The Big Window Consultancy Limited www.the-big-window.co.uk l [email protected]
To BE or not to BE : Is it really a binary question?
Lisa Edgar, Founder, the Big Window®
Thanks to:
Jo Kenrick, Marketing Director, Homebase
Dr Lynn Sudbury-Riley, University of Liverpool Omnisis Limited, Programming and Data Processing
Consumer and Organisational
Psychology
To BE: A Quick Recap
3
Consumers’ Decisions – in Theory
Working full-time
Children at home
Internal Pressures
We process 174
newspapers every day
Av social media users consumers
54,000 words every day
External Pressures
Other priorities
Can I be bothered?
4
Life is a Processing Nightmare
5
Information Overload
System 1: Thinking Fast Almost automatic, superfast system of
processing that allows us to cut through data/information to arrive at a decision 6
Behavioural Economics: System 1
System 2: Thinking Slow Allocates full attention to the mental
activities that are demanded, consciously trying to take in as much
information as possible 7
Behavioural Economics: System 2
In other words, with so much to process we take easy to follow or
well trodden decision paths or patterns…
‘System 1’ rather than ‘System 2’ Thinking 8
q These patterns are called Biases or Heuristics and they explain: § How advertising works § Why we try to emulate our peer groups § We we respond to 3 for the price of 2 § Why we are willing to buy add-ons with big
purchases § Why we respond to ‘closing down’ sales § ….
9
Biases and Heuristics
!
10
… Biases and Heuristics In Action
Herd Behaviour… One of My Favourites
Behavioural Economics: The New Nirvana?
CRT Test 89% of our
sample made 1+ System 1
errors 65% made 2+
Approach to Decision-Making 54% agreed they make spontaneous
decisions
Herd Behaviour Test
61% agreed with at least 2 HB statements
Delayed Gratification 65% needed at least 100% return to delay
gratification of a financial reward for 2 years
Lots of evidence for Behavioural Economics
And in academia…Delayed Gratification
Because, in Behavioural Economics world…
But… we do not all respond to BE in the same way
…Or not to BE: Variations on a Theme A Case Study on Age
Starting with Age … with older consumers not ready to rollover to marketing techniques
Theory suggests…
Age in Years
Reactions to emotional/rational advertising
Emotional Advert Rational Advert
Nectar Panel (February 2013)
c2600 responses
Reactions to emotional/rational advertising
CRT Test (Fredericks, 2005)
Perceptions of task approach (Novak and Hoffman, 2009)
Approach to decision-making (Nenkov, 2009)
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Emotional Engagement
Headlines Opinion about
headlines
General furniture
Main furniture
Colour
Net recall of Living Room Adverts
As expected… System 1 (Impression formation) rules
22 Net recall of Living Room Adverts
Older consumers breaking our ‘rules’
16-24 70+
32%
8%
23% Rational Ad Net Recall
Emotional Ad Net recall
40-49
Living Room Adverts
… much preferring the rational ads
q How could BE help explain this? q Do different people have different BE tendencies?
… anxiety and cynicism about letting their hearts rule their heads
The advert felt meaningful to me
I could really relate to this advert
I learned something about this product in
this advert that I didn’t know before
I can now more accurately compare
this brand with other competing brands …
Effortful
Optimising
Heuristics Speed
Rule-based
Maximising
Instinct
Emotion
Deliberate
➔ the CRT test, Fredericks ‘05
Measuring BE Tendencies
System 1
System 2
9%: all correct 26%: 2+ correct
49%: 0 correct 73%: 2+ incorrect
➔ with little age differences
System 1 dominates
100#
110#
120#
130#
140#
150#
160#
170#
16*29# 30*39# 40*49# 50*59# 60*69# 70+#
Av#$me#taken#in#secs#
Av#/me#taken#in#secs#
Older Customers trying to use System 2
q 75% thought they tackled the tasks in System 2
q 66% of those who got all the tasks wrong thought they were in System 2
I am in System 2, honest
20%$
30%$
40%$
50%$
60%$
70%$
80%$
90%$
16-29$ 30-39$ 40-49$ 50-59$ 60-69$ 70+$
system$2$
system$1$
Older consumers more than most
I want to see it as it is
I want to know the facts
I worry about making the
wrong decision I like to stop and
think first
➔ evidence that older adults are less inclined to make ‘mental leaps’?
Older consumers very wary of using System 1
Park et al, 2002
… perhaps ‘world knowledge’ serving as a warning signal
…Or not to BE: Variations on a Theme Other Bits and Bobs
Cross Cultural Variances in the CRT Test
34 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 Errors <= 1 Error <= 2 Errors <=3 Errors
Country A
Country B
Cross Cultural Variances in the CRT Test
Personality-Based Variances in CRT Results
36 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
External Personality Internal Personality
0 Sys 1 Errors
1 Sys 1 Error
2 Sys 1 Errors
3 Sys 1 Errors
44% make <2 System 1 errors
34% make <2 System 1 errors
66% make 2+ Sys 1 Errors
56% make 2+ Sys 1 Errors
Variances by Personality
Different Decision-Makers Have Different Products Too
40%
50%
60%
70%
80%
90%
100%
4 future choices 3 future choices 2 future choices 1 future choice 0 future choices
Has Product No Product
Q Which of the following gifts would you prefer… e.g. £50 now or £100 in 2 years
38
Variances in Delayed Gratification
…So…
40
The Big Window Consultancy Limited www.the-big-window.co.uk l [email protected]
Keeping Pace with the Older Consumer
Lisa Edgar, Founder, the Big Window®
Thanks to:
Jo Kenrick, Marketing Director, Homebase Dr Lynn Sudbury-Riley, University of Liverpool
Omnisis Limited, Programming and Data Processing
Consumer and Organisational
Psychology