What Behavioural Science Can Teach Us about Consumers

Three Business Blog Team
On: 14 Dec 2017
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Jimmy Larsen Red C Three Blog

Businesses like to think consumers make rational, informed purchasing decisions. That’s why so much time is spent on traditional marketing.

However, Jimmy Larsen, Director of RED C Research and Marketing contends that the more we learn about buying behaviour, the more surprises there are – leading to new ways to affect consumer behaviour, such as “nudging”, adopted from behavioural science.

Consumers, and that includes ourselves, have more information available to inform purchasing decisions than at any other time in history. From being able to “visit” every stockist under the sun without even looking up from our laptops, to accessing comparison sites that do the job for us, we can learn everything there is to know about a product or service and find the best price in a matter of minutes. After which, we naturally make a rational decision and choose the optimum price/product combination. Or do we?

Actually, we don’t. In spite of us having hard facts to hand, researcher Jimmy Larsen says that we still allow our choices to be influenced by irrational factors and to be driven by idleness, influencers and mental shortcuts.

Our choices are influenced by irrational factors and driven by idleness, influencers and mental shortcuts.

Swayed by the Subliminal

Despite the availability of facts, our choices are swayed by subliminal factors such as the colour of a product’s packaging. If you’re choosing something like a jar of instant coffee, this may be more understandable. Yet even for something as important and costly as car insurance – where a wide range of comparison sites do all the hard work for us – it’s been shown that most people will only look at the top three policies that appear on a site.

If decision-making really is this irrational, how can we hope to influence it?

One theory – first expounded in the Nineties – has undergone a renaissance in the past decade and is currently gaining ground. It’s the behavioural science of “nudging”.

Small Interventions, Big Outcomes

Jimmy explains that nudging is not about big marketing campaigns but, as the name suggests, about small interventions which guide people through subconscious influences to take a desired action.

Until recently, this approach has largely been used in the public sector, for such things as health or public safety campaigns: think “Don’t Drink and Drive” or warnings on cigarette packets. Nudging is an ideal technique for campaigns like these, as they aim to influence a behaviour which is good for the consumer.

Aim to produce a behaviour which is good for the consumer.

Can the same approach be applied in the private sector when the behavioural change you are trying to encourage is to buy more of your product or use your service? If implemented in the right way, the answer is yes.

Jimmy cites the example of a French cheese producer whose sales were falling because people were overeating the cheese and feeling uncomfortable or even slightly ill as a result. This negative brand experience led them to buy the cheese less often. In response, the manufacturer added portion size indicators to the cheese packaging. Although this led to an average reduction of 13% in the amount of cheese consumed per occasion, overall it led to an increase in consumption as people rediscovered the enjoyment of the cheese without the unpleasant after-effects. Indicating a recommended portion size also tied into the wider issue of smaller portions for healthier eating, leading to a behavioural change which consumers perceived as being to their advantage.

Not What You Say, but How You Say It

Nudging can also be as simple as presenting choices in a different way. For example, if you present potential customers with a choice of two levels of service – Basic and Premium, most will choose Basic. However, if a third customisable option is introduced at a price between the other two, most will choose it. The consumer sees the benefit of an option that is better suited to their needs and less expensive than Premium, while the benefits to business having up-sold from Basic are obvious. The desired behaviour is seen as good for them.

A simple but effective nudge can be to make the retailer’s or provider’s preferred option the default option. Customers will then tend to choose it.

Another effective nudge, which can increase the value of sales, is not to present customers with a basic product or service and ask them to add features, but to offer them a fully-featured, top-of-the-range product from which they can remove features and reduce the price. This results in them ultimately purchasing a higher-featured, higher-priced option than they would otherwise have bought.

Where to Nudge

Nudging has broader applications than the public good. It can be applied equally effectively to grow your business. All that’s required is to identify the nudge “topic” that can produce a desired behaviour that consumers will see as good for themselves.

Identifying the topic and finding a way to nudge it effectively may be something you can do yourself if you have creative thinkers within your business. A good starting point would be to read-up on the subject in books such as Thinking, Fast and Slow by Daniel Kahneman, and Nudge by Richard H. Thaler and Cass H. Sunstein.

Alternatively you can talk to companies such as RED C Research, who understand how consumers really behave and how to nudge them to behave as you want them to – because they will want to themselves.

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