Attending a talk hosted by FS Forum I was immediately sold on Alan Newman (London +3) when he remarked ‘humans are not irrational, we are non-rational – there’s a difference.’ It’s not the case that consumers make senseless choices, but rather that in certain contexts we behave inconsistently and sometimes choose in opposition to general principles of logic and reason.
Newman sets this up as a gap between ‘knowing and doing’ rather than between ‘knowing and not-knowing.’ For example, an overweight individual will know they should exercise to benefit their health, but they may choose not to – they know, they just don’t do.
Such non-rational choices are made with no less thought or reason than so called logical ones, it’s simply a case of different factors being at play in the process of their making. All such choices are of course cognitive; the value of a solid grounding in neuroscience becomes all the more relevant when we learn that as individuals ‘95 percent of our purchase decision making takes place in the subconscious mind’ (Gerald Zaltman, Harvard Business School). The onus here is on the fact that we make these choices, a personal peeve of mine being when people appropriate the subconscious as existing somehow outside of the individual. True, we are of course less aware of making such choices than we are conscious ones, though it is still us making them. Another bug bear being that the very term ‘subconscious’ positions this level of thought as secondary, less important and ‘other’ to our conscious thinking which of course is not the case.
‘Unconscious’ I believe to be a better descriptor for our less accessible and less understood thinking levels. Terms aside, the key learning is to appreciate that consumers are all individuals and are reacting to different contexts in different ways – based on their own individual past experience as well as the individual context in which a choice is presented to them.
Newman spoke of ‘levels of programming’ within each of us, which can be broken down as below:
- Shared biology – drivers such as the need to eat and desire to procreate
- The early years – factors which shape us at a young age such as language and culture
- Personal and unique experiences – those which help to develop who we are as adults
Such contexts affect our behaviour as consumers, two of three of which alter dramatically between individuals. Consequently it would be near on impossible to even imagine a model that could represent, and be used to predict, individual behaviour in relation to consumer choice.
What we can, and should consider, are the contexts themselves. Traditional market research focused on gathering data such as an individual consumers age, sex and postcode. Taking Newman’s different levels of programming into account, we’re forced to appreciate a need to find more telling signs of behaviour – how do individual consumers identify themselves and how do brands fit in to this?
Newman proposed that modern consumers are more likely to identify themselves based on the generation of which they are part rather than by, for example, geography. I for one have never heard someone of the so-called ‘Millennial Generation’ or ‘Generation Y’ describe themselves as such. I have, however, heard many people of a different generation describe younger individuals in exactly these terms. For me, this is the crux of the challenge – learning to stop identifying consumers and rather focus on an understanding of how they identify themselves. When looking for indicators of behaviour in relation to ‘how brains buy’, context is key but we should not expect clear-cut or uniform results.
Considering ‘context’ specifically we start to understand where the opportunity to develop behavioural change might exit. Newman used an example of purchasing a bottle of wine – many of us wouldn’t bat an eyelid at ordering a £30 bottle of wine at a restaurant, though would be far less likely to choose a bottle of wine of the same price at a supermarket – context changes our behaviour and therefore our choices. If we can alter the context of consumer choice, we may be able to affect behavioural economic outcomes. One of the best examples of creating such change can be seen in the results of the 2007 UK ban on smoking in public places; ‘in 2007 a quarter of all British adults smoked, today it is barely 18%’ (Guardian, April 2015).
As the world becomes increasingly mobile, each traditional context of consumer purchase is subject to constant flux. Brands are now in a two-way dialogue with consumers, using these avenues to gather insight into consumer behaviour as well as help foster change. Here I’m thinking of Amazon and its ingenious and hugely successful initiative to offer its customers recommendations based on what other consumers have purchased.
‘Your recommendations change regularly based on a number of factors, including when you purchase, rate or like a new item, as well as changes in the interests of other customers like you’ (Amazon).
The major success here is that Amazon have both acknowledged the fluctuations in consumer choice as well as developing a way to respond quickly and adapt with such changes to continue to add value. Amazon has embedded itself deeply within the contexts of each consumer choice in order to maintain and retain consistent relevancy. It’s the platform that is golden and has allowed Amazon to thrive. It’s platforms that I believe to be the future of partnership between behavioural economics and successful brands.
