It’s Important to Examine How Influence Affects Marketing
Matthew started the presentation by sharing his own definition of marketing: “Marketing is the creation, management, and measurement of programs designed to influence the choices you need people to make to meet your objectives.” He explained that:
- Every organization has objectives, but they can only achieve them, if they get people to make the choices that fit those objectives. Interestingly, marketer’s choices are dependent on the choices of others, i.e., whatever their objectives are, they cannot consider their goals in a vacuum; they must look at how they influence what and how other people choose.
Consumer vs. “Chooser”
Matthew emphasized the importance of calling a consumer a “chooser.” He stated, “… it speaks to what marketing is centrally about, which is influencing a choice.” Instead of a consumer-centric approach, he calls for a “choice-centric” approach to marketing in which marketers put the decisions and choices that the “choosers” are making at the center of what they do.
To do this, it’s important for marketers to understand as much as they can regarding what goes into the choices that they need people to make. What influences the choice? And what are the cognitive mechanisms that might activate or might stop people from making the choice? Focusing on this can be a powerful marketing tool: the best brands make choice a no-brainer by making it rewarding, so that “choosers” feel good by selecting them.
We Understand More About Choice than Ever Before
Matthew said that we’re in a golden age of decision sciences and outlined how this is driven by three factors:
- Breakthrough thinkers such as behavioral economist Richard Thaler, psychologist Daniel Kahneman, and other academics have contributed to how we understand and think about choice.
- The increase in people studying behavioral science around the world, which is creating more resources for whatever aspect of choice a marketer is trying to influence.
- Technology such as neuro techniques are giving some indication of what’s happening on a neural level, i.e., what’s happening in people’s brains when they’re given tasks and making choices.
Quoting academic Baba Shiv, Matthew explained how our rational brain simply rationalizes what our intuitive brain has already decided to do. “He’s not saying that people are irrational, he’s just saying that these intuitions — these instincts — kick in more quickly and … are getting our choices underway before we start to think deliberately and rationally about them.”
Matthew reinforced that it is important to understand these intuitive processes, because they impact choices. He also shared a few examples of the long list of cognitive mechanisms like the “Ikea Effect, which he explained : it’s not an aversion to buying products at IKEA, but is simply that when you put something together yourself when you put effort into it, you’re likely to value it more than if you didn’t.
The History of Choices
Matthew observed that it wasn’t always as difficult and complex as it is now to make choices, as there were fewer options in the past. He shared that it is important to remember that people are the product of a long string of choices that were right more often than they were wrong. Our ancestors made choices that are deeply baked into us and affect how we make choices today. Therefore, marketers have to factor in the human nature effect.
Why People Don’t Do What They Don’t Do
There are many reasons why people don’t do what they don’t do. Matthew shared a model he created to encourage marketers to consider different reasons why people don’t do what you want, which asks:
- What in human nature might be stopping people?
- What in culture and context might be stopping people?
- What are systemic factors?
- What are aspects of your brand that might be stopping people, and how might your marketing activities not be having the desired effect?
As an example, he mentioned selling life insurance in Asia:
- Insurance is always a difficult sell, because of the optimism bias: people don’t think bad things are going to happen to them. Furthermore, life insurance is in the distance, and people tend to discount the future consequences of things.
- Cultural context has an effect, especially in Southeast Asia, where the population values family highly. The impact: it is considered almost an insult to take out life insurance, as it suggests that your family can’t take care of you, if something goes wrong. Because of the belief that family can help out, if needed, it seems like a waste of money paying for life insurance.
- There are also local systemic factor It’s difficult to buy life insurance, and it’s not an established market. In addition, some countries’ government plans provide plans that citizens pay into as a form of taxation and get some level of life insurance.
- Finally, the marketing activities in this specific example were tuned to the wrong message. They focused on the fact that most people didn’t have life insurance and talked about a protection gap, i.e., the big gap between the amount of coverage people had vs. what their life was worth. This approach did not address underlying cultural and systemic factors.
Additional Factors Affecting Choice
He then expanded four additional factors that affect choice:
#1: Human Nature Can Be A Barrier
One of the reasons why people don’t do things is that it’s too difficult, even if the reality is that the situation is not so hard. Matthew described how humans are masters at figuring out the easiest route. If we have to check an extra box or walk an extra two yards, we will probably favor another option that doesn’t require us to take those steps. He emphasized the importance of making choice easy, if you want to encourage someone to act. Or, if you want someone not to do something, just make it a little bit more difficult.
Matthew cited multiple examples of this, one being the consumption of M&Ms among Google employees, who seemed to be eating more M&Ms than might be healthy. How did Google approach the problem without taking away a favorite treat? Their solution was simple. Google put a lid on the M&Ms jar to make it more difficult to access the candy. It changed the behavior significantly: some reports said consumption declined by three million pieces over three- or four-months.
Matthew emphasized that marketers should examine their processes to determine how to make choices easier: “…when organizations identify the choices that they need people to make, they tend to try to address these questions:
- What choices do we need people to make to reach our goals?
- What choices do people seem to want when we’ve done our research? …
- What requires the least effort on the part of the chooser? … “
He continued, “…very often the things that we need them to do because they will help us make profit or whatever aren’t easy to do. But thinking about our goals in terms of whether they are an easy choice for our choosers could help us prioritize objectives.”
#2: Every Choice Comes with A Potential Loss
Matthew described how the prospect of a loss has a bigger effect on our behavior than the prospect of an equally sized gain. He gave an example by showing an award-winning Kraft macaroni and cheese ad campaign that used an unconventional approach to overcome a potential problem — that people might have a sense of loss when the product they liked was changed.
Kraft changed their recipe and launched the new product without flagging that the recipe differed. Six months later, they ran their campaign saying, “We would invite you to try it, but you already have. When we took the artificial flavors preservatives and dyes out of Kraft macaroni and cheese, we wanted to be sure it still tasted like the Kraft mac & cheese you know and love. So, three months ago, we quietly started selling the new recipe in our old boxes to see if you’d notice. And your silence spoke volumes. After all, it’s pretty hard to speak with your mouth full.”
#3: Other People Aren’t Doing It
Matthew explained the logic behind “social proof” and why we’re drawn towards things that we see other people doing. As an example, he shared how most people would rather wait 45 minutes for a restaurant with a line than go into an empty restaurant. It’s our intuition telling us that behavior is more correct to the degree we see other people doing it.
#4: Future Benefits Don’t Motivate Action Now
Another reason why people don’t do things is because there’s no payoff at the moment. Matthew shared how humans are predisposed to taking a smaller reward now over a larger one later, also called hyperbolic discounting. A classic example of this is asking someone if they want 50 dollars now or 100 dollars in a year. 60-80 percent of people will normally take the 50 dollars now rather than 100 dollars in a year. However, he explained, if you flip the frame around and you ask if someone wants 50 dollars in a week or 100 dollars in a year, which from an economic perspective is exactly the same thing as a year apart, then 60-80 percent will take the 100 hundred dollars.
Matthew ended the presentation by going back to the need to understand why people do what they do by understanding why people aren’t doing what you need them to do, especially on a behavioral level. This gives marketers the opportunity to release them from “don’t,” which he believes this is the first step in marketing. He offered a simple way to approach this: How do you release people from the things that are stopping them from doing what you want to do? It’s often a question of making it easy and make “do” a natural and easy choice.