Keep Moving Forward

One of my favorite movies is Disney's Meet the Robinsons.  Not only is it one of Disney's funniest, it has some wonderful commentary on ingenuity and optimism, two things that were very close to Walt Disney's heart.  Not to mention, one of my favorite jazz musicians happens to provide the voice for the jazzy frog.  

The story is about 12 year old orphan Lewis, a blooming inventor.  Convinced there is no one who will adopt him, his life takes a turn for the bizarre when he is approached by Wilbur Robinson, a child from the future.  He takes Lewis to the future, and there he learns much about attitude, ingenuity, and family. 

The movie is jam-packed with little hidden morals.  In one scene, Lewis is eating dinner with the Robinsons, and they ask him to repair a broken PB&J machine.   His confidence as an inventor is at a low in this part of the movie, so he initially refuses.  But after being pressured into it by the quirky family, he promptly fails, and PB&J is spread everywhere, all over the walls and over everyone.  It is a total mess. 

Initially, Lewis cowers, and expects everyone to be angry at his failure.  But the do just the opposite. They celebrate it.  Why?  Because from failure, you learn.  From success, not so much. 

I love this attitude.  Failure is not something to look down upon, as long as the person is trying.  Failure sucks, but instructs.  Whether or not you let it stop you is all a matter of attitude.

The perhaps most obvious takeaway from the movie is the slogan - Keep Moving Forward.  The movie tells us that no matter the battle, the failure, the challenge - you have to keep moving forward.  Keep your mind stuck in the past, and you'll suffer the fate of the misunderstood villain, Goob. 

I find I need to constantly remind myself of that.  A maximizer, it is natural for me to worry about the choices I have made, and wonder if they truly were the best.  This is especially relevant at the close of a semester...the best thing to do is reflect on what you have learned, and keep your eyes on the future.  Don't get caught up in the small failures.  

"Around here, however, we don't look backwards for very long.  We keep moving forward, opening up new doors, doing new things, because we're curios.  And curiosity keeps leading us down new paths."
- Walt Disney 




  

Adaptation-Level Phenomenon

How many of us have thought "I'll be happy when {-insert_conditional_here-}," and how many of us were actually happy when that conditional happened?  

Welcome to the world of the adaptation-level phenomenon. The adaptation-level phenomenon is the tendency of people to quickly adapt to a new situation, until it becomes the new norm, and not being able to remember life without said situation. Once the new situation is the new norm, a new experience is craved - thus creating a never-ending process of continual growth and seeking that happiness.  Hopefully you are happy for a little bit.  

Taken in that light, the adaptation-level phenomenon is quite laughable and easy to dismiss.  But it is real, and has a very strong pull. For me, the classic example is smart phones - I don't know how I functioned without mine, and my adaptation was surprisingly quick. Another example is living without Netflix once you have tasted the convenience of their service. 

This explains how Apple has been able to grow and retain such a loyal customer base too.  Their customers are always looking for the new iPhone, iPod, iPad, whatever, and as soon as it comes out, their current iDevice has lost it's shiny place and are the new norm.  Now they must have the new experience.  Because, you know, heaven forbid you are the only one at work with an iPhone 5s.  

I think a lot of company's try to create some form of this phenomenon through running campaigns that say things like "Don't miss out!" or "Keep on the cutting edge of technology with our product."  That brand loyalty is some pretty sweet short-run security, to be sure! 

From a consumer's standpoint, I think the trick to avoid being trapped in that vicious cycle is like anything - recognize and admit that it is a problem.  Then, train yourself to enjoy your current "norm" as much as you would the new experience.  Then your happiness is not relied on something else that will never come, but instead is grounded in today. 

Gambler's Fallacy

If there's one thing I've never understood, it's the lottery.  

Like, I don't get it...The probability of you winning anything is so small, the opportunity cost of that lottery ticket is pretty darn high.  And yet, people still buy in.  And it seems a lot of that has to do with this little thing called the gambler's fallacy.  

Ladies and Gentlemen -
the Gambler's Fallacy

The basic idea is that you put more faith that something will happen because it is "bound to happen by now."  Say you roll a dice hoping for a four.  The first roll is a two.  The next, a three.  Then a one, a two, another two, and a five.  By now, you may be thinking that four is bound to show up soon.  It just has to.  But the thing is...is doesn't have to, and that's completely irrational logic. Mathematically it is still a 1/6th chance you'll roll a four - just like the other rolls.  

But some people don't see that.  All you have to do is look at the advertisements for the lottery - they all run off themes like "Lucky Day", or "Feel the Luck."  They are making money off the people's irrational decision making.  

The funny thing is that the people who are good at games that we typically think of involve luck to win, don't take into account any luck at all.  In fact, it's just the opposite.  The take into account the risks, and use mathematics and probabilities to make their decisions.  Look at any poker champion - they are good with numbers. 

Automatic vs Reflective

In Nudge, Thaler and Sunstein say there are two different cognitive systems - automatic and reflective

Automatic system is instinctive, unconscious, fast, and effortless.  It is what Farenheit is to most Americans. 

Reflective system on the other hand, is self-conscious and deliberate.  It is cognitive thought, and often slow. You can call it the rational side of humans - they call it the Mr. Spock.  It is what Celsius is to most Americans..

Automatic systems have their own inertia that often prevents us from doing something we’d want to do otherwise. In some ways it is the knee-jerk reactions we may want to get rid of, but are very difficult to.  

This explains why learning a new language is so difficult.  Our native language is automatic and comes out without us thinking about it. But a new language is reflective.  It is slow, thoughtful, and difficult.  Thus, bilingual implies both languages are automatic.

Heuristics could be seen as part of the automatic system, as they are rules of thumb that are almost instinctive to us.  

Thinking about Reflective vs Automatic is essential when you are trying to influence someone's behavior, and nudge them in a certain direction.  Obviously, tailoring your message to the Automatic system will be the most effective, as it has that inertia an they probably do not even realize they are thinking in that way. 

I wonder if that is related to the "Hot Decision making" principle, that people make different decisions when they are aroused (tested in a sexual context, but it could be any sort of arousal).  That's why infomercials always try to create some sort of urgency to their message, isn't it?  They want to communicate to the Automatic side of their customer, and make them buy the product before they put to much thought into it.  

And if that's true, than the best shoppers are the ones who take their time and do some good Reflective thinking on things.  So take that Schwartz - maximizers may be making better decisions than satisficers do, because they are not as subject to their automatic impulses.   

Jumping to Conclusions

It never ceases to amaze me how easy it is to jump to conclusions in our life.  We as humans like to generalize, and simplify things as much as possible (heuristics, anyone?) so we can understand it.  

What has surprised me this semester is how easy that is to do during the design process.

We were brainstorming the other day of ways to make the adjustment to adulthood easier for 18-25 year old people.  We started by writing all different types of problems down we could think of: things like finances, stress, and careers.  My team decided to hone in on self-actualization.  

Brainstorming at work

After doing some initial brainstorming, we came up with a service that would push you out of your comfort zone, through things like travel, classes, and other experiences.  The basic idea is that you learn the most about yourself when you are uncomfortable.

Well, this idea was so great, we had a hard time thinking of other ideas (even though we were supposed to come up with other possible solutions).  Even individually, most of ideas we came up with were in a very similar vein to the one discussed.  

Why was that? 

Was it laziness? 

Or was it just a darn-good idea?  

I wish I had the answer.  I came across similar problems in my other design class, Design Thinking for Our Community.  Often the ideas we ended up prototyping and testing were some of the first ideas that came to our mind.  

I guess there is nothing wrong with it, per say.  As long as you are able to put the idea through the tests, poke holes in it, and see where it needs improvement - and throw it away if necessary.

It is only a problem if you don't do any of that refinement.  If you think the idea is the best and needs no extra thought...well you should probably put some thought into the lives of some of the best inventors, like Thomas Edison or Walt Disney.  Just as genius is not born overnight, nor are good products.  They are the result of much hard work.  

Marketing Research and Behavior

One of the best pieces of advice I have gotten in my marketing classes is this: 

When you are doing marketing research, be careful of the data you gather, because sometimes the same people who say they will buy something are the same people who will lie to you. 

 For example, say you are designing a product, and you take the concept to your target audience to ask them how much they would pay for it.  Say the average person said they would pay $20 for this product.  Great.  You can work with that.  You go through all the development, with all its expenses and pains, and finally come back to the same people with the finished product in hand, ready to sell for $20.  But, they do not buy it.  

It makes things more difficult, but people will make different decisions when aroused or under pressure.  The decisions they say they will make are less likely to uphold.  

Thankfully, there are ways to control for these things statistically, to help mitigate that risk.  I just thought it is interesting and a worthwhile word to the wise.  

Nudging Us in Buildings

One of the nudges discussed in Nudge was something I've never thought about before - nudges in buildings. 

I'm sure this is "Good Building Design 101" for architects, but since I've never taken an architect class before, I found the idea quite interesting.  

So, I started paying attention, and asking "How are buildings designed to nudge us to do a certain things?"  

One of the first things I realized was bathroom locations.  Whenever I needed to use one, I always found myself needing to walk somewhere.  While walking, I'd run into a friend.  I'd remember to send that email to that professor as I walked by their door.  Overall, the need to walk to the nearest bathroom always seemed to provoke some level of interaction.  

Another came up while walking through Jabs, this time with eyes open and looking for the small nudges.  One thing I had noticed before but never thought about were the vending machines -- they are tucked away, almost hidden, by the emergency stairs, as far away from Sola Cafe as possible.  Had they been more accessible, how many sales would Sola loose to the cheaper vending machines?  It was a nudge to buy Sola.  

Then I did some quick Googling and came across this (an obvious nudge, but nonetheless):

How cool is that?  It's like a little nudge coach reminding you of why you should take the stairs!  Can't help but feel we need more of these types of nudges in our buildings.

If anything, I'll be keeping my eyes much more open over as I explore new and old areas. It certainly is interesting to think about how much thought is put into something as simple as where to put the bulletin board or where to put the bathrooms.  It never ceases to amaze me how much thought is put into the small things we often overlook - from building layouts to advertisements.  People are crazy. 

Don't know about you, but it makes me even more excited to build my own house someday ^_^ 

Availability Heuristic and Decision Making

We were talking in class about the different heuristics - or rules of thumb - we use to understand things faster.  One of them, the availability heuristic, I have especially been seeing almost everyday in people's decision making.  And it hurts sometimes, because it can lead them to make irrational decisions.  

But first, an example that explains the availability heuristic. Parents are more protective of their children now than they were fifty years ago.  And we can see why, right?  It seems almost everywhere you look you see horrendous stories about children being kidnapped, and goodness knows what else.  These are scary things!   So naturally, you being the informed citizen and loving parent, you protect your child.  You always keep them in your sight, to ensure nothing goes wrong.  You walked to school by yourself when you were a kid, true; but those were different times and today things are more dangerous. 

But here's the kicker - the probability of children being kidnapped is significantly less than is was fifty years ago.  And even then, it's a really (really) small probability. 

We just think it is a huge possibility, because we hear about these stories so often in our connected world full of a press that eats up any story that shocks and sells.  We remember the things that are the most accessible to us, and use those rules to make our decisions, even if it is not an accurate picture of reality.  In other words, we are using an availability heuristic.  

And this leads me a main thought that has been spinning around my mind over the past few months - what is the social responsibility of the press?  Are they actually doing us a disservice by covering all these stories?  Sure, they may think it is their "social duty" to cover these stories, or they may just be looking for a good story to get the hits they need on Google.  But regardless of intentions, are they creating a bigger problem in doing so?  

But, there is a counter argument as well -- maybe the decrease in kidnappings are due to better parent behavior because they are more aware of the terrible things that can happen to their children. Proving that causality would be, of course difficult.  But, still its interesting.  

I think it comes down to the classic economic test of benefits vs costs.  Sure, there is less kidnapping nowadays (and thank goodness).  But, what cost does that have?  Some would argue that sheltered children have a smaller probability of being kidnapped yes, but they are robbed of the essential skills that would have developed from the adventuring and being off on their own.  So, is the benefit of a smaller probability of being kidnapped worth the cost of losing those skills?  I wish I had the answer.  

But what I do know is we all must be careful not fall into the trap of the availability heuristic.  Think like a rational human being, be different, and lead by example.  Otherwise, you could be blind to the things you could help fix - as demonstrated below. 

Stop Once Satisfied

I remember someone telling me the big difference between America's eating habits and Europe's habits.  He said that Americans finish eating once the plate is empty.  Europeans on the other hand stop eating once they are no longer hungry.  That cultural difference is why America has the higher obesity rates.  

Well, so that person claimed.  But, whether or not it is true, it stayed with me.  

But I think that's something worthwhile to think about.  Is a lack of satisfaction a large reason why we have enormous obesity problems in the US?  If people were trained better to stop once satisfied, would that eliminate a lot of behavioral problems we have today? 

Perhaps the obesity problem is deeper than that.  Maybe it is genetic.  Or maybe overweight parents often bear overweight children just because they eat the same unhealthy foods and pass on similar poor habits. 

Either way, the basic formula seems pretty simple - if you want to lose weight, reduce your consumption.  Thinking like a behavioral economist, maybe there are small nudges we can give or help people put on themselves that will reduce consumption. It could be something as simple as a poster that reminds them that x amount of people in their community have food insecurity.  

Nudge and Ethics

The authors of Nudge do a great job of using behavioral economics to influence people's behavior.  They say that we cannot not influence behavior, because every way we word a question, organize a menu, and so forth is an influence in itself.  So, they argue, if you have to make a decision either way, why not use your newly-discovered toolbox full of nudges for the greater good? 

This position surprised me.  Previously, I was absolutely against a higher vertical power making decisions for those below them, "for their own good."  I thought, how could anyone make a better decision for someone than that person could themselves? But this semester, I've been second-guessing myself.  

I am in another class on development economics (I swear...this is related.).  We're reading a book called Poor Economics by Banerjee and Duflo (The Economist's Book of the Year in 2011). One of the author's main points in the book is that the poor remain poor because they have a lot more decisions to make than we do, and many of them are the important decisions "nobody should have to make."  For example, we in the USA don't have to really think about getting access to clean water.  We can get water from a tap and (with relatively high assurance) be confident that we won't get some terrible disease from it.  So, in many ways, a lot of the important "basic human right" decisions we don't have to make.

And thank goodness! If you had to spend every day filtering your water - think of the opportunity costs!  

So, how many of those "important decisions" should be made for us?   Who decides what is important enough?  

I think that the whole point behind their "paternalistic libertarianim" (two words that, quite frankly, seem too contradictory to be included in the same sentence). Nudge says the people should still absolutely be able to make their own decisions; no one is forcing them.  It's more a suggestion, than an actual rule. 

They certianly make a good case for showing us that these nudges will work.  But how far to take them....well that could change from person to person.  Welcome to the wonderful world of policy makers.

Relative Rationalizing

Ahhh relativity. One of the most confusing - but important - topics you can go down the rabbit hole on.  Everything is relative.  A salary of $50,000 may sound like nothing to you, but it may be quite appealing to me.  But you may be comparing it to your (or your neighbor's, or you brother's, it doesn't really matter) current salary that's in the six-digit range.  But for me, I'm comparing it to my current lack of a salary.  That't pretty great. 

Here's another example.  When contemplating the purchase of a $25 pen, the majority of people would drive to another store 15 minutes away to save $7. When contemplating the purchase of a $455 suit, the majority of people would not drive to another store 15 minutes away to save $7.  The amount saved and time involved are the same, but people behave differently. 

As my Dad would tell me many times during my childhood, "It's all what you compare it to."   

How does that relate to marketing and consumer behavior?  Well, here's an example to answer just that.  

When Williams-Sonoma introduced bread machines, sales were slow. When they added a "deluxe" version that was 50% more expensive, and the machines they started flying off the shelves.  The smart marketers used the "deluxe" version as a base of relativity.  Now the first bread machine appeared to be a bargain! 

So the takeaway for marketers is make your customer think a certain way by providing a base to compare something to.   And the takeaway for us as consumer is - know what you value.  Watch out for relative thinking. 

Stereotypes

One thing behavioral economists and psychologist can (more or less) agree on is that the mind get's what it expects.  Previously held expectations can cloud our rational judgement. 

What about stereotypes, you ask?  

Well, the same principle applies.  We react differently based on the stereotypes we have of others. Is that good or bad?  Tricky question, but my best answer is that it depends. 

But interestingly enough, we react differently based on stereotypes about ourselves as well. 


It's a terrible fact, but some people will often perform worse on exams if they are asked to specify their race or gender beforehand.  In one experiment on Asian-American women conducted by researchers Shin, Pittinsky and Ambady, one group was given a math test, and asked questions related to their gender.  The other group was given the same test, and given questions related to their race.  The latter did better on the exams than the former did.   

Other tests have shown that African-Americans perform significantly worse on exams when asked to specify their race.

So I wonder, how much of these stereotypes are used in marketing?  Probably much more than we realize. Advertisers may want to convey a certain message that is better communicated through one type of people than another - and that is okay, as long as it does no harm. 
It is just one way they can work on their relationship with the customer.  
  
But apparently sometimes these stereotypes can do harm to people's opinions of themselves, and if that is the case, that is wrong.  We should not be putting people down.  

Maximizers - as Irrational as We are Led to Believe?

"The majority of people want more control in their lives, but the majority of people want simpler lives" - Barry Schwartz in The Paradox of Choice

Welcome my friends to the consumer's paradox.  Let's just hope you're not a maximizer. 

Upon reading the first few pages of Barry Schwartz's the Paradox of Choice I started to become overwhelmed.  The entire first chapter is dedicated to all the decisions we have to make in our daily life.  I quickly became aware that I am a "maximizer".  

Let's back up.  What's the difference between a maximizer and a satisficer anyway?  

The maximizer are just that - they are only happy if they get the beset option out there.  They will spend hours researching all different options to make sure the one they end up choosing is the indeed best.  According to Schwartz (a satisficer) "The goal of a maximizer leads to a dissatisfied life."

Satisficers are the other way around.  They are okay with the first pair of jeans they try on, and see no value in spending all that time researching the options.  They can move on after making a decision, unlike a maximizer who would most likely lose their enjoyment in a decision once they find out there was a better one out there.  Generally (or so Schwartz preaches) satisficers lead a happier life.     

Should Schwartz have his way - the maximizers in the world would spend less time making decisions and more time making the important decisions.  Perhaps my view is skewed (because at my core I am a maximizer), but I think his view of maximizers is a bit naive and....well biased.

I have an acquaintance who lives in Pasadena, California.  He is a full time lawyer by day, and a jazz guitarist by night.  He has perhaps the most sophisticated taste I know in the things of music, food, and drinks.  Schwartz would argue that my friend wastes too much time every time he wants a cup of coffee.  He'll go out of his way to get a simple cup of coffee, through doing intense research before evening going out his door.  Schwartz preaches that my friend should just be fine enough with a simple drip coffee at Starbucks.  But I've seen first hand the amount of joy my friend gets when he tastes that cup of coffee.  Regardless is the coffee is indeed better (or just better because of his expectations), he LOVES that cup.  And he'll be the first to admit it - he can't be happy with a Starbucks drip coffee.  He just can't.  

Thinking economically, my friend is perfectly maximizing and behaving rationally.  It would be irrational of us who are fine with a Starbucks drip coffee to force our tastes on him, because our way is better.  Some people are fine with Starbucks.  Some are not.  And that's OK.  

Yes...But Ethical?

Through Predictably Irrational and some other videos we have been watching, much of what we've been covering a similar underlying message: we as consumers respond to small cues and often make irrational decisions due to those incentives.  So recognizing this, we as marketers can utilize this understanding in ways to in the bottom line, make the cash registers ring.  But are we just after their money?   Or is there some other "higher" obligation we have to our customers?  Is using these type of tools in our marketing toolbox ethical? 

From one point of view, yeah it is, because we can argue that consumers get the utility they pay for.  In regards to the wine video, researchers literally witnessed the consumers having more enjoyment out of the "more expensive" wine when they were under the MRI.  So, regardless of the actual quality of product, the consumers are paying for a perceived utility of a good/service and in the end they get it.  The means is irregardless.  They're happy and we're happy.  Where's the problem? 

I think the issue becomes more grey when the consumers are not left off in a better place, like in the Subway scenario.  People actually ate more because they thought they we're eating healthy initially, so the extra eating was "justified."  The policy had a reverse effect.  (On a tangent - it always seemed irrational to me when someone goes to the gym, works their behind off, and then has a cheeseburger with chips and ice cream that evening, because they've "earned it."  Not only is this a nearly-bulimic behavior, it's irrational.)  So, if our marketing decisions are having a negative effect on our customers (who are people!), don't we have a "higher obligation" to their well-being?.  Understanding the cues that influence customer's incentives is a powerful - and humbling - thing.

But there again, there is a flip side of that argument.  The consumers should know what they are getting themselves into.  We are not making the decision for them.  They should know to only eat the sandwich, and ditch the cookies, soda, and chips for their own health.   So, where does the "blame" go - to the person who pulled the lever, or the person who escorted them there in the first place? 

I guess my answer, at least at this moment and on this post, is that yeah... it is ethical, provided we are ethical in our means, and don't intentionally/ aren't aware of causing them to be in a worse position.  Rule #1 - we must be honest and honorable! 

Bend It Like Beckham: a Commentary on Social Decision Making

Bend it like Beckham is more than a simple '00s British rom-com.  

Directed by Gurinder Chadha, there is so much social commentary in this movie, it is almost overwhelming.  Funny in its own right, it depicts commentary on group influences, social norms, family and family decision making, and culture.  Surprisingly enough, it does this through a plot that considers such touchy topics as religion, sexual orientation, female rights, and family structure.   

From left to right: Jewels, Jess, and Joe

Jesminder "Jess" Bharma (Parminder Nagra) is an Indian living in west London.  Due to the rules of the house, she is not allowed to play football, her one true love, because she is a woman.  And per Indian tradition, the woman's role in life is to marry young, keep the house, raise the children, and cook.  How different from the modern Western life.  

It all changes when Jess meets Jewels (Keira Knightley), an English born girl of the same age, who also loves soccer and plays with the local all-girl team Hounslow Harriers. Jewels invites Jess to try out for the team, and the very impressed coach Joe (Jonathan Rhys Meyers) puts her on immediately.  The movie is full of up and downs, highs and lows (including the classic love-triangle), but in the end, everyone is able to break out of their own pressures and work things out.   

Throughout the film, Jess is conflicted between her desire to play football and keep her family happy.  In the end, her family lets their strict rules relax and lets her play.  This provides interesting commentary on the power social pressures can have over us.  Jess' parents in essence do a complete 180 from the start of the movie to the end.

Jess and Tony

The movie also has a surprisingly strong homosexuality commentary.  Jess' best friend Tony, also and Indian, confesses he is gay in the middle of the movie, to Jess wide support.  She encourages him to cast away the pressure to be heterosexual, and embrace his orientation.  Also, Jewel's parents (after overhearing a conversation and misinterpreting it)think that Jess and Jewel are romantically involved.  Jewel's mother goes through a mourning process (she always wanted the "cheerleader daughter" and was never comfortable with Jewel's love of football), but in the end embraces her daughter being gay, even though she finds out in the very end she is not.  

Jess' family during her older
sister's, Pinky, wedding

Not to mention the commentary on the culture differences as shown through the conflict between the Indian culture and the British westernism.  Jess' father was a great criquet player, but stopped playing upon being made fun of because of his turban.  Director Chadha is putting a cruel spotlight on the cross-cultural biases our cultures unfortunately exhibit far too often.  He shows us how it should be by showing her father and Joe (two people of very different backgrounds who had their own share of conflict during the movie) playing criquet together in the end. And although the plot is not carried this far, we can reasonably assume the Jess and Joe's relationship is carried through the years...something Jess' family was not okay with during the beginning. 

So, how does this relate to marketing and consumer behavior?

Director Chadha shows us the power social and family pressures can have on decision making.  The Bharma does a complete 180 from the beginning to the ending.  Jess continually pushes the limit on what her family is comfortable with.  In the end, they find a balance between her love of her Indian roots and of football.  Even though he was uncomfortable at first, her father saw a lot of himself in Jess, and wanted her to have a different future than he had. 

It also shows us how norms can change across generations.  While Jess' parents may have been uncomfortable with too much interaction with the Brits, Jess sees little problem with it and in the end convinces her parents.   

Well done, Mr. Chadha. 

Paying Too Much When Paying Nothing

It's true - I feel like we all know it as both marketers and consumers.  Zero and/or free is a source of irrational excitement. 

Some part of my ear always twitches whenever I hear someone saying something was free.  Perhaps it's due to me being too much of a realist (and economist), but really.  Nothing's free.  That doesn't stop "free things"  from making some pretty big waves in the world of consumer behaviors.  

Take Amazon's free shipping for an example.  After the Super Saver shipping was introduced, Amazon saw increased sales everywhere, except France.  But, it turned out that the French division offered a 1 franc (about $.20) pricing instead of free shipping.  Once it was changed to free, France saw the same sales increases as every where else.   That is amazing.  Free is a cross cultural trigger.

Another example - Costco.  Ask anybody what their favorite part about Costco is, and 75% of the time they'll respond with "Free samples!"  I know people who go to Costco just to see what they're sampling that day.  Oh, and if they just happen to pick up two gallons of milk and some coffee while they're there, that's fine.  

In Predictably Irrational, Ariely theorizes that for normal transactions, we consider both the upsides and downsides.  But when something is free, the downside consideration goes out the window. "Free" makes us perceive what is being traded as immensely more valuable than it really is.   

And because of that, people go out of their way to get free things.  And in a true cost/benefit analysis, they pay too much in opportunity costs to pay nothing. 

While there is a lot of talk among behavioral economists and psychologists whether or not a free item is perceived as junk or not in the long run, the point is it does a great job at making people do things, and in that regard it is probably one of the strongest tools we have in our marketing toolbox.  

Expectations, Queen, and Coffee

Predictably Irrational - man what a book.  And one that honestly makes me...a little uncomfortable.  I try hard to know my tastes in things and to have a developed understanding of the things I enjoy, whether it be music, movies, drinks...the list goes on.

But, some of the examples in the book really make me wonder --> how much of the enjoyment we get out of something is actually due to the thing itself, and how much is due to the enjoyment we imagine we will get out of it? Is there even a difference?

Queen was always ahead of the rest of us...

The book goes into detail about different tests that prove how irrational we are as humans.  The classic example is the wine experiment.  People enjoy wine more when it is given to them in a fine glass than if given in a Styrofoam cup.  In fact, they enjoy the wine more even if they are just told the it is expensive/fine/whatever wine! 

So, how can we relate this to marketing?  I think it shows us that impressions do matter. Packaging matters.  Color matters.  Words matter.  Anything that influences the customer's impression and expectations is extremely important. We as marketers need to understand what image we want our customers to associate with our products.   

For example, provided they are all exactly identical, what are the impressions and expectations you would get if someone handed you an Americano in these three different type of cups? Would they change your enjoyment?

Overvaluing What We Have

We humans are quirky people.  According to his research, Ariely identifies three fundamental quirks of human nature and our feelings towards the things we have: 

1. We fall in love with what we already have.  (Can you say pack rat effect?)
2. We focus on what we might lose, rather than what we might gain.  Thus when we think of selling something, we think about all the things we'll be loosing by getting rid of it (and thus may value it higher than the market does). We do not think about all the hassles of owning it.
3. We assume that other people will see the transaction from the same perspective as we do.  So, we might be confused when a potential customer complains about too high a price - they value it completely differently than we do!

What's more, the more work you put into something, the more ownership you begin to feel for it (The "IKEA effect"), even if you actually do not own the item yet. This is exactly why so many companies can get away with money back guarantees.  The amount of people who default on them is minuscule. People hate to downgrade, even when it may be the best option for them.  

I think this is also why bidding processes work so well.  If you already are comfortable with pledging $x to buy an item, you already start to feel attached to the item, almost like you own it.  Thus if someone ups your bid, you are tempted to keep bidding - it is "yours" after all!  But, if you had proper training on sunk costs and thinking at the margin, maybe you would not have bought that item for much more than it is worth. 

An especially interesting anecdote is that these ownership quirks apply to ideas as well as things.  What is exactly why why we stick to ideologies that no longer seem rational.

ZMET Thoughts & Takeaways

One of the biggest challenges in today's marketing world is to not just discover what people are thinking, but to discover why and how they are thinking. 

And out of the demand for more deep qualitative research, the ZMET was born.  Oh, the ZMET...A lot of surprises in that one.

For those who don't know, the "Zaltman metaphor elicitation technique" (or ZMET) is brilliant method for getting inside our minds. It is a technique developed by Dr. Gerald Zaltman in the early 1990's, and the idea is to deepen our understanding of the subconscious thoughts we have towards a product, a brand, or an experience.  It's a handy tool to examine things like why do we like a certain brand over another, why one product speaks to us, and so on.  
The basic process goes like this: you select a number of images that remind you of whatever the topic is - the more randomly you come across the images the better.  Then, you are interviewed and asked to go in greater depth into the images.  The common threads between the different images you can find is quite astounding.  
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Perhaps the biggest takeaway from the whole experience for my (and bringing it back to marketing) was a new-found appreciation of how much thought smart advertisers put into their ads, and just how powerful a good ad can be.  Going through a ZMET reminded me of how difficult qualitative research is...especially since we are each complex individual human beings. 

Importance of Being Empathetic

JACK: I am sick to death of cleverness.  Everybody is clever nowadays.  You can't go anywhere without meeting clever people.  The thing has become an absolute public nuisance.  I wish to goodness we had a few fools left.

ALGERNON: We have. 

JACK: I should extremely like to meet them. What do they talk about? 

ALGERNON: The fools? Oh! about the clever people of course.

JACK: What fools.” 

― Oscar Wilde, The Importance of Being Earnest

Empathy - the thing at the heart of every good design, and the heart of every clever designer.  The best designs understand the user.  Through that, they can cut off problems at the pass...before they become too big an issue.  

 This was perhaps best explained to me in a honors design class entitled Design Thinking for Our Community. We had a guest speaker (a psychologist turned designer) give us a simple picture of a light switch, like this: 

and asked us a seemingly stupid question: Is the light on or off? 

Sensing a trick questions, one clever student responded that it depends if it is on a three-way circuit or not.  "No, you're thinking too about it.  That's not what I'm asking.  Is it on or off?"  he responded.  Unable to avoid the obvious answer, we respond the switch is toggled up, so it is on.  

But of course - that answer was indeed not exactly correct.  The correct answer?  It depends on where you are.  

Here comes the takeaway. 

In some countries, up means on.  In others, up means off.  The point is you have to understand your user ---> and you have to understand them at the earliest point in the design process.  You don't want to spend thousands of dollars inventing a new switch for China and find out it was designed up-side-down.  That'd be both embarrassing and expensive. 

So, the moral of the story is be empathetic.  Understand your user. Observe them, what their instincts are, how they react, and so on.  That is one of the things that'll make the difference between a well-designed product and the awkward (expensive) product sitting in the corner.