Rational vs Rationalising Choices

Are you helping shoppers make instinctive decisions?

Last month Richard Thaler was awarded the Nobel Prize for Economics.

Thaler is famous for ‘Nudge Theory’. This says that small changes to the way choices are framed can have a big impact on the choices we make. The classic example is organ donation. If you make it an opt-in decision most people don’t opt-in. If you make it an opt-out decision most people don’t opt-out. So, you make it an opt-out decision and you have millions more organ donors.

At the heart of Thalers’ work (and behavioural economics as a whole) is a fundamental view of human behaviour – that we are rationalising beings not rational beings.

What this means is that we don’t make many truly rational decisions – where we weigh up the costs and benefits of different options and then make the optimal choice. Instead we make many instinctive (system 1) decisions. We then rationalise these decisions. We make up a reason to tell ourselves, or other people, why we made that decision.

For instance, think about going to view a new house. Within about 10 seconds of entering the house you have made an instinctive decision about whether you like it or not. For the rest of the viewing, the rationalising part of your brain gives you the reasons to justify that decision. Room X is too small = you didn’t like the house. Room X is really nice and cosy = you liked the house. Same room = different rationalisation.

Why are we talking about this? Well, first of all, we really like talking about this stuff. But, secondly and more importantly, we think it matters. It is easy to fall into the trap of thinking that because we in the industry think rationally about things (e.g. brands, pricing, promotions, advertising) then shoppers must do so too.

We often look to research to give us answers, but we are asking shoppers to explain things that they often can’t explain or even remember. And why should they be able to? If one of the biggest purchases we make in life – a house – is driven by instinct, then deciding which brand of biscuits to buy will be even more instinctive, right?

So, our job is to play to instinctive behaviour. Then give shoppers simple ways of rationalising the choices they make.

How can you do this?

Use simple, consistent visual hooks. Have you noticed that after you buy a new car you suddenly see a lot more of them on the road? They were all on the road the previous week, but your brain is now primed to notice them.

No shopper will tell you they bought Brand A simply because they recognised it. But a lot of purchase decisions are based on what shoppers see and recognise first. This means you need to be consistently distinctive. Distinctive – so you look different to the other things around you. Consistent – so you embed that identity in shoppers’ minds. The stronger your visual hook, the more recognition you will have and the more chance you have of priming a shopper. “Look for the Green & Gold packs” may not be the most exciting marketing message but it might be pretty effective.

Use simple, memorable words. What do Apple, Amazon, Google and Facebook have in common? Well, one of the things they have in common is a simple name. And data says that companies that have simple names – ones that are easier to pronounce – outperform the stock market. We are not making this up!

So, think about this in the FMCG world. Simple brand names are likely to be better. “What do you want to drink?” “Well, I’d love a Staropramen. But I can’t pronounce it, so I’ll have a Fosters”. Simple variant names are likely to be better – think Ella’s Kitchen “The Red One”. Simple slogans or messages are likely to be better – “Beanz Meanz Heinz”, “Grown Not Made”.

By the way, we aren’t saying simplify your brand name, then sit back and watch the cash roll in. There is a bit more to Apple and Amazon than that. But simple language can’t hurt.

Use simple reasons for behaviour. We’ve written about the photocopier study before – in a test 93% of people at a photocopier let someone who approached them use the copier first when they said “Excuse me I have 5 copies. May I use the copier because I want to make copies?” They let the other person go first because they gave a reason. Even though it was a rubbish reason.

Shoppers pay about as much attention in store as people at photocopiers do. They are quickly moving around the store. They are making a lot of quick choices. They can’t think about the choices in detail. Your No 1 job at shelf is to give shoppers a reason for their behaviour. To make them feel happy about the choice. Something that they can rationalise afterwards – e.g. “0% fat” or “lasts 50% longer”.

We would all love shoppers to think about our brands as much as we do. But, they aren’t going to. They will make instinctive decisions. Then rationalise those decisions.

We need to make it easy for them to do so.

Feel free to forward.  Have a great weekend and speak to you next week.

© 2020 by Insight Traction