Consumer behaviour – Page 3 – Behavioural Design

If you are a retailer, you ought to know who’s pregnant!

Published January 31, 2017 by Anand Damani

Amongst big retail chains, it is common knowledge that people’s buying habits are more likely to change when they go through a major life event. Like getting married or moving into a new house or losing or changing a job. But life’s biggest event for most people is having a baby. And new parents’ habits are more flexible at that moment than any other time in an adult’s life. So for companies, pregnant women are gold mines.

I’m seeing a lot of my friends become new parents and they buy lots of stuff – diapers, wipes, cots, blankets, bottles, cribs, the list is endless. Retailers figure out that once sleep-deprived moms and dads start purchasing baby stuff, then they’ll also buy groceries, towels, underwears and whatever is easily available. To new parents, easy matters the most.

New parents are so valuable that companies like Walt Disney, P&G, Fisher-Price, etc in the US, have lots of giveaway programs aimed at new parents in hospitals itself. But for a retail chain like Target, approaching moms in maternity wards can be a bit too late. So Target began marketing to them before the baby arrives.

How did they do that? Target has a baby shower registry and that helps them identify some pregnant women. Target has analyzed shopping patterns of soon-to-be-mothers by looking at their due dates provided by them and linking the shopping done across pregnancy trimesters. Target figured that lots of people buy lotion, but women on the baby registry were buying unusually large quantities of unscented lotion in the beginning of their second trimester. In the first twenty weeks many pregnant women bought lots of vitamins. Lots of shoppers buy soap and cotton balls every month, but when someone buys lots of them, in addition to hand sanitizers and lots of washcloths, a few months after buying scent-free lotions and vitamins, it signals that they are getting closer to their delivery date. Whereas if someone bought a stroller, but nothing else, they probably bought it for a friend’s baby shower.

Target is one of the best retailers at predictive analytics. But they figured that they would need to use this information wisely. After all women can be upset if they received an offer making it obvious Target knew their reproductive status. So how do they get their coupons and offers into expectant mothers’ hands without making it appear they were spying on them?

Target sends specially designed mailers to customers, by mixing in all the ads for things pregnant women would never buy with offers meant for them, so that the baby ads look random. So there’s an ad for a lawnmower next to diapers. Wineglasses next to the offer on infant clothes. As long as the pregnant women thinks she hasn’t been spied on, she’ll use the coupons. And that’s because she assumes that everyone else has also got the same mailer too.

Emotions hugely affect decision-making

Published January 18, 2017 by Anand Damani

We’ve all experienced how we like to shop when we’re feeling down. While that says a lot about our buying behaviour, we never imagined that emotions played a huge role in our selling behaviour as well. This phenomenon is explained by an interesting study below.

Behavioural scientist Jennifer Lerner and her colleagues induced either sadness or no emotion in participants by having them view different film clips. Those assigned to the sadness-inducing condition watched a movie clip from The Champ, which featured the death of a boy’s mentor; following that, they were asked to write a brief paragraph about how they’d feel if they’d been in the situation themselves. Those in the no-emotion condition watched an emotionally neutral film clip featuring fish and then wrote about their day-to-day activities. Afterward, half the participants were asked to set a price to sell some highlighters and the other half were asked to set a price to buy the same highlighters.

Turned out that sad buyers were willing to purchase the item for around 30% more than emotionally neutral buyers. Here’s the interesting part. Sad sellers were willing to part with the item for around 33% less than emotionally neutral sellers! Researchers also found that the participants had no idea that they had been so deeply affected by the residual feelings of sadness.

Behavioural scientists Christopher Hsee and Yuval Rottenstrich argue further that in emotionally charged situations we become less sensitive to the magnitude of numbers – we are more likely to pay attention to the simple presence or absence of an event. We get persuaded by offers when we shouldn’t be. Like when we’re got our eyes set on a new beauty (car) and if the difference between the price of the car and what we’re willing to pay for it is say Rs. 3 lakh – a good salesperson will manage to persuade us by throwing in one or two additional items free like a mirror lock or steering lock, whose value is realistically nowhere near Rs. 3 lakhs.

Lesson for negotiations, buying and selling decisions – examine how you feel and put off the decision until you’re feeling emotionally neutral.

Source: Lerner, A. Small and G. Lowenstein – Heart strings and purse strings: carryover effects of emotions on economic decisions – Psychological Science, 15:337-41 (2004)

We all do as others do (ET)

Published December 29, 2016December 29, 2016 by Anand Damani

This article of ours appeared in the editorial column of The Economic Times on 29th Dec, 2016

We did an interesting experiment in Mumbai some time back. We got 98 households across a few housing societies in Bandra and Khar to provide us with their electricity bills before the bills reached each member’s house. We then calculated the average bill amount in that particular society.

Let’s say the average was Rs 1,022. For all above-average users, we put a stamp stating that the average in that society is Rs 1,022. Next to their above average amount, we put a frownie indicating that they could do better.

The average number set the social norm and got the above average users to act like their neighbours and reduce their electricity consumption by 1.33 per cent. 1.33 per cent sounds small, but it can power 17,465 villages for one whole year. We called the experiment People Power because it gives people the power to make a difference at no cost.

Human behaviour is contagious. Our actions are often guided by how people around us are behaving. The information provided by the stamp let the above-average users know how much their neighbours were consuming.

That set the social norm and got them to reduce their power consumption. We do as others do. If people see other people littering, they litter too. If people see other people throwing waste in dustbins, they use dustbins too. If people see other people cheating, they cheat too. If people see other people being honest, they behave honestly too.

Behavioural science studies show that people dress in the same styles as their friends, pick dishes preferred by other diners, choose restaurants that are more crowded, are more likely to get fat if people around them become fat, are more likely to quit smoking if their friends quit, pay taxes if others are paying, vote if their spouse votes, and so on. A five-star review on Amazon leads to approximately 20 more books sold than one-star reviews.

This behavioural science principle of ‘social proof ‘ made a popular American infomercial for a home shopping channel change the all-toofamiliar call-to-action line at the end of the infomercial, “Operators are waiting, please call now” to “If operators are busy, please call again”. This simple change led to its sales skyrocketing.

On the face of it, the change seems foolhardy. After all, the message indicates that one may have to waste their time redialing till they reach a sales representative. Yet it worked so brilliantly.

Consider the kind of mental image that’s likely to get generated when you hear, ‘Operators are waiting, please call now’ — scores of bored phone representatives while they wait by their silent telephones — an image indicative of low demand and poor sales.

Consider how your perception of the popularity of the product would change when you hear, ‘If operators are busy, please call again’ — operators going from phone call to phone call without a break, right? That made people think: ‘If the phone lines are busy, then other people like me who are also watching this infomercial must be calling too.

Most people think they are different. But in reality most of us behave the way others do. So powerful is the effect of others on us that television executives love to fill comedy shows with canned laughter.

Experiments by lots of behavioural scientists have found that the use of canned laughter causes an audience to laugh longer and more often when humorous material is presented. People rate the material as funnier. In addition, evidence indicates that canned laughter is most effective for poor jokes.

In another experiment conducted by behavioural scientists Noah Goldstein, Robert Cialdini and Vladas Griskevicius (‘A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels’, goo.gl/OJT1pb), different kinds of signs were placed in hotel rooms. One of the signs asked guests to help save the environment by reusing their towels.

The second one informed them that the majority of guests at the hotel recycled their towels to help save the environment. The second sign had a success rate of 26 per cent more than the first sign.

A third sign informed guests that majority of people who had previously stayed in their particular room recycled their towels to help save the environment. The third sign had a success rate of 33 per cent more than the first sign.

Now only if hotels could apply the same principle to reducing theft of towels, shampoos, bedsheets, stationary and, yes, appliances too.

Sources: 1. Schultz, P. Wesley, Jessica M. Nolan, Robert B. Cialdini, Noah J. Goldstein and Vladas Griskevicius, “The Constructive, Destructive, and Reconstructive Power of Social Norms”, Psychological Science 18:429-34 (2007) 2. Kelman, H. C. (1 March 1958). “Compliance, identification, and internalization three processes of attitude change”. Journal of Conflict Resolution 2 (1): 51–60.) 3. Cai, Hongbi, Yuyu Chen and Hanming Fang – Observational Learning: Evidence from a randomised natural field experiment – American Economic Review 99, no.3: 864-82 (2009) 4. Noah J. Goldstein, Robert B. Cialdini and Vladas Griskevicius – A room with a viewpoint: Using social norms to motivate environmental conservation in hotels – Journal of Consumer Research 35:472-82 (2008) 5. David W. Nickerson – Is voting contagious? Evidence from two field experiments – American Political Science Review 102: 49-57 (2008) 6. Nicholas A. Christakis and James Fowler – Connected: The surprising power of our social networks and How they shape our lives (2009) 7. Behavioural Insights Team – erstwhile cabinet office of British Government 8. Gary S. Becker – A note on restaurant pricing and other examples of social influence on price – Journal of Political Economy 99, no. 3: 1109-16 (1991) 9. Chevalier, Judith and Dina Mayzlin – The effect of word of mouth on sales: Online book reviews – Journal of Marketing Research 43, no.3: 345-54 (2006) 10. Gregory S. Berns et al – Neurobiological correlates of social conformity and independence during mental rotation – Biological Psychiatry 58: 245-53 (2005) 11. M. M. Smith and R. G. C. Fuller – Effects of group laughter on responses to humorous materials – Psychological Reports 30:132-34 (1972) 12. R. G. C. Fuller and A. Sheehy-Skeffinton – Effects of group laughter on responses to humorous materials: A replication and extension – Psychological Reports 35:531-34 (1974) 13. T. A. Nosanchuk and J. Lightstone – Canned laughter and public and private conformity – Journal of Personality and Social Psychology 29:153-56 (1974)

The science of how radio stations introduce new songs

Published December 6, 2016 by Anand Damani

From Left to Right – Miley Cyrus, Beyonce, Grimes (Canadian Electronic Artist) Rihanna and Adele

As the major contributor of content on radio is music, the station ought to be playing hit numbers so that listeners keep tuned in. But how can radio stations afford to play only hit songs, if they are more costly? And what about the promotions of new songs? How do new songs get played on radio stations? And how do they become a hit? That got us digging. Here’s what we found.

There’s a company named Polyphonic HMI – a bunch of artificial intelligence experts and statisticians based in Spain – who has created a program called Hit Song Science. Don’t kill us for this. Hit Song Science analyses mathematical characteristics of a tune by comparing the tempo, pitch, melody, chord progression, and other factors against thousands of hit songs stored in Polyphonic HMI’s database. They predicted the success Norah Jones’s Come Away with me that won 8 Grammys, Santana’s Why don’t you and I that reached number three on Billboard charts. (We don’t know what song they predicted incorrectly.)

The program also predicted the success of a song called Hey ya by hip-hop group OutKast in 2003. When industry folks heard Hey ya, they liked it and thought it would become a huge hit. But when the data came in about listeners across radio stations, a huge number of listeners tuned out within the first thirty seconds itself. What went wrong?

One of the pioneers in studying why and how songs become sticky, Rich Meyers, says, “Sometimes radio stations do research by calling up listeners and playing a snippet of a song, and listeners will say, I’ve heard that a million times and I’m totally tired of it. But when it comes on radio, your sub-conscious says I know this song, I can sing along. Your brain secretly wants that song, because it’s so familiar to everything else you’ve already heard and liked.”

Areas of our brain that process music – auditory cortex, thalamus and superior parietal cortex – are designed to seek out patterns and look for familiarity. Music after all is complicated with numerous tones, pitches, overlapping melodies, etc. Our brains crave familiarity in music, because familiarity is how we manage to hear without becoming distracted by all the sound. That’s why songs that sound ‘familiar’ – even if we’ve never heard them before – get sticky.

The problem wasn’t that Hey ya was bad. The problem was that it wasn’t familiar. So radio stations used the trick of sandwiching Hey ya between familiar hit songs to mitigate risk. If stations don’t take risks with new songs people will stop listening. On the other hand, listeners want songs they already like. So by sandwiching them between already hit songs, stations make new songs familiar as fast as possible. Jiten, partner at Boing recording studio, says, “radio stations mitigate risk by playing new songs that are well promoted on audio-visual media like the TV as well.” Makes sense.

Be careful when offering your brand for free

Published November 15, 2016 by Anand Damani

When you give something free, people don’t value it. Even if your brand is being given free as a gift with the purchase of another brand, whether highly priced or not, it could backfire.

Behavioural scientist Priya Raghubir had participants view a duty-free catalog that featured liquor as the target product and a pearl bracelet as the bonus gift. One group was asked to evaluate the desirability and value of the pearl bracelet in the context of it being the gift, and another group was asked to evaluate the pearl bracelet by itself. She found that people were willing to pay around 35% less for the pearl bracelet when they saw it bundled with the target product as a gift, than when they saw it as a standalone product.

This happens because consumers might infer that the product’s manufacturer wouldn’t give away a valuable product for free. People may wonder what might be wrong with the gift or may assume that the gift is obsolete or out of style or isn’t selling or it may be plain junk.

One way of preventing such damage would be to inform consumers about the true value of the gift. So instead of a ‘Free backpack with the suitcase’, it should read ‘Free backpack worth Rs. 1990 with the suitcase’.

This has application for anyone looking to influence others. Says Robert Cialdini, Professor of Psychology and Marketing at Arizona State University, “by pointing out to a colleague that you were happy to work for two extra hours to help finish this important project, because you know how much it means to his/her prospects, you are valuing your time in your colleague’s eyes. Or you could use it to convince people that, in order to avoid having their opinion devalued, they should stop giving you free advice.”

Source: Free gift with purchase: Promoting free gifts with purchase: Promoting or discounting the brand? – Priya Raghubir – Journal of Consumer Psychology, 14(1&2), 181–185 (2004)

Why Behavioural Design is more effective than Advertising at changing behaviour

Published November 8, 2016 by Anand Damani

Advertising is useful for creating awareness of the the brand and making the brand likable through a story. However its too much to expect that viewers would choose that same brand or product when they are actually in ‘buy’ mode. Because today consumers are subjected to thousands of associations everyday and the human brain cannot be expected to revive the desired brand connection at point of purchase or consumption. Behavioural Design, on the other hand, works at this moment of truth and is far more effective at making people act in the desired way. Let us give you an example.

Suppose we wanted to encourage students to drink alcohol in limits and not go overboard. And say we chose advertising as a way to influence them to reduce their drinking. And say we even use the proven persuasive technique of using social norms – people are motivated to behave in line with perceived social norms. So we advertise that 85% of students drink 2 or lesser than 2 drinks when they party. The thinking is that when students know that their peers don’t drink much, it will reduce the amount that they’ll want to drink when they party. And we advertise via posters in colleges in prominent places so that the students would surely notice them.

Though the technique of social norm is persuasive, by the time the students get to the pubs, clubs, parties, wherever drinking occurs, they forget about that piece of persuasive messaging. The disparity between where the students see the persuasive message and where they are when they drink means that the distant voice of the message is likely to be drowned by the here-and-now sounds of cheers, fast music, laughter and an ambience created to shed inhibitions.

It’s unlikely that the same message would work if placed inside the pubs or clubs, especially if students see other students drinking more than 2 drinks. But what if the pubs put playful ‘light cubes’ in students’ drinks. Light cubes that are LED lights enclosed in plastic, emitting flashes of blue and white light, making the drink look like it were flashing the police car lights (blue, white and red in US). That could subliminally remind the students of the presence of cops around and restrict them from going overboard and getting into trouble. That’s why Behavioural Design is more powerful at changing behaviour.

How to turn your weakness into your strength

Published September 20, 2016 by Anand Damani

There have been many well-known cases of brands touting their weaknesses and being liked for it. Avis car rental’s memorable slogan ‘We’re No.2. We try harder’ that meant when you’re not no.1, you have to try harder. Or 1950’s Volkswagen Beetle’s campaign that Beetle wouldn’t win any beauty contests, but its strengths were durability, fuel economy and price. Or Stella Artois’ ‘Reassuringly expensive’. In fact the third largest auto insurance company in the US, Progressive Auto Insurance is known for letting its customers know about its competitors rates too. Although Progressive clearly has better rates in many instances, it’s not always the case. Inspite of this Progressive has grown successfully.

Social scientists Valerie Trifts and Gerald Haubl also support Progressive’s practice. In their study participants looking to buy books online were more likely to shop from a moderately priced bookseller when that bookseller also provided its competitors prices, which were sometimes lower.

Why does this strategy work? “Arguing against your self-interest,” says Robert Cialdini, “creates the perception of honesty and trustworthiness. This puts you in a position to be more persuasive when promoting your genuine strengths.”

This persuasion technique could even be applied when selling your car. Volunteering negative information about the car, especially information that the prospect would be unlikely to discover by himself/herself should do some good for his or her trust in you and your vehicle.

However, it’s important to keep in mind that this strategy can be effectively used only if your weakness is genuinely a minor one in comparison to your strengths. Like Francois, the 17th Century French writer and moralist, wrote, “We only confess our little faults to persuade people that we have no big ones.”

Source: Valerie Trifts and Gerald Haubl – Information Availability and Consumer Preference: Can Online Retailers Benefit from Providing Access to Competitor Price Information? – EBusiness Research Center Working Paper 06-2002

How to show off without being labeled as a show-off

Published October 25, 2023September 14, 2016 by Anand Damani

Here’s an interesting story we chanced upon that overcomes the dilemma of being seen as a show-off when you may be trying to establish your credentials.

There is a certain real estate agency in the US, which has a sales and a rental division. Customers who would call the agency would typically first speak with a receptionist who, having identified which division they needed to speak with, would say, “Oh, rentals, you need to speak to Penny.” or “You need the sales division, you need to speak to Sheldon.”

Upon the recommendation of a group of behavioural scientists – Robert Cialdini and colleagues – the receptionist started using a slightly tweaked approach. The receptionist would now say, “Oh, rentals, you need to speak to Penny, who has over fifteen years of experience renting properties in this neighborhood. Let me put you through now” or “I’m going to put you through to Sheldon, our head of sales. Sheldon has twenty years of experience in selling properties like yours.”

Everything that the receptionist spoke was true. But for Penny or Sheldon to say the same thing would have been have been at the risk of being liked less and seen as boastful and self-promoting and as a result, not as persuasive. The customers ignored the fact that this introduction came from someone who was connected to Penny and Sheldon and would benefit from this kind of introduction. Penny and Sheldon reported a significant rise in the number of appointments post this Behavioural Design nudge. Lastly, but most importantly, the intervention was costless to the company.

No wonder, inspite of written recommendations being a prominent feature of Linkedin, it has further introduced recommendation of skills, to enhance the user’s credibility as well as LinkedIn’s usability.

How reframing choices, changes our decision

Published August 31, 2016August 31, 2016 by Anand Damani

(In the illustration did you first see a rabbit or a duck?)

Consider the following situation. Imagine that India is preparing for the outbreak of a disease, which is expected to kill 600 people. Two alternative treatments to combat the disease have been proposed.

If Treatment A is adopted, 200 people will be saved.

If Treatment B is adopted, there is a 1/3^rd probability that 600 people will be saved and a 2/3^rd probability that no people will be saved.

Which one do you prefer?

Most likely you prefer the certain option – Treatment A over the gamble – Treatment B.

Now lets consider a second version of the situation:

If Treatment A’ is adopted, 400 people will die.

If Treatment B’ is adopted, there is a 1/3^rd probability that nobody will die and a 2/3^rd probability that 600 people will die.

Which one do you prefer?

Most likely you prefer the gamble – Treatment B over the certain option – Treatment A.

Now look closely and compare the two versions: the consequences of Treatment A and A’ are identical and so are the consequences of Treatment B and B’. However, your options most probably differed. Did you choose to save 200 lives for sure in the first version and chose to gamble rather than accept 400 deaths in the other?

Embarrassed? So were we. Even when this test was shared with public health professionals in the US, they were swayed by this framing effect!

Daniel Kahneman, nobel-winning behavioural economist, explains the rationale behind our decisions. In his book ‘Thinking Fast and Slow’, he says “Decision makers tend to prefer the sure thing over the gamble, when the outcomes are good. They tend to reject the sure thing and accept the gamble, when both the outcomes are bad. Risk-averse and risk-seeking preferences are not reality-bound.”

This shows how a small manipulation can have drastic impact on decision-making. And if you still believe that we humans behave rationally, think again.

Clocky & Tocky – Alarm clocks that literally get you off your bed

Published August 23, 2016 by Anand Damani

Have trouble waking up in the morning? Do you hit snooze on the alarm repeated like me, only to go back to bed and wake up later to realize that you are, as usual, late?

Here are two interesting products of Behavioural Design that could be of help. Clocky and Tocky are products created by Gauri Nanda, an MIT grad. Clocky is an alarm clock with wheels. When it’s time to wake up, these alarm clocks leap off your nightstand and run away beeping to ensure you’re awake. Tocky even lets you load your own wake up message or your favourite song.

See them in action by clicking here.

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