Category: MARKETING

 

Matthew Willcox, EVP, global planning director of FCB West and founder and executive director of FCB’s Institute of Decision Making has intertwined more than two decades of advertising and marketing experience with the findings of decision-science researchers from around the globe to create a marketing book that suggests a different approach to influencing people’s decisions.

 

In The Business of Choice: Marketing to Consumers’ Instincts, Willcox makes sense of the brain’s decision-making systems and how to apply them to today’s marketing challenges. Laced with entertaining examples, Willcox illuminates how the brain’s decision-making systems have been evolving for millions of years and shape consumer choices about everything from toothpaste and clothing to smartphones and retirement plans. Here’s more from the book in an excerpt, published with permission of the author

 

By Matthew Willcox

 

We’re getting a lot better at understanding how people make decisions, thanks to advances in behavioral science and neuroscience.

 

We are learning more about how people choose and learning it faster than we have ever done before. I am very fortunate to be writing this book at a time when we are in the middle of a golden age of decision sciences.

 

In spite of the wealth of knowledge about human behavior and the future potential of the decision sciences to tell us even more about how humans decide, it is important to understand that, like life on earth, science is in flux and continually evolving.

 

Decades ago, the study of the brain was just “neuroscience.” These days we see the emergence of specialized fields like “decision neuroscience,” “cognitive neuroscience,” and “social neuroscience.” The science of decisionmaking is more precise today than it was decades ago because of the natural progression of science (refining your questions and experiments based on previous results) and because of advances in technology—researchers today have access to non-invasive technologies that allow the human brain to be studied in real-time as choices are made. But, even though we have many answers about how humans behave and make choices, there remain many outstanding questions. This fragmentation of expertise is an indicator of the complexity that science has found in our minds. Neuroscience is doing for our understanding of the brain what the Hubble Telescope and its successors are doing for our understanding of the universe. We are learning more than we have ever known, but at the same time revealing how much we have still to learn. Be wary of anyone telling you they have figured out how the brain works or that they have located the “buy button.”

 

Three big trends are driving the golden age of decision science, leading to an explosion of learning from behavioral and social sciences. The first is an intellectual revolution which prompted the acceptance that intuitive processes, rather than rational ones, drive human choices. Theories based on the importance of intuition in decision-making started to gain traction about two decades ago and inspired entire new research fields, such as behavioral economics and more recently, neuroeconomics.

 

Many of you will have heard of behavioral economics. It is a wonderfully fascinating area, and I say without exaggeration, it should lead to one of the biggest changes to marketing thinking in the history of marketing. But, from a practitioner perspective, I don’t think it is particularly well named.

 

Behavioral economics , as a name, comes from the origin of the field, which was when experimental psychologists studying behavior started investigating economic choices (and indeed, collaborating with enlightened economists).

 

Hence behavioral economics. 1 But I think this makes it sound much more about economics and fiscal policy than about human behavior.

 

My lay-person’s description of behavioral economics is this:

Behavioral economics is an area of psychology that explores how humans behave and make choices by studying the differences between how we should act from a rational, economic perspective and how we really behave. In so doing, it reveals many of the nonconscious processes that drive human decision-making.

 

I’ll use the term behavioral economics in this book, but I will also use related terms like “judgment and decision making” or simply “behavioral science.”

 

By dissing its name, I hope I am not diminishing the importance of behavioral economics. It should be considered game-changing thinking for marketers. Its gift to marketing, though, has much less to do with economics and much more to do with revealing deep insights into human behavior and, in the process, providing the evidence to displace conscious, rational, or deliberative thinking as the lynchpin for how people make choices.

 

Readers familiar with advertising agency structures may see a comparison withthe origin of the term behavioral economics and origin of the term account planning, the creative strategy discipline which was named from the merging of some skills from account management and some from media planning . Although this reflects the discipline’s origins, it doesn’t intuitively describe it. I feel the same about the term behavioral economics.

 

The second trend is one of resource and capacity—a sort of human brainpower version of “Moore’s Law.” Gordon Moore’s observation suggests that the number of transistors on an integrated circuit doubles every two years, which enables a step change increase in computer processing power.

 

We have seen a dramatic increase in the number of minds, and thus brainpower, focused on understanding human behavior and decision-making.

 

Behavioral and social sciences have become the hot ticket in leading academic institutions across the world, and an estimate based on the sizes of the leading faculties and academic societies suggests that more than 5,000 professors and graduate students 2 are today involved in conceiving, carrying out, and analyzing experiments relating to behavior and decision making. The popularity of behavioral and social science research has led to large, interconnected communities of discussion and collaboration, the output of which is peer-reviewed papers (I estimate that the leading five journals 3 and conferences that cover human decision-making have yielded 1,500 papers over the last two years that are of at least some interest to marketers) and, of course, books like this one, jostling for space in the non-fiction section of airport bookshelves. Countless blogs on the subjects exist, and scientists like Dan Ariely have amassed Twitter followings that approach rock star proportions.

 

The third trend is more like the real Moore’s Law, because it is one facilitated by technology. Behavioral and social scientists benefit from the decreasing cost and increasing availability of technology to perform experiments that were inaccessible to decision science greats when they made their landmark contributions—scientists like Kahneman, Amos Tversky, George Lowenstein, Paul Slovic, Richard Thaler, Paul Glimcher, and Bill Newsome, to name just a few. The field of neuroeconomics, for example, relies on functional magnetic resonance imaging (fMRI) scanners that were not available outside of medical schools until the first decade of this century.

 

2. Estimate based on combined membership of relevant societies.

 

3. Some examples are Nature, the Journal of Consumer Psychology, the Journal of Consumer Research, Cognition, the Journal of Judgment and Decision Making, and the Journal of Advertising Research. There are many, many more—the SCImago Journal Rank Indicator counts 5,000 active journals in the broad field of social sciences. A list of conferences I have found useful is in the appendix.

 

4. Well, maybe not rock star proportions, but @danariely seems to lead the pack of behavioral scientists with 72,900 followers as of September 2014, and he had significantly more followers at that time than institutions and brands like Carnegie Hall (52,000), the Nissan Leaf (41,000), Samuel Adams (51,000), and 7Up (54,000).

 

Now most leading business schools have MRI scanners in their basements (you will learn more on what these machines have revealed so far and their future potential in Parts II and III). Also, we can see the application of crowdsourcing to behavioral science experiments: Amazon’s Mechanical

 

Turk, a service that distributes Human Intelligence Tasks (HITs) to online workers, enabling inexpensive and fast fieldwork for experiments; the use of everyday technology like smartphones and webcams records behavior and choices in natural environments; and the data trail from the Internet and mobile web reveals actual behavior rather than stated preferences and intentions.

 

This third movement also presents the opportunity for huge learning in the social sciences but especially in marketing. The organizers of the Conference on Digital Experimentation (CODE), a conference at MIT that brings the worlds of social science and computer science together, introduced their inaugural event with the statement: “The ability to rapidly deploy microlevel randomized experiments at population scale is, in our view, one of the most significant innovations in modern social science.” Enabled by the ability to track real behavior in real-life digital environments, this approach allows randomized controlled tests (RCTs) to be conducted with a robustness of scale that would have been prohibitively expensive to previous generations of researchers. These massive RCTs can also be implemented with a speed that makes them significantly more useful for marketers than most research conducted to academic standards.

 

Studies that take this approach have the potential to help us understand human nature at a macro level, in a way that avoids something that bedevils nearly all research—whether academic or commercial. Whether study participants are lying in an fMRI scanner; are taking part in a behavioral test and being rewarded with coffee mugs, pens, or course credits; or are in a focus group room answering questions about whether packaging design may lead them to buy a particular brand of yogurt on their next trip to the supermarket, virtually all research has to make methodological compromises that remove it from the real world, and therefore from the real behavior and outcomes it seeks to predict. Behavioral researchers refer to this phenomenon as concerns about ecological validity.

 

While real-world RCTs of the type advocated by CODE hold great promise, marketers need to tread a little warily, as potential exists for ethical criticism

 

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The Business of Choice is about how marketers can embrace what science has revealed about how people choose. It is not a science book, and I don’t believe that marketers need to become scientists. (I’m not sure that scientists becoming business people is a good idea either, but that might be simply a result of seeing too many villains following that course in movies like Spider-Man.)

 

The Business of Choice includes practical examples of where good work has already started. I write about some intentional uses of decision science and other areas where marketers and their agencies have intuitively landed on ideas that leverage the science of human intuition.

 

The book also highlights research that might make you think differently about how to change behavior, and I would be delighted to hear whether it inspires any ideas that actually do. More than anything else, my aim is to demystify decision science. I want to enable marketers to see this wonderful and fascinating area as compatible with a practical and ethical approach to marketing. It is possible to leverage knowledge from decision science in a way that doesn’t just help brands get chosen but can also create positive brand equity by helping the people who choose them.

 

The Business of Choice: Marketing to Consumers’ Instincts is available as a Kindle ebook for Rs 532 (Search at amazon.in/kindle)