Clever Insights for Brand Builders
Up, up and away!
New Media Age via YellowBix
Brand builders always instinctively felt that the sales lever so loved by consumers, the price promotion, was not just grubby but also damaging to the long-term health of a brand. That said, we’ve rarely been able to articulate our dislike of price promotions in a way that stands up to any kind of scrutiny, making us seem petulant and uncommercial in the face of the quick volume that can be delivered by discounting.
The problem is compounded on the web. The ability to compare prices is one of the great drivers of etail’s success because everyone loves a bargain. But the relentless focus on discounting makes it hard to gauge the value of a customer.
So anyone who manages a brand online should pay attention to the buzz about behavioural economics. This is the study of how people make decisions with specific relation to economics and business. One of its tenets is that, instead of the price we’ll pay for something being the consequence of its real value to us, in practice causality runs backwards. Therefore discounting actively demeans the perceived quality and efficacy of a brand.
Behavioural economics offers an explanation for why people will work harder to avoid losing something than they will to gain it, why they engage less with future events than the present, and why they’re more likely to complete tasks when broken into manageable chunks.
As the study of why people rarely act consistently and rationally, it’s the natural academic bedfellow of the business we’re all in: turning human understanding into commercial value. It’s why I’ve joined the IPA behavioural economics thinktank, which aims to help us understand the biases people use to make decisions, and thus how to influence them.
Importantly, the subject also covers choice architecture. This is why people given a choice of fish or chicken on a menu often chose the fish, but if beef is added they change their minds and choose the chicken. Beef makes chicken seem a relatively healthy choice. It’s the rationale for something website designers and market researchers have always known, that there’s no neutral way to present a choice and that how it’s framed is fundamental to the decisions we make.
Not surprisingly, this challenge to the economic orthodoxy is flavour of the month in ad land. Championed by Rory Sutherland, president of the IPA, behavioural economics is seen as a means to unite different marketing disciplines under one framework. For those in the digital community, it will be second nature; nowhere else in the marketing business has the study of human behaviour been more acute.
What’s significant for digital thinkers and designers is that there’s now a powerful academic justification for practices they observe and recommendations they make. In turn, there’s a way to grow the entire brand advice business rather than perpetuating the status quo in which agencies and disciplines only grow at the expense of others.
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