The Hidden Forces behind Buying Decisions
Are we really crafting our lives based on our decisions or is it all an arbitrary coincidence?
Is a consumer rational to pick a product based on needs and value offered?
Incidental emotions have a huge impact on the decision making process. It said that there are multiple contextual effects that lead to consumer’s buying decision. At any given time the impact of emotions on one’s behavior is indisputably in coherence with the strength and effectiveness of external stimuli. Decisions taken by consumers on daily basis are greatly influenced by seemingly illogical and invisible forces like emotions, social norms etc. as they are victims of their inherent biases and cognitive illusions.
Then how do we determine what people really want. If the consumers themselves do not have access to their thoughts then how will they guide us in what they want and why they may like it. The traditional research tools fail because they rely on ‘articulated’ or ‘self-reported responses’. Instead of depending on research techniques and intuitive guesswork we need to probe the consumer below the surface of consciousness.
While irrational behavior has big implications on how we design it would be worth thinking can we use these very principles to artifice the market? Research and development teams need to blend neuro-science into their offerings. Brain science will enable developers to conceptualize ideas that are designed for consumers Real but unarticulated desires. Traditional research methodologies when mixed with neurological parameters will give much more reliable indicators of consumer behavior and preferences.
Sometime back, while browsing the internet I stumbled on a very interesting article- ‘which iphone do you own?’ I was intrigued by the article. The article stated that iphone 5S model is outselling the iphone 5C model by a margin of more than 1 to 3 in US. That confused me. I was wondering why an expensive model would outdo a cheaper version by such a large extent. The answer was simple. Iphone 5C acted like a decoy in the market letting 5S emerge as a winner. It was iphone 5C that made iphone 5S appear more attractive and desirable. This article talked about ‘Contextual Effects’ on people’s preferences. It said that there are multiple contextual effects that lead to consumer’s buying decision. As creators it is important to recognise that people’s preferences are very uncertain and are determined in response to a context. It was easy to conclude that we just have an illusion of making a decision. And the decisions we take on daily basis are greatly influenced by seemingly illogical and invisible forces like emotions, social norms etc.
Today’s market is completely consumer driven. Therefore understanding their decision making process is of utmost importance. In most cases even these consumers are not aware of their choices at a conscious level and thus the data generated by traditional marketing research tools is not very accurate. People are looking for rational reasons but they are taking emotional decisions. Why is that? That is because they are victims of their inherent biases and cognitive illusions.
So, the question is what are these inherent biases and what is cognitive illusion? As explained by Freeman Dyson “A cognitive illusion is a false belief that we intuitively accept as true. The illusion of validity is a false belief in the reliability of our own judgment.” Decisions that we take are heavily biased by our inherited illusions and even if we become aware of these, the illusions refuses to disappear.
On an every average our senses take 11 million bits of information each second. But our conscious brain can process only 40 bits of it. Where does the rest go? It’s processed by our subconscious brain. By that math the ratio of subconscious to conscious processing is 99.999%. Therefore people themselves do not have direct access to the sources that drive their behaviors and influence their decisions. Then how do we determine what people really want. That is where the traditional research tools fails. They capture ‘articulated’ or ‘self-reported responses’. But that is like asking the conscious brain about the information that is withheld in the sub conscious. This is where brain sciences can help innovators. Neuro based frameworks needs to be identified for product development and communication.
I would like to validate that hypothesis with a case study. Why is Apple such an iconic and loved brand? One can say because of its designs, operating system, colors, logo, appeal etc etc. But I feel that it’s not because of any one of these alone. Apple has had a very strategic approach. Since the beginning it has created a very strong and distinct identity. Apple as a brand has been able to provide the human brain what it longs for but the question is how has it managed to do that? They have a very consistent brand strategy making sure that every touchpoint that consumer encounters expresses the same attributes thereby making it simple for the brain to associate one singular meaning out of the whole brand experience. They gave the brain ease of use and overcame the inherent fear of the complicated intimidating technology. What helped in enhancing stronger meaning and lasting identity was the beauty and simplicity of its design. The visual language of apple products and packaging was uncluttered, hence pleasing to human eye. Building further on the brain’s need for identity they controlled their distribution very strictly thereby positioning themselves very differently from the other brands. To create an aura of desirability they kept the price points way above the category norms. Apple evoked the feeling of desire in people’s mind by heightening the air of exclusivity and reinforcing the elements that form the essence of the brand. That is why Apple is one of the most celebrated brands worldwide with millions of fans who themselves are not aware of the real reason behind the love for Apple products.
Incidental emotions have a huge impact on our decisions. At any given time the impact of emotions on one’s behavior is indisputably is in coherence with the strength and effectiveness of a trigger. We do not realize the profound effects of emotions on our desires. Consumers don’t have a control on their own choices and the price they pay for it; and the strangest thing to note is that these behaviors are recurring in human nature. For example, while window shopping one day in the mall I came across a dress on sale. The dress was very beautiful and was also on 50% discount, which meant that it had gone down from Rs 7500 to just Rs 3750. Even though the price had come down by 50% it was still an expensive purchase for me. Also that was the last piece of that dress and it was a size smaller than mine. Rational thing to do in such a scenario would be to not waste Rs 3750 on a dress that would not fit you right and would just end up lying in your closet. But at that time the cloud of 50% discount had impaired my thinking and I ended up buying a dress of a smaller size at an expensive price. Such random circumstances influence our behavior where we make a trade off in the favor of something regrettable over something pleasurable. So, the question is - Are we really crafting our lives based on our decisions or is it all an arbitrary coincidence?
Standard economist would completely dismiss this theory. Economics assumes that we know all the pertinent information about our decisions and that we can calculate the value of the different options we face, and that we are cognitively unhindered in weighing the ramifications of each potential choice. The result is that we are presumed to be making logical and sensible decisions. And even if we make a wrong decision from time to time, the standard economics perspective suggests that we will quickly learn from our mistakes either on our own or with the help of "market forces."(Dan Ariely, predictable irrationality, 239). On the other hand according to behavioral economics people’s behavior is not always rational. Behavioral economists believe that people respond to their immediate environment and get influenced by the same. Priming and anchoring plays a very important role on our decision making process. Our eyes receive the visual signals, our ears absorb auditory notes and our nose senses smell, but brain is master of all these senses as all these signals are processed in the brain. The information that our brain comprehends may not be the true reality. Like demonstrated with the circle relative illusion earlier. According to a very famous neuro-marketing expert Mr. A.K. Pradeep, “the fact is that the human brain is structured, and functions, in such a way that relying on its articulated responses, as compared to its earlier registration of information at the deep subconscious level, produces inherently and unavoidably flawed results.” He suggests that instead of depending on research techniques and intuitive guesswork we need to probe the consumer below the surface of consciousness. Instead of assuming that a consumer would make good choices we should present our ideas in a ‘Brain-friendly’ way. In a situation where a consumer himself is not aware of his actions and his choices asking him about his preferences would be redundant.
Let’s have a closer look at the global economy. We are in the age of disruptive innovation where millions of people are fighting for intellectual Property rights. The number of innovative products that we have seen in the last 5 years is more than ever in the design history. But is the reality different from what it appears? The marketplace has recorded 80% failure rate in the new products and services being introduced. Marketeers and product developers rely on articulated reports on consumer preferences and that is why they are led astray. Interplay of conscious with subconscious data in the brain poses a challenge for people developing products and getting consumers to buy them. If the consumers themselves do not have access to their thoughts then how will they guide us in what they want and why they may like it. I could name so many product failures which were a breakthrough in design and technology but could not find a market. When Godrej developed Chotukool they were very sure that they have identified a definitive segment and they are going to capture it in no time. Godrej had identified that 80% of the Indian population does not own a refrigerator, which means that a billion plus population is at the bottom of the pyramid. Godrej wanted to make a luxury product like a refrigerator accessible and affordable to the larger population. Thus, Chotukool was born. Chotukool is a portable refrigerator designed for rural India priced at Rs 3000. It was the world’s cheapest fridge. G Sunderraman, vice president of Godrej & Boyce Mfg Co Ltd said, “Chotukool was conceptualized on disruptive innovation that opens up the untapped market of the non-users. It addresses the basic needs of the simple consumer with easy and affordable solution.” Chotukool team did a lot of groundwork during development stages to get insights about consumer behavior, lifestyle and buying preferences. Godrej claims that Chotukool was developed using Five Step Discovery Process based on consumer needs and invisible insights generated during user study. But the product failed miserably in the market. Why would an award winning product with a brilliant concept not sell? What mistake did Godrej make? Onio design pvt ltd. organized a co-creation workshop to understand refrigerator needs for this segment of the Indian population. In the workshop people were given cutouts of vegetables, fruits and other things that go into a fridge and were told to create a fridge for them on a wall. The outcome of this exercise was very interesting. Most of the people constructed fridge that was beyond 5 feet*3 feet. What insight do we generate from this? The urban poor population living below poverty line longs for a refrigerator which is almost half the size of their houses. Is that where Godrej went wrong with Chotukool? What Godrej failed to understand is that the consumer is not very rational to pick a product based on needs and value offered. With Chotukool Godrej tried creating a new product category and the consumer could never associated that product to a refrigerator. Every year trillions of dollars are spent over hundreds of new product launches globally but all these economic costs do not always turn into success stories. Very few people focus on how human brain works and how it makes choices. Chotukool is not the only brilliant product which has failed to capture the market we have many such products floating all around us like TATA Nano, Segway, apple newton etc. All these were very well designed products but that did not guarantee a successful and profitable business.
In this competitive age how do we design products and services that not only attracts, engages and delights the consumer but also compels them to try and buy. Research and development teams need to blend neuro-science into their offerings. Brain science will enable developers to conceptualize ideas that are designed for consumers Real but unarticulated desires. Traditional research methodologies when mixed with neurological parameters will give much more reliable indicators of consumer behavior and preferences. Uma R. Kamarkar, an assistant professor at Harvard Business School says, “People are fairly good at expressing what they want, what they like, or even how much they will pay for an item. But they aren’t very good at accessing where that value comes from, or how and when it is influenced by factors like store displays or brand perceptions.” Our purchase decisions are largely based on what makes us feel good in that context. Then we try to rationalize our decisions because we have a tendency to justify our actions to be right and not accept that they could be poor judgments. We tend to find our choices rational in retrospect because we heavily invest in them both financially and emotionally. Why does that happen? Human brain can take into account not more than three to four criterias at a time while making any choice. In presence of information overload our brain tries to limit these criterias. We tend to overlook the full picture and base our decisions on gut and rationalize our choices to ignore any possibilities of being wrong. This is where neuro-science could intervene. When our brain receives a stimulus it subconsciously reacts in a wisp of a second. That data is unpolluted of our consciousness and is free from cultural biases, language barriers, educational conflicts and past lived experiences. This data is pure as compared to data put through myriad mental mechanisms by your conscious mind. According to neurologists this data is much more efficient and precise with only 4% margin of error. With the help of neuroscience we can discover the hidden elements of the decision making process.
While irrational behavior has big implications on how we design it would be worth thinking how we can use these very principles to artifice the market. The field of behavioral economics and neuro-economics has many frameworks which could be deployed in the research process to generate actionable insights for developers, marketeers and business people. Dr. Zaltman, Professor in Harvard Business school with a PHD in sociology said, “The knowledge of what we need lies so deeply embedded in our brains that it rarely surfaces Most of what influences what we say and do occurs below the level of awareness. That's why we need new techniques: to get at hidden knowledge - to get at what people don't know they know.” Dr Zaltman Patented a research tool called the Zaltman Metaphor Elicitation Technique famously known as ZMET. It combines neurobiology, linguistics, psychoanalysis and art theories to decode hieroglyphics etched deep inside our minds. It explores people’s metaphorical expressions by evoking both conscious and unconscious thoughts. As Zaltman described it, "A lot goes on in our minds that we're not aware of. Most of what influences what we say and do occurs below the level of awareness. That's why we need new techniques: to get at hidden knowledge-to get at what people don't know they know." ZMET was used to decode the metaphors for taste for Nestle Crunch fans. Nestle crunch is a milk chocolate with crisped rice bar on the inside. Zaltman probed 10 nestle crunch fans with ZMET asking them create picture collages. Interestingly people brought in pictures of children playing in lawns, old pickup trucks, grandfather clocks and American flags. Nestle had expected people to pick up pictures of good tasting dishes and quick energy indulgences but the scenario was completely different. The insight generated was that people associated nestle crunch bar with powerful memories of childhood. This was a direction that company never noticed before. Zaltman says, Nestle found out that "a cue about time could be especially engaging - whether it's an hourglass or a clock or a sepia drawing on the wall. It can be a very small item, but you know that the eye is going to be directed toward it." In nestlle’s case a very old company discovered new dimension to their product and on the other hand Motorola used ZMET to discover unknown insights about a product which was not even born. Motorola was developing new security system and they wanted to understand the metaphorical characteristics associated with security and insecurity. Surprisingly most of the respondents collected pictures of dogs stating that canines bring in a sense of comfort and security. “This finding had enormous implications for how the product was positioned - less as a technological gizo, more as a companion - and for how it was named,” Says Wini Schaeffer, Motorola manager. Instead of naming it ‘The Talkatron’ they decided to call it ‘The Watchdog’. ZMET is a technique that unravels answers to questions that people never thought of asking.
Our brain has been relying on its instinctual responses for billions of years and it will do so in the future. This means that if specific principles are applied to products/services in order to optimize the information process of our brain then it can convert prospects to customers and create love brands. Behavioral economics and neuromarketing are the trends that are still in its infancy but the fact it promises to provide more accurate results than traditional research tools is why giants like google, HP, Citi, Microsoft etc. are using it. Neuro sciences have generated a stir in the industry across all sectors. From soda companies, to retailers, manufacturers, brewers and media companies all are becoming neuro focus as it has the potential to revolutionize the way we make and market our products. Marketeers have awakened to the endless possibilities of unveiling the brain circuits. As designers it is very crucial for us to understand the power of brain. The more we uncover subconscious desires of our consumers the more useful and meaningful products would be created. The traditional tools for consumer study rely on impaired memories and projections of the future behavior and intent. In order to connect to the consumer and make products that they fall in love with we need to combine neuro sciences in traditional design process. Behavioral economics and neuro marketing tools will not help us create successful products but also satisfy consumer’s latent needs. It is a win win situation both economically and socially.