One thing I’ve noticed at Ashgrove is how up to speed everyone is with marketing’s constant developments, whether it’s the latest SEO changes or seeking new software to streamline the planning process, we like to stay on the ball.

A topic that has been at the forefront of marketing in recent years is ‘behavioural economics’. This marriage of psychology and economics is a fairly new school of thought skews how economists have typically dealt with the pesky problem of human behaviour; due to its complexity, the decision making process is typically simplified in economic models to make it easier to understand. The reality is that this process is complex and irrational; as much as we’d like to think we put rational thought into our latest purchase, the truth is we’re swayed by a myriad of factors, some of which operate at a subliminal level. These cognitive biases could be the difference between you purchasing something or leaving it on the shelf, so naturally marketers are intrigued.

In recent years popular books such as ‘Nudge’ or ‘Thinking, Fast and Slow’ have helped push BE further into the spotlight with entire agencies such as Ogilvy’s ‘Change’ set up to make the most of its potential and understand the way it can affect us all.  The London Economics consultancy summarises how behavioural biases can affect consumers by saying that they can:

  • Form consumers’ preferences for products and the price they are willing to pay
  • Inform their beliefs about the future, probability of events and their own abilities
  • Affect decision making about product qualities and search behaviour

So, at the end of all this research what is the end result? Looking at real world applications can be quite surprising, the nature of the topic is so complex yet from the consumer’s perspective the only visible change could be something as simple as, for example, an additional option in a subscription service that shows what the most popular choice is, this is known as ‘choice architecture’ and in this instance the idea is based on the notion of social proof: “if everyone’s doing it, then I should too”.

In terms of marketing the emphasis on BE isn’t to make people buy things they don’t want but rather frame products so they aren’t falling in any psychological traps that could damage sales. But consumers are right to be wary about its manipulative use. Speaking on a fantastic episode of the podcast ‘Freakonomics’ Rory Sutherland  (vice chairman of Ogilvy & Mather, UK) uses airline websites as an example: “[it quotes] you a price for your seat and it says only four are left at that price. Now, that works on me. I’ve spent eight years studying [BE], I know it’s an attempt to exploit my scarcity bias, but it still makes me click. That’s just the way I’m wired. Implicit in that line is that subsequent seats will be more expensive… Yet actually it could be that the subsequent four seats are being sold actually at a lower price.”

This is an example of BE really pushing your buttons; you probably would have got the tickets anyway but this gave your decision making process the extra shove.  The reality of this practice is usually much less invasive yet these small adaptations to psychological pitfalls can, in extreme cases, be the reason why a product launch succeeds or fails.

Although marketers are ahead of the curve, these applications of BE understandings are increasingly common.  Policy makers are intrigued by ‘nudging’ which is based on presenting choices in different ways to make better decisions, David Camron has even set up a dedicated ‘Behavioural Insights Team’, nicknamed the ‘Nudge Unit’ who have looked in to ways to increase organ donators. Other examples are the sweets in checkout aisles, which are so effective supermarkets have publicly announced their intention to remove them.

I’ve just scratched the surface of this topic and could go on for hours, but I’ll leave you with my favourite example which comes from an unlikely source. It’s not helping to shape policy or boosting flagging sales, but rather making someone’s unenviable job easier. If you find yourself in Schiphol Airport, Amsterdam and happen to be male then be sure to visit their bathrooms.  People travel the world to use these urinals (okay, maybe not literally) which can make for quite a mess, their solution to this? Including a picture of fly in a spot that reduces splashing by 80%, this is a nudge so simple it’s now seen all over the world with similar results. It’s BE at its best: simple, un-invasive and highly effective.