Why did I not buy that French wine? Marketing Stories in Behavioural Economics
Imagine you are at a wine shop to buy a bottle of wine for that evening of peaceful reflection or for other good purposes wines are generally useful for. You are happy that wines are neatly organized by country, and you casually browse the global selection you are presented. After careful thought, you pick up a German wine, a Spätburgunder red, tough to pronounce, but thankfully good to taste you opine. To match your evening objective, reflecting in this case, you want something that is fine, subtle and has a youthful yet, yes, reflective taste. It was certainly a bit over your budget, but that’s ok for some good wine. You hum a tune as you pay the bill and then eventually leave. Objective awaits!
If it was that vaguely German sounding piece that you heard in store, stayed in your head and you hummed along as you were leaving, you have been “primed”!
Music influences us in more ways than we can imagine. It can subtly influence our thoughts and actions, which includes what we buy. In a study1 conducted to understand influence of music on purchasing behavior, researchers observed shopper purchasing patterns as German and French music was played on alternate days. You probably guessed it. On days when French music was played, shoppers bought more French wine and when German music was played, German wine outsold the French (Table 1). But, when participants were asked whether the music influenced their choice, most said it did not.
The wine and the prolonged reflection combined with this revelation has probably resulted in you (if you were born before the 90s and interested in rock music), remembering a line from the Pink Floyd song, non-German, non-French, and written in a totally different context:
“There is someone in my head, but that’s not me”
From the song Brain Damage, from the 1973 album Dark Side of the Moon.
In many ways, neuroscience has proved this to be true. We doubt if Roger Waters knew Behavioural Economics, nor did he track the progress in brain science. But most of us, we know two facts now:
- A significant part of our decision making is influenced by factors we might not understand fully, factors that are subtly influenced by the subconscious.
- Decision-making consists of the interplay of two systems: a fast, intuitive one and a slow, deliberate one.
Over time (which refers to time in millennia), we have without our knowledge, arrived at rules, short-cuts, and signifiers for taking decisions and let our brains take that call with as less effort as it possibly can make do with.
Priming is one such example. It occurs when repeated or long-term exposure to words, visuals, music, or other external stimulus subconsciously influences our action such as in the case of the purchase of German wine over the French one. Along with priming, there are other biases that played a role in the shoppers’ decision. Because of what is known as the ‘Mere exposure effect’, we are swayed towards what is familiar. When deciding, we would rather choose the familiar over the alien.
In this blog, we present three interesting examples of subconscious influences, biases, rules of thumb that have been used in the marketing world. Saying these examples are “interesting” is not our attempt to prime the reader, but we do hope they are certainly what we expect them to be.
Meeting our future selves
Unlike Austin Powers (Spy who shagged me) or Adam Reed (Adam Project), we cannot build machines or be magically transported to a different time and meet our future selves, that too with marketing budgets that are not of the scale of Space X.
Nivea knew that. They also knew that humans find it difficult to imagine a future self, even if it is just around the corner.
The tendency for individuals to under-predict the impact of future events, especially on their own well-being, is often called Projection bias. Take a study among smokers as an example. There is evidence that unaddicted cigarette smokers significantly underappreciate their own risk of becoming addicted2. Specifically, only 15 percent of high school students who were occasional smokers (less than one cigarette per day) predicted that they might be smoking in five years, when in fact 42 percent were still smoking five years later, and 28 percent were daily smokers.
You might not have noticed this happen with you, but if you are making summer plans in the winter, you may choose destinations that are in warmer locales as you are making decisions based on what you most want now which is warm weather. Our inability to see our future self inhibits action, particularly seen in health & money management and maybe in travel planning.
If we can show people their future, today, maybe they would be spurred to act. Nivea did just that3.
Kids are eager to run into the sand and play as soon as they get to the beach. They don’t like to put on sunscreen.
Nivea created dolls that react to sunscreen just the way our skin does. When exposed to the sun, it slowly turns into a darker color. Kids over 3 years old were shown this doll as they settled down on the beach. The dolls were first shown in the shade, and then exposed to the sun. The future was suddenly there in front of their eyes. And their parents could see that too. They were much more likely to apply sunscreen, and mothers were also reluctant to let their kids go off without sunscreen. A campaign was created around this activation to take this to a broader audience.
Education and knowledge sharing has a limited impact until we can show them the future.
There are several explanations in the evolutionary psychology and neuroscience literature for why humans exhibit projection bias. Some of these include:
Limited attention to future consequences: One explanation for projection bias is that people have limited attention and cognitive resources available to them, which makes it difficult for them to fully consider the potential consequences of future events. This can result in a tendency to under-predict the impact of future events on their well-being4.
Evolutionary history: Another explanation is that humans have evolved to prioritize immediate rewards and survival over long-term planning, which can result in a bias towards present-oriented decision-making and under-prediction of future consequences5.
Emotional processing: Some researchers have suggested that projection bias may result from the way in which the brain processes emotions and information about future events. For example, negative events may be more salient and memorable, leading to an over-prediction of their impact, while positive events may be under-predicted due to a lack of attention and emotional processing4.
Bounded rationality: Projection bias may also result from limitations in human reasoning and decision-making processes, such as bounded rationality and heuristics. People may make decisions based on limited information and mental shortcuts, leading to suboptimal predictions about future events6.
Experience > Technical Language
The world of marketing loves technical language, and statistics, and sometimes both. Our day-to-day experience with people often tells us otherwise. Logic doesn’t solve all problems, but we always go back to it. As Herbert Simon (the first to get a Nobel prize in 1978 for Behavioural Economics, for his theory of Bounded Rationality) has said: “You do not change people's minds by defeating them with logic.”
Logic, technicalities, and numbers or stats are helpful to some extent and work to highlight product superiority, but they fall short when it comes to behaviour change. Which is why respondents showed unrealistic optimism in their judgments of the absolute risk of lung cancer. In an actual study7, current smokers judged their own risk of developing lung cancer substantially and significantly lower than they judged the risk of the average smoker (the actual risk was roughly 2 – 4 times greater than the estimated own risk).
In a technical, spec driven automotive world, Infiniti took a departure when it launched the Infiniti QX80 model at the Dubai Motor Show in 20178. With car sales down in the year and significant competition that comes to DIMS, shouting one’s lungs out seems the safer option. Infiniti did just the opposite. While most other car brands had promoters, influencers, salespeople, loud marketing, Infiniti kept it quiet. None of the traditional methods were used. Instead, they turned to Daniel Kahneman’s work on the “dual-self”. As per the dual-self theory, we have a self that lives in the present moment, collecting experiences and then there is the remembering self that builds memories based on the peaks of those experiences. A meaningful experience is what matters most. They decided to create good experiences based on the stories consumers shared about their brand. Each visitor was given a headphone which responded to sensors located in the various cars. As prospective customers examined various cars and features, they could hear what other Infiniti drivers felt about those features and their cars.
Simple. Honest consumer opinion trumps statistics and technical language.
This phenomenon would also be explained, at least in part, by the limited cognitive resources in the human brain.
The Value of Ownership
When the writer, philosopher said “The clever owns, but he is never possessed”, he did not know the Endowment Effect. The endowment effect is an emotional bias that says that once we own something (or have a feeling of ownership) we irrationally overvalue, regardless of its objective value9. A mild case of possessiveness.
People tend to value things they own more than other’s value them—this can include abstract things such as ideas and beliefs too. This typically does two things:
- We consider something we own to be of higher value and will pay more to retain something we own compared to obtaining something we do not own.
- When we possess something, we are reluctant to exchange it for a good of similar value.
Why does this happen? This is largely attributed to the Loss Aversion Bias which has deep roots in our evolution & survival. With scare resources, ownership improved chances of survival. Hence arose a tendency to place more emphasis on what is owned. Without much effort, and almost instantaneously, evolution takes over. At times, grass is not greener on the other side.
This trait of human behaviour is not used as often, but we do see some unique applications. With people shifting to online sales, the use of this bias has come about more, perhaps executed with a different objective.
For example, being able to see and wear an item, even virtually, imbues a sense of ownership and makes consumers more willing to purchase the product10.
Nike has successfully used this principle by allowing people to choose the color and design of certain shoes. The act of creation makes one feel like the product has been ours all along. Once you personalize it, it becomes more difficult to abandon as a result. Creating a customised product fosters a sense of ownership, hence not only increasing the chances of consumers purchasing the product, but also creating premium value since consumers would attach a higher value to something that is uniquely theirs.
For more such applications, get in touch.
References
- North AC, Hargreaves DJ, McKendrick J (1999) The influence of in-store music on wine selections. Journal of Applied Psychology, 84: 271 – 276.
- Loewenstein G, O’Donoghue T, Rabin M (2003) Projection bias in predicting future utility. The Quarterly Journal of Economics, 118: 1209 – 1248.
- Nivea Brasil (2016, Oct 12) NIVEA Doll ensina as crianças a usar protetor solar. YouTube. https://youtu.be/AeRXMywoBgA
- Loewenstein G (1996) Out of control: Visceral influences on behavior. Organizational Behavior and Human Decision Processes: 65, 272 – 292.
- Kahneman D, Frederick S (2002). Representativeness revisited: Attribute substitution in intuitive judgment. In Heuristics and biases: The psychology of intuitive judgment (pp. 49 – 81). Cambridge University Press.
- Simon HA (1955) A behavioral model of rational choice. The Quarterly Journal of Economics, 69: 99 – 118.
- Weinstein ND, Marcus SE, Moser RP (2005) Smokers’ unrealistic optimism about their risk. Tobacco Control, 14: 55 – 59.
- Infiniti Audio Hunters, TBWA\RAAD website, TBWA, accessed 14 February 2023, <https://www.tbwaraad.com/work/infiniti-audio-hunters>
- Kahneman D, Knetsch JL, Thaler RH (1990) Experimental tests of the endowment effect and the Coase theorem. Journal of Political Economy, 98: 1325 – 1348.
- ARLOOPA Augmented Reality / Virtual Reality (2016) Try on Virtual Watches using Augmented Reality App - Demo ( AR-Watches.com). YouTube. https://youtu.be/rKOBR3Vztlo
