Behavioural sillynomics vs. smart-onomics at the MRS Annual Conference

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20130320_151456Recently our co-founder Leigh Caldwell chaired the behavioural economics panel session at the Market Research Society conference. Our goal with this was to go beyond the anecdotal party tricks approach which has dominated much of the BE conversation in market research so far. Our title, “behavioural sillynomics”, was meant as a playful challenge to this conversation.

Of course party tricks are a fun way to introduce the ideas of BE for the first time, and they help to catch the attention of a new audience. The market research industry has already got to that stage, however, and is hungry to know how to apply these discoveries in practice.

We structured the session as a conversation between a client, behavioural scientists and – bridging the gap – market research agencies. The client wants to use BE to create more value for his consumers; the scientist has a whole library full of useful (but sometimes complicated) discoveries that she and her colleagues have made; and the agencies can sit in between, picking out the most important and practical pieces from the scientific literature and putting them into practice for businesses.

20130320_151928Our client, Erkan Balkan of PepsiCo Snacks, opened with a call for agencies to start finding out how consumers make decisions in an unconscious way. Existing research methods mostly rely on the conscious beliefs and memories of respondents, and rarely access the deeper drivers of behaviour. Some agencies have started to adopt BE methods in the early stages of research – qualitative methods which are usually used for ideation and invention. Even there, even the most advanced agencies only use behavioural methods for 20% of their insights. But to really change market research, we have to start applying BE at scale. The real money in research is in validation and testing, for ads, products, concepts or packaging – mostly quantitative disciplines. According to Erkan, nobody has really figured out how to scale up behavioural economics research. (Read more on Erkan’s views on Research-live.com.)

20130320_153535Barbara Fasolo of London Business School represented scientists and economists – the people discovering the underlying science. One possible reason BE has not immediately been seen as a useful discipline for market research is that it sometimes uses a straw man approach. BE sets up an image of people as “rational” in order to prove they’re “irrational” – and presents this as a revolutionary discovery. But no practising market researcher has ever been under the illusion that consumers are rational! Only economists believe that.

Instead, BE and the science of decision-making should forget the argument about “irrationality” and instead focus on providing a scientifically valid description of how people make decisions. Market researchers know a lot about decision-making, and behavioural economists know a lot too – by combining their expertise we can understand the consumer much better than before. The key insight that behavioural economists and psychologists can bring is an understanding of heuristics, and the smart methods that consumers use to find their way through a complex world. Barbara called this “Behavioural smart-onomics” which made a good contrast to our title.

So, a client wants to know how BE can help him, and a scientist has presented a new way to look at the discoveries the field has made. Could our two agencies act as a translation service, putting the science into terms that clients can use?

20130320_154404Lisa Edgar took us through an example of how her agency Big Window has done that. Working with client Jo Kenrick at Homebase, she measured the cognitive response of Homebase consumers to specific advertising messages. The psychology literature predicts that older consumers will rely more on “System 1” and emotional responses, rather than logical, considered “System 2” responses. This might suggest that emotional advertising works better on this audience (an important segment for Homebase). Lisa set out to test this, but it turned out that the picture wasn’t as simple as this. Older people turned out to respond better to logical, feature-oriented advertising than to emotional ads. But they took longer to do so, suggesting that they are alert to the risk of being fooled by heuristics and take care to think things through and avoid it.

20130320_160406Tom Vannozzi from Jigsaw then showed three case studies they’ve carried out. In one, they showed consumers messages about the social norms in their area – for example, that 60% of consumers eat the recommended five servings of fruit and vegetables each day. In a survey afterwards, they found that this message changed consumers’ claimed attitudes to healthy eating – although didn’t necessarily make them buy any more vegetables! In another study, subconscious “goal priming” of consumers changed their behaviour at a petrol station – if they were thinking of environmental goals, they’d make different choices than if they were thinking of goals around speed and excitement, or self-actualisation. Consumers weren’t conscious of how these messages or primes were changing their behaviour, but the effects were statistically robust.

20130320_161311The whole panel reinforced the message that there’s no real meaning in saying consumers are “rational” or “irrational”. Instead, we would be better off thinking about what a consumer’s goal is, knowing the heuristics they are likely to use to achieve it, how those vary by consumer type, and how to influence them. Heuristics follow certain rules – based on the capabilities and limits of our minds – and by knowing these rules, we can predict and understand consumer behaviour very well.

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We also gave attendees at the session a copy of the handbook of behavioural economics written by our founders Leigh and Elina. If you’d like a copy, email us at info@theirrationalagency.com.

 

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