mrs workshop 24 july
DESCRIPTION
Presentation from the MRS Workshop held on 24th July 2014TRANSCRIPT
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The Big Window Consultancy Limited www.the-big-window.co.uk l [email protected]
To BE or not to BE : Is it really a binary question?
Lisa Edgar, Founder, the Big Window®
Thanks to:
Jo Kenrick, Marketing Director, Homebase
Dr Lynn Sudbury-Riley, University of Liverpool Omnisis Limited, Programming and Data Processing
Consumer and Organisational
Psychology
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To BE: A Quick Recap
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3
Consumers’ Decisions – in Theory
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Working full-time
Children at home
Internal Pressures
We process 174
newspapers every day
Av social media users consumers
54,000 words every day
External Pressures
Other priorities
Can I be bothered?
4
Life is a Processing Nightmare
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5
Information Overload
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System 1: Thinking Fast Almost automatic, superfast system of
processing that allows us to cut through data/information to arrive at a decision 6
Behavioural Economics: System 1
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System 2: Thinking Slow Allocates full attention to the mental
activities that are demanded, consciously trying to take in as much
information as possible 7
Behavioural Economics: System 2
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In other words, with so much to process we take easy to follow or
well trodden decision paths or patterns…
‘System 1’ rather than ‘System 2’ Thinking 8
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q These patterns are called Biases or Heuristics and they explain: § How advertising works § Why we try to emulate our peer groups § We we respond to 3 for the price of 2 § Why we are willing to buy add-ons with big
purchases § Why we respond to ‘closing down’ sales § ….
9
Biases and Heuristics
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!
10
… Biases and Heuristics In Action
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Herd Behaviour… One of My Favourites
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Behavioural Economics: The New Nirvana?
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CRT Test 89% of our
sample made 1+ System 1
errors 65% made 2+
Approach to Decision-Making 54% agreed they make spontaneous
decisions
Herd Behaviour Test
61% agreed with at least 2 HB statements
Delayed Gratification 65% needed at least 100% return to delay
gratification of a financial reward for 2 years
Lots of evidence for Behavioural Economics
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And in academia…Delayed Gratification
Because, in Behavioural Economics world…
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But… we do not all respond to BE in the same way
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…Or not to BE: Variations on a Theme A Case Study on Age
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Starting with Age … with older consumers not ready to rollover to marketing techniques
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Theory suggests…
Age in Years
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Reactions to emotional/rational advertising
Emotional Advert Rational Advert
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Nectar Panel (February 2013)
c2600 responses
Reactions to emotional/rational advertising
CRT Test (Fredericks, 2005)
Perceptions of task approach (Novak and Hoffman, 2009)
Approach to decision-making (Nenkov, 2009)
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-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Emotional Engagement
Headlines Opinion about
headlines
General furniture
Main furniture
Colour
Net recall of Living Room Adverts
As expected… System 1 (Impression formation) rules
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22 Net recall of Living Room Adverts
Older consumers breaking our ‘rules’
16-24 70+
32%
8%
23% Rational Ad Net Recall
Emotional Ad Net recall
40-49
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Living Room Adverts
… much preferring the rational ads
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q How could BE help explain this? q Do different people have different BE tendencies?
… anxiety and cynicism about letting their hearts rule their heads
The advert felt meaningful to me
I could really relate to this advert
I learned something about this product in
this advert that I didn’t know before
I can now more accurately compare
this brand with other competing brands …
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Effortful
Optimising
Heuristics Speed
Rule-based
Maximising
Instinct
Emotion
Deliberate
➔ the CRT test, Fredericks ‘05
Measuring BE Tendencies
System 1
System 2
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9%: all correct 26%: 2+ correct
49%: 0 correct 73%: 2+ incorrect
➔ with little age differences
System 1 dominates
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100#
110#
120#
130#
140#
150#
160#
170#
16*29# 30*39# 40*49# 50*59# 60*69# 70+#
Av#$me#taken#in#secs#
Av#/me#taken#in#secs#
Older Customers trying to use System 2
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q 75% thought they tackled the tasks in System 2
q 66% of those who got all the tasks wrong thought they were in System 2
I am in System 2, honest
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20%$
30%$
40%$
50%$
60%$
70%$
80%$
90%$
16-29$ 30-39$ 40-49$ 50-59$ 60-69$ 70+$
system$2$
system$1$
Older consumers more than most
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I want to see it as it is
I want to know the facts
I worry about making the
wrong decision I like to stop and
think first
➔ evidence that older adults are less inclined to make ‘mental leaps’?
Older consumers very wary of using System 1
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Park et al, 2002
… perhaps ‘world knowledge’ serving as a warning signal
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…Or not to BE: Variations on a Theme Other Bits and Bobs
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Cross Cultural Variances in the CRT Test
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34 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 Errors <= 1 Error <= 2 Errors <=3 Errors
Country A
Country B
Cross Cultural Variances in the CRT Test
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Personality-Based Variances in CRT Results
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36 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
External Personality Internal Personality
0 Sys 1 Errors
1 Sys 1 Error
2 Sys 1 Errors
3 Sys 1 Errors
44% make <2 System 1 errors
34% make <2 System 1 errors
66% make 2+ Sys 1 Errors
56% make 2+ Sys 1 Errors
Variances by Personality
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Different Decision-Makers Have Different Products Too
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40%
50%
60%
70%
80%
90%
100%
4 future choices 3 future choices 2 future choices 1 future choice 0 future choices
Has Product No Product
Q Which of the following gifts would you prefer… e.g. £50 now or £100 in 2 years
38
Variances in Delayed Gratification
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…So…
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40
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The Big Window Consultancy Limited www.the-big-window.co.uk l [email protected]
Keeping Pace with the Older Consumer
Lisa Edgar, Founder, the Big Window®
Thanks to:
Jo Kenrick, Marketing Director, Homebase Dr Lynn Sudbury-Riley, University of Liverpool
Omnisis Limited, Programming and Data Processing
Consumer and Organisational
Psychology