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There has never been a more exciting time to work in marketing and technology. The world was already digitising rapidly, but the pandemic has accelerated this digital transformation. Companies that have been forced to adapt to evolving customer behaviours to survive now have an opportunity to thrive.

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Book of The Month: The Choice Factory by Richard Shotton

There had been “too much description of behavioural biases and experiments, and not enough about the practical application,Richard Shotton told us when asked about the motivation behind his book.
 
Richard Shotton (1)
 
This book review is sponsored by our pals at Treasure Data. Shape customer-centricity to power exceptional experiences & build trust! 
 
The Choice Factory, 25 Behavioural Biases That Influence What We Buy chronicles what the man himself considers to be the most relevant biases that can be applied to marketing and advertising.
 
(Scroll down for the full interview with the man himself, hosted by our very own Carlos Doughty. Horse's mouth and all that.)
 
But what is the Choice Factory? Well, if you're a marketer, or in the business of influencing decisions, you have to know. Understanding the drivers of these decisions, and why individuals are pulled one way or the other, is vital. 
 
This is where the Choice Factory comes in. It explores how behaviour is shaped by psychological shortcuts. Remember, the brain is lazy, and evolutionary so. Why waste precious energy, when it can cut through the supposed muck to get to its end goal?
 
So, Richard Shotton sees how this can be applied to advertising. The work specifically looks at the power of decision-making and how it impacts peoples' purchasing decisions. 
 
Want to hear directly from the man himself? Then check out the marketing leaders symposium. Join us there for an evening of inspiration and insights, as we discuss the art of decision-making in modern day marketing and hear from our special guest speaker, Richard Shotton himself.
 
Starting his career as a media planner working for accounts such as Coca Cola and Lexus, he has now specialised in applying behavioural science to business problems. Currently, he is the Head of Behavioural Science at Manning Gottlieb OMD. 
 
Richard explains how people can become easily overwhelmed by the everyday decisions they have to make. This can be stressful, and time-consuming, which leads to shortcuts. However, this haphazard approach can lead to biases. 25, to be exact. Please see the book's tagline if this comes as a shock to you. 
 
What makes the book a seminal work is the topic. Behavioural science findings and research is often ignored, as advertisers often just ask consumers directly about their motivations. However, this assumes that what consumers say, and do, are aligned. That's not always true, and can lead advertisers to act on incorrect information. 
 
So, instead, Richard's 25 biases can help ad professionals to map out their audiences' unconscious behaviours, and cut out the middle man. Let's jump in with bias number one.
 

1. The Fundamental Attribution Bias

Context is just as important as the audience. 
 
There's a tendency to overestimate the importance of personality, and underestimate the context, when explaining customer behaviour. So, the situation, not the person, determines behaviour. 
 

2&3. Social Proof and Negative Social Proof

The best tactic is to reveal the popularity of your product or brand in a way which is relevant to your audience. 

Popular brands can become even more popular because their visibility provides a sense of social proof. It's important not to assume your scale is known.

Instead of just listening to what customers say, it's more effective to look at what they do. There are two types of norm: those referring to how you should behave, called injunctive norms, and those describing how most people behave, known as descriptive norms

The brands which take the time to convey their social proof messages with humour, or on-brand messaging, will be even more successful.

With negative social proof, it's vital not to confirm inferiority. Using some clever wording, you can flip the statistics in your favour. 
 

4. Distinctiveness

 Being distinctive makes brands memorable. Although this might sound incredibly obvious, many advertisers and the advertising industry tend to ignore it. 
 
As a result, you should avoid committee decisions when creating something new, as they're not conducive to original work. For example, successful companies like Comparethemarket were able to make creative and quick decisions based on how small their marketing team was, with a tight group of two or three decision-makers. 
 
But we're talking about distinctiveness. The book talks about a study, which found a distinctive item is more memorable. But what was interesting was who it impacted most; the effect was more pronounced among a younger group. 
 
Distinctness is so rare as many brands want examples of successful case studies before they act. This leads to endless loops of mimicry. 
 

5. Habits

Habits account for a significant proportion of consumer actions and are revealed only when their environment changes.

This is what's called a 'life event', and can be such things as getting a new job, having a baby, moving house, or starting university. 

The book found that 45% of behaviours were habitual — the same decisions being made at the same time and place without full conscious thought. 

Since habits are specific to the context, a consumer's habits become looser when their environments change. So, when they undergo a life event, their habitual behaviour can be destabilised. 

In fact, 8% of consumers switched brands in the selected categories when they hadn’t undergone a major life event recently. 
 

6. Pain of Payment

If you can distance the consumer from the tangibility of money, this will reduce price sensitivity. 

Remember: when the prices were shown as a daily figure they were five times more likely to be rated as a great deal than when they were shown annually.
 
Plus, consumers tend to overemphasise the sum quoted and place too little weight on the time frame. 
 
The way deals are, uh, dealt with are also important. When consumers don't trust brands they treat deals sceptically, but when they're accompanied by a backstory they have more influence. 
 

7. Danger of Claimed Data

People tend to lie in research, or at least can't be 100% accurate. So, you'll need to be prepared for deceit and design your surveys accordingly. 
 
You can consider asking respondents how they think others might behave.

Direct questioning is unsatisfactory because of lying and confabulation. When people aren’t aware they’re being monitored they behave naturally.

 

8. Mood

When we are in a good mood it signifies an absence of danger and removes the need for individuals to think critically.
 

9. Price Relativity 

When compared to a high-priced brand, any brand can look better value, even ones with their own high price point. 
 
So, you can change your competitive set by merely changing small parts of your brand. For example, wine in comparison to beer, or beer in smaller cans. These create a distinct category for drink, in which brands can set their own (higher) price. 
 
This means that, often, the middle ranged price point can be the most popular, just by adding in a high-end option. In a study 57% chose it, compared to 22% for the cheapest option. Buyers are often uncertain about what makes for a good product – they worry that the expensive option will be overpriced and the cheapest will be shoddy.
 

10. Primacy Effect

One theory is that our limited memory capacity means our recall is saturated by our earliest memories, and the ability to store later information is weakened. 
 
So, if a brand establishes a strong association with one positive characteristic, it can colour other attitudes, so they should instead focus on the values that are easiest to be associated with. 
 

11. Expectancy Theory

Basically, brands can double the price, by merely improving the presentation. The presentation can be just as important as a product. 
 

“If you run a restaurant there is no healthy distinction to be made between the value you create by cooking the food, and the value you create by sweeping the floor”.

So, detailed descriptions can boost appeal, and even taste, by 13% and 7% respectively.

This theory also suggests that consumers believe that products involve a trade-off. So, improved eco-friendliness entails a loss in effectiveness. So, you need to investigate the set of expectations associated with your positioning. 

12. Confirmation Bias

This suggests it's hard to overturn negative opinions. Nay-sayers of your brand will be extremely difficult to convince because they interpret your message cynically, and through a lens of negativity. 

So, when we consider the three audiences:

  1. Those likely to buy regardless of communications.
  2. Those unlikely to buy regardless of communications.
  3. Those for whom communications might make a difference,
Brands should be focused on number three. 
 

13. Overconfidence

This impacts marketers and customers alike. If you have an above-average campaign, you should really leave it alone.
 

14. Wishful Seeing

What we see is sometimes what we want to see. So, the idea of a marketing approach which works in all situations is false. 
 
This means that in a competitive market economy, performance is relative, not a certainty. Competition, and other factors, play a huge role in the brand's performance
 

15. Media Context

The media context in which an advert appears can impact its interpretation. No piece of information is processed neutrally, and instead, consumers are swayed by contextual clues. So, a message in a highly respected context can gain credibility from the environment alone. 
 
Advertising known to be expensive can signal the volume of resources available to the advertiser. 
 

16. The Curse of Knowledge

Find out if your audience are maximisers or 'satisficers'. – Maximisers want to know that their product is perfect; satisificers want reassurance it won’t be rubbish.

Reassurance comes from stressing the popularity of a brand.

17. Goodhart's Law

 
This states: When a measure becomes a target, it ceases to be a good measure.
 
So, setting a naïve target encourages behaviour that meets that goal, rather than the underlying objective. 
 

For example, when we are biased against a specific outcome it forces some unexpected behaviours or outcomes. This might look like sacrificing a larger sales next month to hit this month’s bonus). 

In Hanoi, there was an outbreak of bubonic plague. To try to contain it, the French Colonials offered a small reward for every rat’s tail. This led to people cutting off the tails and then letting the tail-less rats go free

18. The Pratfall Effect

Everyone assumes that brands are imperfect and fallible, so if a brand is open about its failings, it can position itself to persuade consumers that its weaknesses are inconsequential. 

19. Winner's Curse

This is all about finding unique ways of identifying your target audience. This can be as simple as browser choice. The formulaic targeting of most brands means there is plenty of opportunity for more creative companies. 

Another aspect of this bias is behaviour patterns and rhythms. This is all about identifying the moment when a target audience becomes valuable. For example, there is a predictable spending spike around payday. 

So, two steps: first, find unique ways of identifying your audience. Then, identify the moment when a target audience becomes valuable.

20. The Power of the Group

As Vadim Gayevsky said: The audience does not trust itself, it trusts someone else.

On top of this, things are funnier if experienced in a group, due to shared experience.

Ads watched in groups of three and six were reported to be 21% and 10%, funnier than those watched alone.

The key point is that the funniness of an ad is not solely a creative issue but also one of location, and media placement.

21. Veblen Goods

As price conveys quality, companies and brands should invest disproportionately in their higher end goods.

22. The Replicability Crisis

It's important to not take a single study as definitive proof. Much market research doesn't generate the same results when replicated, so it's vital to not be cynical but sceptical.

23. Variability 

Nudges do not change all people, all the time. Different people will react to a nudge in different ways. 

A bias that works in one situation might backfire in another, so using nudges is a constant work of refinement. 

Don't apply biases randomly, employ scarcity and social proof in specific ways. 

24. Cocktail Party Effect. 

One way consumer brains determine what is worthy of conscious attention is through personal relevance.

However, this is tricky for marketers. Localisation needs to be relevant enough to attract attention, without being too personal or creepy to offend. 

For example, there was a campaign run by a brand in the UK. One version of the ad related the offer to the UK, the other to the site of the ad, Charing Cross station. The locally tailored activity generated 14% higher spontaneous awareness than the nationwide message. 

Bob Levenson, the copywriter behind many of the great Volkswagen ads, gave practical tips on how to adopt a personal tone of voice. He recommended that you should write your ads to a close friend. 

25. Scarcity

This one is well known. It's all about limiting the number of products that consumers can buy. 

The most famous experiment into scarcity was led by Stephen Worchel, a psychologist at the University of Virginia. In 1975, he recruited 134 undergraduates and asked them to rate the quality of a batch of cookies.

The participants tasted the cookies from a glass jar containing ten or two biscuits. When the cookies were in scarce supply they were rated as significantly more likeable and attractive. The participants were also prepared to pay 11% more for them.

TLDR;

The Choice Factory hypothesises that consumers rarely make decisions based on ration or logic. Therefore, most decisions modern customers make are susceptible to decision bias. So, understanding how these biases do this can give businesses an advantage in the market.

But Richard is keen to suggest that Behavioural Economics is not a magic elixir for brand health. Different biases create different levels of impact, so test your success and remain sceptical over the findings. 


RELATED: Marketing & Tech Book Club episode with Seth Godin

Interview with Richard Shotton

Our illustrious founder, and host of the Marketing and Tech Book Club Carlos Doughty caught up with Richard to chat about the book and you can listen to the full episode right here;
 
 

In this episode:

  • Tech giant Uber's success with the application of psychological principles...and where it might fail due to the consumer's inherent bias towards 'punishing unfairness'
  • The application of the Pratfall Effect in recent ad campaigns by Carlsberg and Argos
  • Richard's advice for marketing newbies
  • Why marketers might be failing to analyse their social listening data
  • Why 'Brand Purpose' should not be the focus of marketing
  • and plenty more.

Episode preview

Richard Shotton - Uber