When psychologists and economists discovered market research behavioural economics was born.
Many market researchers will see some of the examples of behavioural economics and think “Surely we knew that anyway?”
“How so?” you may ask.
Well that is because market researchers have to understand those types of outcomes in order to design research studies that provide useful results instead of results that stem from the circumstances under which the experiment took place. The key difference is that in the past there was no real scientific description of how decisions were systematically affected by these circumstances.
In the April edition of Marketing magazine Professor Nick Chater, Head of the Behavioural Science Group at Warwick Business School, described one such experiment. Female experimenters situated at the ends of two bridges, one high and precarious – the other low and sturdy. People crossing the bridges were asked to perform a small task and given a number to call the experimenters to follow-up later. The net result was that men who had crossed the high and precarious bridge were the ones most likely to call. Women crossing the low sturdy bridge the least likely. But that was not the most interesting part.
The most interesting part was that the men crossing the high bridge were more likely to call because the adrenaline rush that went with crossing the bridge transferred to the meeting such that they believed they had met someone who they really liked and wanted to see again. In many respects this is the same phenomena that drive people to repeat ever more risky experiences.
But is this really that surprising? Or is just a perfectly understandable and well-known outcome being presented in a new way? My belief is that often it is the latter and not the former.
Having worked for many years doing data analyses for the purposes of predicting individual customer behaviour, we have found that most behaviour can be described and anticipated if one assembles data on individual circumstances and attitudes. We call it the ABC of customer prediction. These “ABC” are:
Understand the attitudes of the individual – what they value, what they aspire to, what they tolerate – and the circumstances in which they are making the decision – in as much detail as we can gather – and you can predict what they will decide to do with more than 50% certainty more than 50% of the time. And that is being conservative. Typically the 80/20 rule applies and you can predict the outcomes such that marketing profitability can be increased by 50%.
We have achieved this for numerous clients and our case studies provide the details. To find out more log-in to our site and visit our case study section.