What happens to today’s opinions tomorrow?

Byron Sharp’s How Brands Grow is the only marketing text I refer to on a regular basis. It’s well written and pulls no punches. His conclusions are based on single source datasets tracking attitudes and purchasing over time, giving them rigor and power.

The evidence he presents on the unstable nature of attitudes is particularly useful (p102). Brand imagery statements we all know and love (e.g. “Is a brand a trust” “Offers VFM” “Tastes nice” etc) often show broadly stable agreement over time. Sharp’s insight is that when you ask the same people the same question over time their answers are often different. The repeat rate for attitudes is around 50%. So for example if 45% agree brand x tastes nice in Q1, and 45% agree in Q2, evidence from single source datasets show that half the people “voting” for brand x have changed their minds since being asked previously.

stick men.jpgSharp talks about the “fickle, probabilistic nature of beliefs” which are relative, not absolute. People tend to buy from a repertoire of brands, and our beliefs are dependent both on our power of recall and the situation. As he puts it “I might choose Avis 60% of the time but that doesn’t mean that sometimes I won’t choose Hertz even two or three times in a row…” There’s a range of other published evidence showing similar findings (e.g. here and here).

As a market researcher you miss this meta-level reflection. Ad hoc work takes us from project to project, where we burrow into hypotheses then move on. Tracking tends to use fresh samples for each wave. Client work is confidential.

As an industry we suffer from an acknowledged, accepted, scientific body of knowledge upon which to base much of our work. Ask two people how advertising works and likely you’ll get two different answers. Econometrics or agency ad effectiveness models re-create a version of reality, not reality itself. From time to time it’s hard not to feel like William Gull as described by Adam Curtis “…a mad figure seeking to impose narrow order on a fluid world that he can only partially understand.”

I take two implications from the evidence on attitude repeat rates.

Firstly, to ground our research findings within an appropriate context. Peer influence on choice (e.g. what others are doing) and convenience (e.g. location, ease of buying) are good places to start.

Secondly, it’s a reminder not be over reliant on brand imagery batteries when diagnosing brand health. Awareness and purchase behaviour are as worthy diagnostics.

Posted in Books, Decision Science, Market research, Methods | Tagged , , | 3 Comments

The mail men: TMc research launches new Royal Mail advertising campaign

If you are on the tube this week look out for a new campaign from Royal Mail.

Mailmen.co.ukThe Mail Men aims to reach media planners, buyers & advertising clients to educate them about the unique role of mail as part of the marketing mix.

What’s different about it? It’s launching a research report. Biometrics, quant, qual and ethnography were combined to evidence how mail works at an emotional, not just a rational level.

“Researchers spent 18 months examining how people interact with mail in the digital age – and the results are astonishing. “

What’s exciting for us is that it showcases our work. In 2013 we conducted a controlled experiment examining how production quality affects how people respond to advertising mail (how the medium affects the message). In 2014 we put CCTV cameras in people’s homes to show how mail behaviour is very different from mail attitudes. Both projects were shortlisted for MRS Awards in the Advertising and Media category.

The website has video excerpts taken from both projects, evidencing the impact of mail in the home and mail in the heart.

Whilst I can’t claim to be objective it’s really well branded, confident campaign. We wish Royal Mail every success.

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The end of absence: reclaiming what we’ve lost in a world of constant connection (Michael Harris)

 “We shape our tools and thereafter they shape us.”  John Culkin

End of absenceThose of us over the age of 30 can remember life before the internet. In the End of Absence Michael Harris examines the impact it has had on our lives. We are so surrounded by our devices that we don’t notice how much our behaviour has changed:

“…in this brief historical moment, this moment in between two modes of being, a very rare opportunity. For those of us who have lived both with and without the vast, crowded connectivity the Internet provides, these are the few days when we can still notice the difference between Before and After.

This is the moment. Our awareness of this singular position pops up every now and again. We catch ourselves idly reaching for our phones at the bus stop. Or we notice how, mid conversation, a fumbling friend dives into the perfect recall of Google.

I think that within the mess of changes we’re experiencing, there’s a single difference that we feel most keenly; and it’s also the difference that future generations will find hardest to grasp. That is the end of absence— the loss of lack. The daydreaming silences in our lives are filled; the burning solitudes are extinguished.”

Harris isn’t the first person to bring the unintended consequences of technology on behaviour to our attention. Be it how humans absorb information (e.g. Nicholas Carr’s The Shallows) or how we interact with other people (e.g. Shelley Turkle’s Alone Together) there’s a wealth of authors examining technology from a critical perspective.

What struck me as different was the first-person perspective and urgent tone. It makes it a compelling read. Harris is a freelance journalist who relies – as many of us do – on tech for work and play. He is not criticising from the sidelines, but critiquing his own behaviour and examining his own mixed feelings towards his laptop and smartphone. In this way I think he is midway on the techno utopian <> neo-luddite continuum. A technorealist perhaps. He writes:

“As we embrace a technology’s gifts, we usually fail to consider what they ask from us in return—the subtle, hardly noticeable payments we make in exchange for their marvellous service.”

Harris’ conclusion is not to stop using technology, merely to be aware and to seek balance. I’m sure he won’t be last person making this argument in years to come.

There is a wealth of information in the book, but four themes stood out:

1) Technology designed to liberate can enslave. The human need to communicate, acquire knowledge and form relationships are increasingly being met online. Love, life and laughter are all too often mediated through a screen. The dopamine hit we get when receiving a text message trains us to constantly check and re-check just in case. Once habituated, the device – which represents a multitude of potential connections – can be more appealing than the person in front of us. The cliché of Pavlov’s dogs rings true.

“Dr. Gary Small, a researcher at UCLA writes that ‘once people get used to this state they tend to thrive on the perpetual connectivity. It feeds their egos and sense of self-worth, and it becomes irresistible…in the short run the stress hormones [cortisol and adrenaline] boost energy levels and augment memory, but over time they actually impair cognition, lead to depression, and alter the neural circuitry in the hippocampus, amygdala, and prefrontal cortex – the brain regions that control mood and thought. Chronic and prolonged techno-brain burnout can even reshape the underlying brain structure.’”

2) “Restless idleness” means our ability to concentrate is compromised. Once habituated to constant connection, many find it hard to switch off. Is “restless idleness” becoming a default state as we flit from one thing to the next? Is concentrated thought required to make a breakthrough in science, art – or your client presentation – undermined? He writes:

“Real thinking requires retreat. True contemplation is always a two part act: We go out into the world for a time, see what they’ve got, and then we find some isolated chamber where all that experience can be digested. You can never think about the crowd from its centre. You have to judge from the place of absence.”

3) Focussed, calm thinking is important because it is how we learn. It fosters the laying down of long term memory. Evidence from neuroscience shows our brains are changed by our environments (neuroplasticity). If every fact is a google away, it is easy to become a conduit rather than a receptacle for information. This leads to an “intellectual paradox — we know everything and we know nothing” a feeling of being smart and stupid at the same time (or “smupid” as Douglas Coupland calls it).

Education researcher Daisy Christodoulou extends this point in a recent Guardian article:

“Long-term memory is vast, but working memory is limited to about four to seven items and is easily overloaded. By committing facts to long-term memory, we free up precious space in our working memory to manipulate those facts and combine them with new ones.

That’s why it’s so important for pupils to learn their times tables: memorising them doesn’t stifle conceptual understanding but rather enables it. We also need a framework of facts in long-term memory to make sense of what we find on the internet; studies show that pupils frequently make errors when asked to look up unfamiliar knowledge.

Long-term memory is not a bolted-on part of the mind that we can outsource to the cloud. It is integral to all our thinking processes; researchers even suggest it may be “the seat of human intellectual skill.”

4) The rapidity of technological change means the evidence isn’t in yet. We don’t know what the effects on brains and social norms will be for young people growing up with technology. Academics don’t agree: I’m sure UVA Professor Daniel Willingham and Oxford Professor Dame Susan Greenfield would have an inspired debate on the matter.


Posted in Books, Consumer Psychology, Demographic change | Tagged , , | 5 Comments

From Yuppies to Endies in 25 years

SkintI’m a sucker for a new segment.

The latest to hit the headlines are the ENDIESthe Employed with No Disposable Income or Savings – sadly, not a happy bunch. They are described in Hollow Promise, a multidisciplinary research report by the Centre for London:

“…individuals and single parents earning between £20,000 and £33,000 and couples with dependent children earning as a household between £25,000 and £43,000. Around 20% of Londoners fall into this category. …the Endies are not just squeezed, they are trapped: they cannot see how to build up assets in London while earning incomes which each month barely cover getting to work and the essentials of life.”

Counter intuitively these people can be on good incomes: electricians, retail managers, nurses. It’s the cost of housing that renders them – in relative terms – poor. And whilst the report is centred on London the same issues apply nationwide. The majority of people in poverty are in work.

The case studies strongly communicate a sense of unfairness, frustration and even betrayal. Jayne for example:

“She commutes almost three hours a day to get to her job as a manager in an English language school on the other side of the city. Like many in London she feels overqualified for the job she is doing… By the time she gets home in the evening she is too tired to go out which is probably a good thing because she has no money… Her life is largely confined to an unremitting schedule of working, commuting and recovering in a flat, which she will never be able to call home.” (P33)

This frustration boils down to identity. These people are having trouble making sense of their lives as things simply aren’t panning out as they’d hoped. Their trajectories are broken.

From an economic perspective people are delaying settling down, getting married, having children. Rent swallows almost half of the monthly pay packet.

From a social perspective the accepted belief that qualifications led to a job, home and a better future for you and your family no longer seems to apply. The very notion of the social contract seems erased.

From a consumer perspective the choices Thatcher’s children had come to take for granted are being removed. Their very identity as consumers is being undermined. We shouldn’t underestimate how much this smarts.

Whilst their plight would not evoke sympathy from those living in Raqqa or bear comparison to people lining up at soup kitchens in the great depression, their existence points to troubling questions about what our economy delivers for a large proportion of society.

How did we get here?

Let’s rewind 25 years. In the late 80s people were talking about Yuppies – young, affluent and defining themselves through conspicuous consumption. The Endies now entering the labour market are the children of Yuppies, just as the Yuppies were the children of Baby Boomers.

Market forces, globalisation and the internet have radically altered the shape of the economy and how much we have to pay for things. Public policy has changed how we are educated. The table below – whilst an oversimplification – focuses the mind.

Boomers – entering labour market late 60s aged 18 Yuppies– entering labour market late 80s aged 18 Endies– entering labour market now aged 18
Exam system Examined at 16 & 18 Regular testing from primary school
Education Grants, no tuition fees, but limited access – <10% went to university Some university grants, no tuition fees, widening access Tuition fees, wide access – approaching 50% attend university – leading to academic inflation
Jobs Virtually full employment Boom years into recession Internships, wage stagnation, zero hours contracts
Housing Buying accessible to majority Buying accessible to many Buying accessible to those with property owning parents
Pensions Widespread final salary pensions Some final salary pensions Defined contribution schemes only
Health Male life expectancy at birth of 66 Male life expectancy at birth of 69 Male life expectancy at birth of 74
Food Some born when rationing was in place – many wished they could eat more Eating out regularly becoming more normal Cheap, abundant food –  many wish they could eat less
Social class Rigid class identity – manufacturing base strong Class identities waning with deindustrialisation Post class identities
Social mobility Possible Possible Questioned
Zeitgeist Cooperation Competition Competition for survival

The future

It would be easy to descend into pessimism dwelling on this. The report suggests a range of possible remedies centred on raising incomes (wage rises, training, sharing tax allowances across family units), as well as government intervention to make housing and childcare more affordable. Whilst admirable, the obvious challenge is that they address the symptoms not the causes of these long term economic trends. Globalisation is eroding middle class jobs. Young people are less carefree as they feel the pressure to compete from an early age. If European electorates turn towards nationalism in a rejection of economic models which favour elites, more radical solutions might well emerge soon enough.

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Inspiration in retail: Tracey Neuls

This quarter’s Intelligent Life magazine has a profile of Canadian designer Tracey Neuls.

Her Shoreditch outlet is as much gallery space as it is shop.

I like the merging of the two worlds. The setting casts the product in a new light, encouraging reinterpretation. Or maybe shoes just look better suspended. “Sometimes the best view is from the back” she says.

Having a curated selection of 20-30 choices rather than 200-300 would certainly suit me. Choice can be demotivating.

Whether this would succeed at scale or not for me misses the point: let’s celebrate a beautiful outlier.

Tracey Neuls - Pic courtesy of Luke Hayes

Tracey Neuls - Pic courtesy of MallvomitTracey Neuls 2 - Pic courtesy of Mallvomit

Photo credit #1 Luke Hayes #2 & #3 Mallvomit

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Cultural capital and market research

I’d find it hard to recommend Pierre Bordieu’s Distinction to anyone. It’s written in dry academic prose. It’s overly long. It even weighs a ton – I’ve been propping my patio door open with it all summer. Yet it contains some interesting and important ideas. Cultural capital in particular is a useful concept to decode the world around us.

Grayson Perry’s landmark documentary TV series All in the best possible taste brought the concept to my attention. He described how many middle class people he met felt anxious talking about their choices of home furnishing. The people he spoke to didn’t talk about shopping, but curating, alighting on things and bestowing meaning on them. The items people displayed in their homes – photos from their travels, furnishings, books – were chosen with a subconscious purpose. People were saying things about themselves.

Cultural capital was the concept that Perry used to help tease apart the different social groupings. Residents of the King’s Hill estate (Beamers and Beyoncé) were a world away from residents of Tunbridge Wells 15 miles away (Organic Veg Boxes and the Guardian). What interested me was as far as a recruiter is concerned these people would have been identical: BC1s with similar incomes and qualifications. Cultural capital captured the nuance which our beloved JINCARs scale (ABC1C2DE) missed.

Bordieu took the idea of capital and “extended it beyond the financial into the realm of culture”. Taste – in books, film, travel etc – creates a collective identity, a sense of “people like us” distinct from everyone else. As the introduction states: “taste classifies, and classifies the classifier.”

Your status thus might be derived from a combination of your:

  • Economic capital – financial assets/resources
  • Human capital – education or training that increases productivity in a job
  • Social capital – networks of influence and support, relationships
  • Cultural capital – expressions of things you love and how you’d like others to see you. These might be objects (e.g. record collection) or they might be embodied (e.g. tattoo).

Have you got any framed photos from your holidays displayed at home? Lots do. Objects in the home communicate, both intentional explicit signals (e.g. I have been to Brooklyn) and implicit signals (e.g. I am an interesting person, I am adventurous).  Books are another good example. People tweeting pics of their #bookshelfie are literally basking in reflected wisdom. Do you think they guy on the top-left is a film-buff?


Do you think the guy on the top-left is a film buff?

As it subtly depicts status, attempts at displaying cultural capital are often imitative. Some efforts are more convincing than others.  Whilst the music, literature and politics changes decade by decade the subtext of many student rooms remains constant:

“He exhaled through his nose and shuffled up the bed, taking in the shabby rented room, knowing with absolute confidence that somewhere amongst the art postcards and photocopied posters for angry plays there would be a photograph of Nelson Mandela, like some dreamy ideal boyfriend. In his last four years he had seen any number of bedrooms like this…She had that arty girl’s passion for photomontage too… Nothing here was neutral, everything displayed an allegiance or point of view. The room was a manifesto. The problem with these fiercely individualistic girls was that they were all exactly the same.”        One Day, David Nicholls

A bit 80s but you get my point.

The questions “what is this person choosing to display?” and “what are they trying to say?” or even “who is this person trying to be?” can be a useful way to tease apart social groupings. Map what an in-group or peer group value and you can start to delineate and classify. Some lovely imagery here:

“…as we speak of a cloud or a forest, although in each case the density of the trees or droplets is a continuous function and the limit is not a clear-cut line, so we can speak of class… In this universe of continuity, the work of construction and observation is able to isolate (relatively) homogeneous sets of individuals…”         Distinction, p256

Search for cultural capital online and you’ll soon find an abundance of terrified students grappling with the concept, begging someone to provide a working definition. Overlapping and hazy definitions detract from the concept. Some definitions are so broad that they become meaningless.

Wikipedia goes with non-financial social assets that promote social mobility beyond economic means. Cultural capital in this broadest sense feels more akin to “soft skills” – for example knowing what to wear and how to act in a job interview makes you more likely to land the role.

Sociologists are concerned with the idea as a process: how investing in cultural capital can give a return on investment. For example cultural capital is transformed into financial capital when people get jobs, spouses, and business contacts from knowing the right way to act. As this knowledge comes from school and family it means the middle classes have a head start, which opens up conversations about social mobility. That’s a topic for another day.

So to sum up:

1) The framework of different forms of capital can be a useful spur when considering identity, giving us more confidence to focus on connotations (rather than denotations). This might be differences within or between social groups. On an individual level losing one form of capital might prompt activity in another.

2) Whilst academics use formal definitions, their breadth makes them less useful to market researchers. It’s OK to go our own way.

3) Visiting respondent homes might just take a little longer from now on.

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Event: Why big data is a big deal

Galaxy of big dataMichael Whitelegge from M&S and Professor Mark Birkin from Leeds University hosted a thought-provoking lecture on the big data phenomenon at Leeds Business School this week. Contrary to many talks on the subject the pair focussed on practical examples: what organisations are doing and what real world impact has been achieved.

The event was tied to the recent announcement that Leeds University’s Consumer Data Research Centre has just been awarded £5m from the Economic and Social Research Council in conjunction with UCL. The CDRC aims to be “a national resource that will make data, routinely collected by business and local government organisations, accessible for academics in order to undertake important research in the social sciences to inform policy development, implementation and evaluation.”  The government has identified big data analysis as one of “eight great technologies” in which the UK is internationally competitive.

Professor Mark Birkin introduced the topic, and outlined the CDRC’s remit. By gaining access to industry datasets the team hope to examine hypotheses and see what commercial value can be extracted in fields as diverse as transport, consumer trends, shopping habits and health.

Michael Whitelegge described M&S’ approach to big data, which he sees as just “more data”. His definition made reference to Gartner’s 5Vs:

  • Volume – for example the data trail left by 21 million customer visits to M&S each week. Much of this will be unstructured data which requires new technology and skills to examine;
  • Variety – a rich data palette, much of which is operationally generated, e.g. from credit card usage, RFID chips embedded in stock, even data feeds from chillers in store;
  • Velocity – online retail in particular generates real-time opportunities, e.g. offers/vouchers based on historic purchasing offered at POP, in contrast to much customer insight which uses data “at rest”;
  • Veracity – questioning the trustworthiness and robustness of analytical outputs: are correlations spurious, conclusions valid?;
  • Value – the “3 whats” i) what is the data telling us? ii) so what does this mean? iii) what does the business do about it?

M&S’ aim is to develop a “data-preneurial culture” by combining analytical technology with cultural change: empowering employees to develop and test hypotheses using desktop tools.  They are using Cloudera as their main technology provider. Whilst acknowledging that big data is still approaching the peak of inflated expectations on Gartner’s Hype Cycle, it is here to stay:

  • It allows disparate data sources to be jammed together making analyses much more interesting. When EPOS data (what you bought, where) is merged with credit card data (which other retailers you shop at, how often) a clearer picture of the consumer emerges. Another example related to the multichannel shopper: a single customer view using credit card data means you can identify the customer who abandoned a basket at checkout online (due to delivery costs) and bought the product in store the next day;
  • 80% of the data out there is new – “unstructured” data which would not have been captured prior to cheap data storage. Smartphone data showing how people move around store informing layout plans for example;
  • It can create new commercial value. For example M&S’ general merchandise segmentation is based on the behaviour of 27 million customers. Targeted, relevant personalised offers result – for example a personalised clothing offer sent with a credit card statement resulted in a 40% uplift in sales.

Many of the questions after the lecture related to the ethics of examining our behaviour quite so closely. Analyses can result in profound insights which might be deemed intrusive. Whitelegge remarked that a key test for brands is not to cross “the creepy line.” Google could email you tomorrow lunchtime, saying “don’t go to the sandwich shop you normally visit when you’re working in Leeds, here’s an offer for a new joint on the high street”.

In summary? What’s possible may be unpalatable. Big data may well be a “new thing” but it, like other business operations, should be guided by an organisation’s values.

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Book review: It’s complicated – the social lives of networked teens by Danah Boyd

itscomplicatedListen: if you want to feel sorry for young people, Danah Boyd’s It’s complicated is a good place to start.

Boyd is Principal researcher at Microsoft Research and holds positions at NYU and Harvard’s Berkman Centre. Her focus is how technology impacts behaviour, particularly how young people are affected by social media’s “networked publics”. The book is her attempt “to explain the networked lives of teens to those who worry about them.”

Boyd successfully uses ethnography within a commercial setting. I was interested to read the book not only to explore the issues but to see how a “proper ethnographer” transmutes their source material into compelling prose. By proper ethnographer I mean someone whose work / life balance perhaps suffers in the pursuit of her cause (sample quote from recent interviewAfter the film, I did what I always do after a movie. I went and sat in the women’s bathroom to listen to how people would talk about the film with their friends.”)

Whilst the nexus of people and technology is the book’s focus what stuck with me most strongly was the world which many of her interviewees inhabit. Sterile and stripped of spontaneity, defined by paranoid parenting, structured activities and little trust:

“From wealthy suburbs to small towns, teenagers reported that parental fear, lack of transportation options, and heavily structured lives restricted their ability to meet and hang out with their friends… While parental restrictions and pressures are often well intended, they obliterate unstructured time and unintentionally reposition teen sociality as abnormal. This prompts teens to desperately – and in some cases, sneakily – seek it out. As a result, many teens turn to what they see as the lowest common denominator: asynchronous social media, texting and other mediated interactions.”

For Boyd, teen social media use stems from being excluded from other spaces. The narrative of addiction used to describe hours spent online is naïve. Young people are addicted to each other, not social media:

“Listening to teens talk about social media addiction reveals an interest not in features of their computers, smartphones, or even particular social media sites but in each other.”

Unable to control their child’s peer groups or boundaries online parents often feel anxious about social media. For Boyd the nature of the medium has led to confusion. A teen using Facebook to continue a conversation that started at school rather than the telephone is nothing to be alarmed about. The question we should be posing when technology advances is what has actually changed, and what hasn’t. At some point all media was new media, and it’s surprising in retrospect what causes anxiety – novels were seen as addictive in the Eighteenth Century, comics seen to encourage violence in the 1930s and rock n’ roll morally corrupting in the 50s. With perspective, in her view moral panics like these are merely adults projecting fears onto the technology of the time. The message is: calm down, it’s natural. Look at what is underlying the behaviour.

Boyd also attacks some sacred cows.

For her the term digital native is a myth, and a misleading one at that. The teens Boyd comes into contact with are less adept with technology than the term would suggest. Skill often correlates with privilege: those with multiple devices and the opportunities to develop them in their own time. The term has unintended consequences, implying digital education is unnecessary for the young. People across generations need the skills and knowledge necessary to survive in a mediated world, especially as government migrate services online.

The techno-utopian ideal that social boundaries would be broken down by the internet is not borne out by Boyd’s research. Social media does not radically change the social networks of young people. The social dynamics of the real world are reproduced online, as teens engage with others who share similar interests. Birds of a feather flock together online and offline (homophily.) Our years researching young people’s online behaviour on behalf of Government supports this. Young people’s friendship groups online tend to consist of several overlapping groups, replicating their real world relationships (for example the football team, your old school pals, your work mates etc) and extending them (friends of friends, people you met once and are unlikely to meet again).

Oversharing by teens is related back to social media platforms and their default settings. It is easier to share widely than manipulate privacy settings thus many teens operate by a “public-by-default, private-through-effort” rule of thumb. Norms around information sharing are changing, with privacy achieved by choosing what not to share, as one of Boyd’s interviewees describes:

“I just think that technology is redefining what’s acceptable for people to put out about themselves. I’ve grown up with technology so I don’t know how it was before this boom of social networking. But it just seems like instead of spending all of our time talking to individual people and sharing things that would seem private we just spend all of our time putting it in one module of communication where people can go and access it if they want to. It’s just more convenient.”

Thought-provoking stuff: worth a read.

Posted in Consumer Psychology, Demographic change, Ethnography, Marketing Research, Media, Social Media | Tagged , , , | Leave a comment

The price placebo effect

Fractal“You get what you pay for” – it’s a common refrain. Price as shorthand for quality: when something costs more, expectations are higher.

Business has played on this notion for decades. The empowered consumer may know that budget and upmarket retailers share suppliers but this bias is hard to shake. People assume that the more expensive product will be superior when two otherwise identical products are compared. You pay more, you expect more.

The Power of Expectationon Radio 4 summarised research by Stanford neuro-economist Baba Shiv. His research demonstrates the notion of “you get what you pay for” affects more than just the expectation of performance or purchase intent. His ingenious experiments prove price can also influence the actual effectiveness of a product. Subconsciously, our expectations affect our experience: how something tastes or makes us feel. A price-placebo effect operates: belief can alter the experience of a product in the same way that belief can alter the efficacy of a medicine.

Some examples:

  • The price placebo effect makes wine taste better. fMRI brain scanning showed people extract more pleasure from the same wine when they are told it is expensive.
  • The price placebo effect makes an energy drink more effective. Two groups of people drank an energy drink which claimed to improve mental acuity, and then were asked to perform a series of problem-solving tasks. Those who bought the drink at a discount performed worse at the problem-solving tasks than those who bought the same drink at its normal price.

In these examples price sensitises the brain’s pleasure centres. Professor Elizabeth Hellmuth Margulis summarises it thus:

“There’s something there in a sensory domain that’s being offered to you, and your relationship to it is determined by the combination of those intrinsic attributes and the set of expectations that you are bringing to the experience.”

Shiv’s work “examines the interplay of the brain’s ‘liking’ and ‘wanting’ systems and its implications for marketing and decision making.”

The brain’s ‘liking’ system here refers to our sense impressions of how something tastes or feels. The brain’s ‘wanting’ system refers to our expectations. The evidence shows our expectations moderate our sense impressions. A confidence trick you pull on yourself. A self-fulfilling prophecy.

Supporting evidence comes from Phil Barden’s Decoded – the science behind why we buy published last year. He describes a memorable experiment involving cake. Brown food colouring was added to a vanilla cake, to make it look like a chocolate cake. Respondents expected it to taste of chocolate because it was brown: many reported that the cake was indeed chocolate flavoured after eating it, despite it being vanilla flavoured. Expectations change subjective experiences.

The implication – that reality is perceived not actual – is fascinating. The very notion of objectivity, of trusting your own reactions, is called into question.

For Shiv the evidence is a “wake-up call for consumers, who need to look at rationalising their expectations, and focus on inner rather than outer cues, like price and packaging.”

Our expectations delude us: it’s just a matter of degree.

Further reading: Seth Godin’s eBook on implications of the placebo effect for marketers can be found here

Guardian article “Food presented artistically really does taste better”

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The self-made

shutterstock_150609167Have you met many entrepreneurs?

I’ve spent a good part of 2014 speaking to self-made business people, from spare-room online sellers to property zillionaires. As I sat in their homes and offices taking in my surroundings, I couldn’t help but see some similarities.

They were positive

Setbacks and challenges were expected, analysed and dealt with. Many seemed to filter the world through a solution-focussed mindset, skipping the shock/denial/worry stage when challenges arose. My favourite example? Renovating his first property at the age of 20, one taught himself bricklaying from a library book when he ran out money. How gloriously tangible.

They were restless

Scenting opportunities, not being satisfied, pushing for the next goal. You could see this physically: rooms were paced, legs were jiggled. Hopefully not all caused by my open-ended questioning.

They were unafraid of change

There were admirable examples of people going with the grain of circumstance. Using a redundancy payment to re-train in your 50s and setting up a new business, specialising in a completely different category when your supplier folded, starting parallel businesses when opportunities emerged.

They were detail-focussed

And not just about where the money comes from, mentally adjusting profit margins as we discussed rising costs. Many of those who had delegated day-to-day operations had an impressive handle on the minutiae of their businesses.

They were hard

From plain resilient to not ‘suffering fools gladly’ and everything in-between.

They were often self-mythologising

All were used to telling their story, chiseling it down to the salient points. The prevalence of swashbuckling TV businessmen means we’re all fully acculturated to the hero-entrepreneur archetype. Some were perhaps susceptible to narrative fallacy… but who can blame them?

“I started off in my bedroom in 2005 and now I’m the seventh largest seller in the UK”

“I’ve got 178 houses now but it all started with that cottage, sleeping in a cement bag after a 20 hour day”

“None of the published programmes worked so I wrote my own”

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