Marketing research aims to understand what consumers want and for this, some of the most common tools we employ are surveys, questionnaires, feedbacks etc. However, These methods are susceptible to The observer’s effect, meaning when the respondent’s are aware that they are being tested, they are far less likelier to be honest. Apart from the observer’s effect, there are other cognitive biases too. The leading researcher in this field is Daniel Kanheman, a Nobel laureate, and author of the famous book titled ‘Thinking fast and slow’. While some of these biases act as impediments to better understanding consumer psychology, others can be extremely useful. Daniel Kanheman won the Nobel Prize for economics but I would like to attempt to transpose his theories to the domain of marketing
He highlights how humans have evolved to develop shortcuts for thinking, namely heuristics and biases and he sheds light on many of those biases. We will look at these from the lens of a consumer.
Ever wondered why giants like Coca-Cola continue to spend huge chunks of their budgets on advertising?
Coca-Cola spends 4 Billion USD on advertising every year, Proctor&Gamble spends 11 Billion. Do these Mammoths, more than centuries old, really need to continue spending such huge amounts of money on ads?
According to Kanheman’s availability theory, The ease with which certain memories can be recalled depends primarily on two factors:
- The emotional intensity of the event
- How often the event is repeated
The consumer may not necessarily realise it but the frequent repetition of TV ads helps to etch the identity of the brand in the consumer’s mind and inculcate a sense of familiarity. Similarly, Brands use recognisable and likeable personalities as their ambassadors in order to add emotional depth to the message. Some great examples are new-age influencer marketing and the popular use of family members as characters.
The paradox of Freemium
A freemium product/service is one where a consumer can use it for free but only up to a certain point. To access more features, They must pay. For someone who does not like spending money on apps, I find it very difficult to resist paying in case of freemium apps. What is it that makes freemium apps so attractive?
According to Daniel Kanheman, one of the most pervasive biases is the Sunk-Cost fallacy. This can be best understood through a thought experiment. Picture yourself halfway through a boring movie. It is clear that abandoning the movie would save time and save you from boredom but, in most cases people would be compelled to continue watching.
So, The Sunk-cost fallacy is in action when a person is reluctant to abandon a strategy or course of action because they have invested heavily in it, even when it is clear that abandonment would be more beneficial.
It is important to note that even though we are looking at Kanheman’s work through a light-hearted lens, These biases have been deeply influential in the world of academia and have been observed across multiple walks of life.
Why are all watches set to the same time in advertising images?
All Watches in ads are set to 10:10 because the needles’ shape resemble a smile. Whenever I say this to someone, I can tell that they are reconsidering their opinion of me and contemplating if I should be taken seriously, but allow me to elaborate.
After extensive experimentation, Kanheman came to the conclusion that we can sometimes be inattentive to stimuli, but it may still greatly affect an individual’s behaviour and decision-making. He called this Priming.
One of these experiments involved consumers being primed with words associated with high-end retail brands. When this happened, they preferred these brands over low-end retail brands. However, consumers who were primed with words associated with low-end retail brands did not prefer high-end retail brands, thus demonstrating the priming effect in action. A simpler example to help make this case could be shops with pleasant aromas, music and regulated temperature.
Interlude : Neuromarketing
As we had earlier discussed, The observers’ effect makes most marketing research techniques unreliable. To tackle this problem, researchers are gravitating towards neuromarketing. Sounds like something out of a Sci-Fi movie, right?
How it works, I assure you, is even more fascinating than how the word sounds. Neuromarketers study how people’s brains respond to advertisements, certain statements, subconscious triggers etc. using brainwave monitoring, eye tracking and skin responses. This is far more robust than surveys since it eliminates the possibility of the respondent lying. Further, through neuromarketing, we may get to know facets of the consumer’s perception that the consumer themselvers are unaware of.
One of the leading neuromarketing companies is Neuroinsight from Australia, led by Pranav Yadav, their CEO from India. Neuroinshight and other similar companies provide marketing insights to companies by testing the consumers’ responses to their offerings. Even though, Neuromarketing is a nascent field and the huge costs involved serve as a roadblock, it is rapidly making it’s place in the world of marketing.
Parting Thoughts
Exponential progress in the 21st century should not just be owed to the globalisation of trade, but also the globalisation of ideas. As academic disciplines become more accessible, anyone who fails to make use is at a disadvantage, especially individuals who wish to be proficient at marketing since it is inevitably intertwined with human psychology and culture.