Oversupply, overload and overconfidence: themes from this week’s reading

WELCOME-TO-THE-CREATIVE-AGEI’m a great fan of Amazon marketplace. It’s my default place to look for books now, with many second-hand titles at trifling prices.

Take Mark Earls’ first book Welcome to the Creative Age: twenty quid new, cost me two quid. Less than a cup of coffee.

The book – published in 2002 – has aged well. Whilst we’re yet to see the death of Marketing, themes are still resonant and predictions are still bearing fruit. Ideas which were more fully developed in Herd get their first airing and there are plenty of world-weary case studies from the coal-face of Marketingland.  

One issue Earls talks eloquently about is the oversupply we face in every category, and the impact it has on decision-making. We have too much of everything, and this is deadening:

Oversupply

“The fact is that we don’t need this amount of choice. It is bewildering. No wonder inertia (opting for what I chose last time) is such a strong force in determining what I do next.

There are very few products or services for which another cannot be substituted. The fact is consumers know this. They know it doesn’t matter which one you choose.

And that gives us consumers and customers a power that we never enjoyed in the early days of marketing. Previously we were grateful for things that we didn’t have. Now we know we have pretty much everything we need.” p62

Overload

Earls goes on discuss the consumer context for making decisions, quoting Alan Hedges, from 1974’s Testing to Destruction.

“To the consumer advertising is mainly just part of the background scene. Ads form part of the continual whirling mass of sense impressions which bombard the eye… just as we cannot take all our consuming decisions in discrete rational steps, so we cannot stop to evaluate and classify all the pieces of sensory input we receive… in order to navigate through the shoals and hazards of a day in a fast moving urban society it is necessary to be able to process a vast range of simultaneous sensory messages at low levels of consciousness. Conscious attention is reserved for a very narrow range of input which is selected in some way as being relevant to the business in hand.” p65

Overconfidence

The frustration of working with clients is subtly conveyed. Evidencing campaign ROI using econometric modelling – prompts reflection on the act of measurement. Econometrics creates a model of reality – but it is not reality itself. Data feeds are merely a proxy:

“Just because we can measure it, it must be important. Anything that we can’t measure must by definition be unimportant. But the more we measure the things that we can measure, the further we get from the reality of things.” p66

“Sobering fact: what the company does is often not the most important influence on sales… Econometric modelling.. involves taking a significant period of sales data (say three years) and seeking to find the most sensible combination of factors that can explain – both statistically and to common sense – which factors caused what amount of sales…The central finding of all these studies is that is very rare for anything that a company does to be in the top three of key factors for sales. Common sense tells us why: unless a company has dominant share of the market, the majority of activity in its market will be done by its competitors – pricing, product design, distribution, advertising and promotion… this conclusion nearly always makes clients feel anxious; most would prefer to think the opposite to be the case.”  p158

 “As a character in Tom Stoppard’s play Arcadia puts it: ‘Real data is messy. It’s all very, very noisy out there. Very hard to spot the tune’.” p160

Shane Parrish at the ever-eclectic Farnham Street blog interviewed author Michael Mauboussin last week.  He picked up similar themes of executive overconfidence, and the cognitive biases inherent in them:

SP: You describe creeping determinism, the desire we have to give past events rational causes and thus make them inevitable. It is a myth of control. But we have a huge desire to see control. It seems preferable even to give control to someone else rather than to deny it existed at all. I’m not sure we are psychologically capable of saying that something in the past happened because of a conjunction of events and actions without any overriding intent or plan. What do you think?

 MM: This reminds me of something Victor Hugo said: “The mind, like nature, abhors a vacuum.” It is psychologically extremely difficult to attribute something to luck. The reason is that in the left hemisphere of our brains is a part that neuroscientists call the “interpreter.” The job of the interpreter is to create a cause for all the effects it sees. Now in most cases, the cause and effect relationships it comes up with make perfect sense. Throw a rock at a window and the window smashes. No problem.

 The key is that the interpreter doesn’t know anything about luck. It didn’t get the memo. So the interpreter creates a story to explain results that are attributable solely to luck. The key is to realize that the interpreter operates in all of our brains all of the time. Almost always, it’s on the mark. But when you’re dealing with realms filled with luck, you can be sure that the interpreter will create a narrative that is powerful and false.

 

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About Simon Shaw

I'm a Director at a communications agency. I'm interested in marketing, market research & consumer psychology. The views expressed are not necessarily those of my employer.
This entry was posted in Books, Consumer Psychology, Marketing, Marketing Research and tagged , , , . Bookmark the permalink.

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