how humans really behave. It encourages us to examine many different elements that may have previously been over-looked.
It looks at social norms, and also takes into account that as individuals, we have difficulty in placing the same importance on future needs than we do on our current needs. This latter point helps to explain the relative disinterest in some key consumer groups in setting pension plans or putting money aside for retirement.
So now that we are now conscious of the sub-conscious, how does this impact on what we measure? In market research, the sub-conscious thoughts and motivations have historically been less of a focus, with a tendency to prefer measurement of claimed reaction, and previous / intended behaviour. In behavioural economics speak, we have historically focused less on System 1 thinking and more on System 2 analytics.
How do we Measure Subconscious Behaviour?
Over the past number of years, there have been many advancements in System 1 market research techniques, which allow us to help clients understand the subconscious decision. Some of these include:
- Eye Tracking: familiar to a number of readers, this approach measures gaze, their head movements and is particularly useful in category management when designing shelf space.
- IAT (Implicit Association Test): this uses approaches that are able to bypass people’s rational, conscious thoughts and assess their automatic (system 1) attitudes and reactions. The strength of association between attributes and a brand/concept can be measured using speed to response to uncover the hidden truth. Helping brands to understand the certainly or lack of certainly in association with attributes vs. their competitors.
- Facial Coding: this involves monitoring subconscious reactions to derive emotions including happiness, surprise, fear, disgust, sadness, anger and neutral. Useful for brand advertising or political campaigning to understand the emotional reaction to messaging and the human impact.
- GSR (Galvanic Skin Response): Sometimes called Neuro Testing it measures change in sweat glands or brain activity to get at the psychological reactions that the individual may be unaware at. Good for helping to measure emotional reaction to stimulus, such as new advertising campaigns, web sites, brand voice etc and this can help brands generate the desired emotion towards the brand.
How do we Guide the Subconscious Mind?
Now that we understand what behavioural economics is, and how we can measure it, how can we use this understanding? This is where the concept of “Nudge” comes into the fore. Nudge is essentially guiding (or nudging) consumers into a desired action through subconscious indicators. We use deep dive research techniques in order to try and pinpoint the triggers to subconscious decision making within a category of interest.
Having identified the “nudge” required to change behaviour, we can then use subliminal messaging, reverse psychology and suggestive messaging to help the consumer behave in a certain manner. Think of footprints on the left-hand side of a busy London underground passage way – the subliminal is saying, “keep left”. Or the piano stairs installed in Sweden by VW to encourage Swedish people to get active rather than take the escalators – all examples of Nudge marketing using insight generated from behavioural economics.
RED C is fortunate to work closely with both our WIN network research partners, BVA (France), who are award winning global leaders in Nudge research programmes and House 51 our System 1 research experts. So, if you want to know more about System 1 research and how Nudge works, we are happy to help you better understand how you may utilise its benefits for your brand or category.
Ciara Reilly, Director, RED C Research & Marketing Ltd
First published in Irish Marketing Journal (IMJ October 2017)© to order back issues please call 016611660