There is no ‘I’ in Marketing

There is no ‘I’ in Marketing

1. The ‘I’ illusion: irrational biases in individual decision-making.

2. The ‘we’ species: a super social ape.

3. Understanding social behaviour

= understanding consumer behaviour.

4. What does this mean for marketing?– Start with WHY

– Join the conversation

– Co-creation

Part 1The ‘I’ Illusion

Irrational biases in individual decision-making

ECONS

Individual = ‘Homo Economicus’

Human decisions =purely rational choices.

(expected utility theory)

Based onStatistics & Mathemetics

HUMANS

Irrational biases in individual decision-making.

System 1 and System 2.

(prospect theory)

Based onPsychology

Views on decision-making

Daniel KahnemanIrrational biases in individual decision-making

• Psychologist

• Nobel prize in economics (2002)

• System 1 and system 2

• Irrational biases

Daniel KahnemanProspect Theory

Prospect theory is a behavioral economic theory that

describes the way people choose

between probabilistic alternatives that involve risk,

where the probabilities of outcomes are known.

The theory states that people make decisions based

on the potential value of losses and gains rather than

the final outcome, and that people evaluate these

losses and gains using certain heuristics (mentalshortcuts). (Wikipedia)

Daniel KahnemanProspect Theory

A. If heads, then you gain €100, if tails then you gain nothing.

B. You immediately get €46.

Daniel KahnemanProspect Theory Loss aversion

If heads, then you gain €150, iftails you lose €100.

Would you take the bet?

Daniel KahnemanProspect Theory Loss aversion

Daniel KahnemanLoss Aversion

In economics and decision theory, loss aversionrefers to people's tendency to strongly prefer

avoiding losses to acquiring gains.

System 1 System 2

Well-considered & Slow

Reason-based

The lazy controller

Limited processing capacity(which explains the blind spots)

The more experience you have in the field, the less energy it takes.

Automatic & Fast

Emotion-based

Associations

Simple calculations

95% of our mental processing.

Unconsciously.

Daniel KahnemanIrrational biases in individual decision-making

Daniel Kahneman

24 x 172 x 2

System 1 System 2

“The pupils reflect the extent of mental effort in an incredibly precise way”

Daniel Kahneman

System 1 System 2

Quick!

A bat and a ball cost

$1.10 in total.

The bat costs $1 more

than the ball. How

much does the ball

cost?

Most common answer:

• Bat = $1.00

• Ball = $0.10

Right answer:

• Bat = $1.05

• Ball = $0.05

A bat and a ball cost

$1.10 in total.

The bat costs $1 more

than the ball. How

much does the ball

cost?

So why not use system 2 all the time?

• It’s slow

• It’s very energy consuming

• It’s very focused

System 2 tasksconsume lots of energy.

System 2 is very focused.

Irrational biases in individual decision-making

• Loss aversionWe irrationally try to minimalise our losses.

• AnchoringOur answer on a question is heavily biased by the first piece of information offered (the anchor).

• Paradox of choiceToo much choice makes us uncertain.

• ConformityWe adapt our own conviction in order to conform.

Daniel KahnemanAnchoring

Anchoring is a cognitive bias that describes the common human tendency to rely

too heavily on the first piece of information offered (the "anchor") when making decisions.

• Is the height of the tallest redwood more or less than 365 meter? Best guess?

• Is the height of the tallest redwood more or less than 55 meter? Best guess?

Avg. = 257m

Daniel KahnemanAnchoring

Avg. = 86m

• Is the height of the tallest redwood more or less than 365 meter? Best guess?

• Is the height of the tallest redwood more or less than 55 meter? Best guess?

Avg. = 257m

Daniel KahnemanAnchoring

Avg. = 86m

Anchoring index=

(257-86) /(365-55)

=55%

Irrational biases in individual decision-making

• Loss aversionWe irrationally try to minimalise our losses.

• AnchoringOur answer on a question is heavily biased by the first piece of information offered (the anchor).

• Paradox of choiceToo much choice makes us uncertain.

• ConformityWe adapt our own conviction in order to conform.

Barry SchwartzThe Paradox of Choice

• Psychologist

• Too much choicemakes peopleunhappy.

• The Jam Experiment

Barry SchwartzThe Paradox of Choice

6 varietiesavailable for tasting

All 24 varietiesavailable for tasting

Stopped at table

40%Stopped at table

60%

Bought

30%Bought

3%

Barry SchwartzThe Paradox of Choice

The negative effects of toomuch choice:

1. Decision paralysis2. Uncertainty (have I made

the right choice?)

Barry SchwartzThe Paradox of Choice

Irrational biases in individual decision-making

• Loss aversionWe irrationally try to minimalise our losses.

• AnchoringOur answer on a question is heavily biased by the first piece of information offered (the anchor).

• Paradox of choiceToo much choice makes us uncertain.

• ConformityWe adapt our own conviction in order to conform.

Solomon AschConformity experiments

Solomon AschConformity experiments

On average32%

At least once74%

12 critical trials

Never26%

Fear of being ridiculed or thought "peculiar".

A few of them said that they really did believe the group's answers were correct.

Conform %

Corpos –Rotterdam

2002

Reli-Rockers Rotterdam

2006

Veggies –Zürich 2012

http://www.exactitudes.com/

Irrational biases in individual decision-making

• Loss aversionWe irrationally try to minimalise our losses.

• AnchoringOur answer on a question is heavily biased by the first piece of information offered (the anchor).

• Paradox of choiceToo much choice makes us uncertain.

• ConformityWe adapt our own conviction in order to conform.

‘You're not a beautiful and unique snowflake.’

Tyler Durden

The ‘I’ Illusion

Irrational biases in individual decision-makingConclusion

• The human brain’s processing capacity is scarce.

• Our human brain was not developed to process everythingthoroughly. That would take too much energy.

• The human brain was developed to process certaininformation thoroughly, and rely on hints and others for allother information.

• The human brain was developed to work together …

Part 2A ‘We’ speciesThe Super Social Ape

Marilynn Brewer (2004)Social Psychologist

“… all of the building blocks of human psychology – cognition, emotion, motivation – have been shaped by the demands of social interdependence.”

A ‘WE’ SpeciesThe Super Social Ape

The Super Social Ape

• Why? The advantages of a social species.

• The ‘generalized other’ determines our self.

• Social pain and self-esteem as regulators.

• We’re not suited forsurvival as loneindividuals.

• We developed as super social apes.

• Social is our core evolutionary strategy.

A ‘WE’ SpeciesThe Super Social Ape

Groups > Individuals• Protection and shelter.

• More mating partners.

• Better organization for hunting larger animals.

• Take and defend a larger territory against predators / other tribes.

• Develop collective knowledge needed for– tool making

– hunting tactics

– omnivourness

– …

A ‘WE’ SpeciesThe Super Social Ape

Human beingsare designed for group living.

We developed brains and speech to work together.

A ‘WE’ SpeciesThe Super Social Ape

Freud (1856 – 1939)

‘Ich’ is set at birth and never changes.

The individual is in control.

Mead (1863 – 1931)

The self emerges from social interactions = the social self.

The ‘generalized other’ has a major influence on our self.

‘Me’ and ‘I’.• ‘Me’ is how we believe the

generalized other sees us.

• ‘I’ is how we choose to react.

Social BehaviorismGeorge Herbert Mead

If the ‘generalized other’ is so important in determining our self …

… how do we control our inclusionary status with our significant others?

A ‘WE’ SpeciesThe Super Social Ape

Self-esteem has long been aninstrument to evaluate an

individual’s self-worth.

Sociometer TheoryMark Leary

Self-esteem as a sociometer

Monitor inclusionary status

Activatie social painRestore

inclusionary status

Sociometer TheoryMark Leary

Self-esteem as a sociometer

A system that continuouly monitors the inclusionary status of the individual. The system monitors cues that connotedisapproval, rejection or exclusion.

Sociometer TheoryMark Leary

Self-esteem as a sociometer

Monitor inclusionary status

Activate social painRestore

inclusionary status

Sociometer TheoryMark Leary

Social Pain

Sociometer TheoryMark Leary

Social Pain

Sociometer TheoryMark Leary

Self-esteem as a sociometer

Monitor inclusionary status

Activate social painRestore

inclusionary status

Cast Away

“… all of the building blocks of human psychology – cognition, emotion, motivation – have been shaped by the demands of social interdependence.”

There is no ‘I’ in Marketing

1. The ‘I’ illusion: irrational biases in individual decision-making.

2. The ‘we’ species: a super social ape.

Part 3understanding social behaviour

= understanding consumer behaviour

There is no ‘I’ in Marketing

1. The ‘I’ illusion: irrational biases in individual decision-making.

2. The ‘we’ species: a super social ape.

Diffusion of Innovations ModelEverett Rogers

‘Diffusion = the process by which an innovation is

communicated through certain channels over time among the

members of a social system.’Rogers and Shoemaker, 1971

Chasm

‘Innovativeness is …

… the degree to which an

individual or other unit of

adoption is relatively earlier in

adopting new ideas than other

members of a system’

Rogers and Shoemaker, 1971

… the degree to which an

individual makes innovation

decisions independently of the

communicated experience of

others’

Midgley, 1977

We got ourselves a movement !

The Innovator

• Authentic = true to their values

OR low susceptability to normative influence

OR low self-monitoring (not conforming)

• Functional risk-taking. What if my investments (in time, resources, health, …) result in a unwanted result.

• R&D centers of a tribe / social context.

– Domain specialisation.

– Look for specialized information.

The Opinion Leader

• Pragmatic = linking opportunities to needs.High susceptability to normative influence

• Social risk-taking: what if the introduction would proof to beirrelevant for the social followers.

• Central nervous system of a tribe / social context– Less domain specialisation.– Look for socially valuable information.– Fully aware of the environment of the group.– Fully aware of relevant trends.

We got ourselves a movement !

The innovator

The opinion leader

The early/late majority

The laggards

The tipping point

‘The leader embraces him as an equal. It’s not about the leader anymore, it’s now about them’

The Imaginative Innovator

Motivation: follow their gut feeling

‘The first follower is what turns a lone nut into a leader’

The opinion leader adds social relevance.

‘Three is a crowd and a crowd is news’

Word-of-Mouth spreads the idea

‘This is the tipping point. Now we have a movement.’

‘The tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.

Malcolm Gladwell

The Tipping Point

‘As more people join in it’s less risky ...

‘Eventually they will be ridiculed for not joining in’

The laggard has to join in, in order to avoidsocial disapproval.

Let’s go back to the time where our social nature was forged.

The social group provided a buffer between the individualorganism and the exigencies of the physical environment

The social group provided a buffer between the individualorganism and the exigencies of the physical environment

SOCIAL ADOPTION MECHANISM

ECONSRATIONAL DECISION-MAKING

‘I’ IS IN CONTROL

DIFFUSION OF INNOVATIONS

HUMANSIRRATIONAL BIASES

GENERALIZED OTHER

SOCIAL ADOPTION MECHANISM

Part 4What does this mean for marketing?

1.Your brandStart with WHY

1. Start with why

1. Start with why

Starting with why makes youconsistent and authentic.

Authenticity is like a quality label for the opinion leader.

‘Why’ triggers the emotion-based System 1.

Create a world where everyone gets to mingle, and connect with people of various cultures and backgrounds.

Rent rooms.

Create a world where everyone gets to mingle, and

connect with people of various cultures and

backgrounds.

Part 4What does this mean for marketing?

2. CommunicationJoin the Conversation

Traditional Advertising:Stimulate individual behavior

Join the Conversation:Stimulate social behavior

Join the ConversationJoseph Jaffe

Join the ConversationThe power of word-of-mouth

Nielsen Survey: Global Trust in Advertising and Brand Messages (2012)

Ads on TV:47%

Ads in magazines:47%

Traditional Advertising:Stimulate individual behavior

Join the Conversation:Stimulate social behavior

Join the ConversationJoseph Jaffe

How to stimulate social interaction about your brand?

1. Authentic and meaningful2. The power of opinion leaders3. Curiosity / Scarcity4. Unexpected5. Storytelling6. Easy to share

Join the ConversationThe power of a crowd

Join the ConversationAuthentic and meaningful

Join the ConversationThe power of opinion leaders

The power of tastemakers /

opinion leaders.

Scarcity / Confidentiality

increases curiosity. Curiosity = social value.

Red Bull gives you wings

Add surprise / unexpectednessto your WHY.

Storytelling. Givemeaning. Be relevant. Start the conversation.

Be the conversation.

"We used to record demos and then just burn them onto CDs and give them away at gigs … So the fans just used to send them to each other, which didn't bother us because we never made those demos to make money or anything … And it made the gigs better, because people knew the words and came and sang along. We can't complain about it."

Make your message easy to share for early

adopters.

How to stimulate social interaction about your brand?

1. Authentic and meaningful2. The power of opinion leaders3. Curiosity / Scarcity4. Unexpected5. Storytelling6. Easy to share

Join the ConversationThe power of a crowd

Part 4What does this mean for marketing?

3. Co-create.Open up your brand. Engage your fans.

1988

2015

INSIGHT SHOP

CO-CREATION PROCESS

2 3 4

Ideation Concept

finetuning

Concept

workshop

1

Scope

5

Voorstelling

eindresultaat

ECONSRATIONAL DECISION-MAKING

‘I’ IS IN CONTROL

DIFFUSION OF INNOVATIONS

HUMANSIRRATIONAL BIASES

GENERALIZED OTHER

SOCIAL ADOPTION MECHANISM

START WITH ‘WHY’JOIN THE CONVERSATION

CO-CREATE

There is no ‘I’ in Marketing