Qual s secret weapon behavioral economics in practice
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Qual’s Secret Weapon: Behavioral Economics in Practice. Presented to QRCA SF (and includes input from the chapter) January , 2013 Jay Zaltzman Bureau West Market Research Los Angeles, California, USA Tel: +1-818-588-6050 Email: [email protected] Behavioral economics.

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Qual’s Secret Weapon: Behavioral Economics in Practice

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Qual s secret weapon behavioral economics in practice

Qual’s Secret Weapon: Behavioral Economics in Practice

Presented to QRCA SF (and includes input from the chapter)

January, 2013

Jay Zaltzman

Bureau West Market Research

Los Angeles, California, USA

Tel: +1-818-588-6050

Email: [email protected]

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Behavioral economics

Behavioral economics

  • We’ve been hearing a lot about behavioral economics in the past few years.

  • Some QRCs are intimidated: “What is this behavioral economics thing?” “Is it a new skill I’m supposed to have?”

  • I have good news: behavioral economics is a new perspective on things we already know.

  • Understanding this perspective can help increase your value to clients. So it’s a win-win!

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Behavioral economics how do people make decisions

Behavioral economics: how do people make decisions?

  • Traditional economics approach: when people have all the necessary information, they will make the rational decision.

  • Behavioral economics found that’s not the case. Decisions aren’t based mainly on logic: the context (choices, environment) and emotions play a major role.

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Asking direct questions

Asking direct questions

  • When conducting market research, it’s tempting to simply ask participants direct questions:

    • Would you buy this product?

    • What do you like about that product?

    • What do you think of this brand?

  • The problem is, research participants lie. (Perhaps unintentionally.)

    • When asked a direct question, people try to theorize how they would make a decision in a given situation, which can be different than actually being in that situation.

    • They try to figure out what they would logically decide.

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Behavioral economics understanding the irrational decision making process

Behavioral economics: understanding the irrational decision-making process

  • Dan Ariely says: while people are irrational, they’re predictably irrational.

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


The power of the default

The power of the default

  • Ariely gives an example of organ donations: Germany 12%, Austria 100%

    • “Check the box below if you want to participate in the organ donor program”

    • “Check the box below if you don't want to participate”

  • Do people choose the default because they don't care?

    • On the contrary: it’s because of the complexity of the decision

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


The power of the default continued

The power of the default (continued)

  • It even happens with experts!

  • Study conducted with doctors:

    • Patient with hip pain, medications hadn’t worked, referred to have a hip replacement; doctor discovered forgot to try one medication. Most doctors would pull patient back.

    • Second scenario: doctor discovered that two medications hadn’t been tried. Majority opt for hip replacement.

  • When the decision is complicated, the default has huge power.

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Frame of reference

Frame of reference

  • Two sets of choices.

    • Weekend in Paris, including hotel and breakfast

    • Weekend in Rome, including hotel and breakfast

  • Or:

    • Weekend in Paris, including hotel and breakfast

    • Weekend in Rome, including hotel and breakfast

    • Weekend in Rome, including hotel and breakfast, but coffee is not included

  • Third option has a surprising impact

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


How much will people pay

How much will people pay?

  • The frame of reference has such a huge influence on our decisions.

    • Company sells product A for $20 and a higher-end version, product B, for $25

    • 80% of sales are product A

    • Second company comes to the market with a premium option, let’s call it C, for $35

    • Guess what happens to the first company’s sales…

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


How much will people pay continued

How much will people pay? (continued)

  • People have an “anchor,” a price they expect to pay, for certain items. Marketers desperately want to know how to change that anchor.

    • One example: when Starbucks opened, and people decided it was worth paying the higher price for their coffee.

    • Starbucks changed the context: different ambience, smell of roasting beans, Italian names (“grandé,” “macchiato).

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


How we value things

How we value things

  • Once people own something, they value that thing far more than they did before they owned it… by a significant percentage.

    • We fall in love with what we have.

    • We focus on what we might lose if we part with that thing.

    • Can lead to a great deal of disappointment when you try to sell your home!

    • But has important implications. For example, utilizing customers to help promote a product.

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Changing habits

Changing habits

  • Charles Duhigg wrote The Power of Habit.

    • Once habits are developed, people do them unconsciously, without thinking.

    • Habitual behaviors are made up of three parts: the cues (trigger), the behavior itself, and the reward.

    • Marketers frequently want to change habits:

      • Febreze discovered they needed to define the reward.

      • Starbucks changed the cues.

    • Or wait for the moment went the context changes. Like when people are on vacation. (Or have children, or get divorced, or move…)

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


The role of emotion

The role of emotion

  • We all know that our emotional state can play a role in decision-making.

    • Dan Ariely ran experiments and the surprise was just how much of a role emotions play.

    • People were asked to make decisions when relaxed, and asked again in an aroused state. The difference between the two was shocking – like Dr. Jekyll and Mr. Hyde.

    • This has important implications for safe sex and drunk driving… but also for consumer decision-making.

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Asking direct questions1

Asking direct questions

  • The moral of the story: when it comes to market research, direct questioning won’t always work.

  • We need to give participants the context to answer the question.

    • Physical context (what are the cues? What are the choices?)

    • Emotional context (how do they feel about it?)

  • That’s where our skills as professional qualitative researchers come into play.

  • We already have the tools to design research that uses methods other than direct questioning.

  • Following slides can be used as a reference.

    • List is not exhaustive; feel free to add.

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Understanding customers relationship with

Understanding customers’ relationship with…

  • Direct questioning:

  • “How do you feel about X?”

  • “Why is it important to you?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Understanding customers relationship with1

Understanding customers’ relationship with…

  • “Choose a picture that best illustrates how you feel about X.”

  • Or:

    • Choose among colors.

    • Choose among random pictures and tell a story about how it relates to X.

    • Role play

    • “Here’s a photo of Mabel. Mabel is everyone’s favorite grandmother. Explain to Mabel about X…” (Thanks, Revelation Global)

    • “Close your eyes…”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Impressions and benefits of a brand

Impressions and benefits of a brand

  • Direct questioning:

  • “What do you think of X?”

  • “What do you like about it?”

  • “What don’t you like?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Impressions and benefits of a brand1

Impressions and benefits of a brand

  • “Think of as many things as you can say about X and write them on the lines shown.” (Thank you, Pat Sabena!)

  • Or…

Brand

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Impressions and benefits of a brand2

Impressions and benefits of a brand

  • Laddering

    • “What attributes of X are important to you?

    • “What’s the benefit to you of attribute Y?”

    • “Tell me a bit more about the personal value of that benefit to you. Why is it valuable?”

  • Or…

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Impressions and benefits of a brand3

Impressions and benefits of a brand

  • What do people say about the product or brand?

  • What do they think about the product or brand?

  • Can add: What do they feel?

  • Or…

  • “Imagine a situation where the product was not available.”

    • “Describe what life would be like.”

  • “Write a love letter to the brand…”

  • Provide a wastebasket and ask what participants would throw away from the brand and what they’d keep from the brand.

  • What would a competitor (or the competitor’s salesperson) say about this brand?

  • What would you tweet? What would you really want to say if you weren’t limited to 140 characters?

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Which positioning statement is best

Which positioning statement is best?

  • Direct questioning:

  • “Please read this statement. This isn’t an ad, but it’s an idea that might be behind an ad. What do you think of what it’s saying?

  • “Now please read this statement…”

  • “And this statement…”

  • “And this statement…”

  • “And this statement…”

  • “Which statement works best? Why do you say that?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Which positioning statement is best1

Which positioning statement is best?

  • Provide a bullseye with the attributes the statements need to convey in the center.

    • Participants place positioning statements based on how close they are to those attributes. (Thank you, Abby Leafe!)

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Where is the brand in the competitive field

Where is the brand in the competitive field?

  • Direct questioning:

  • “Who are the competitors for X?”

  • “How does X compare? In what ways is X better? In what ways is X worse?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Where is the brand in the competitive field1

Where is the brand in the competitive field?

  • “If brand x, y and z were people at a party, what would they be like? What car would they drive up in? How would they be dressed? How would they behave?”

  • (Or for more broad-stroke impressions:) “What animal would they be? Why do you say that?”

  • Perceptual map:

    • (Based on attributes defined earlier)

    • “Where is X on this map?”

    • “Where are the competitors?” (one at a time)

Higher

Less

More

Lower

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Which features are important

Which features are important?

  • Direct questioning:

  • “Here is a list of features. Which of these is important to you? Which are unimportant? Which are just ‘nice to have?’”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Which features are important1

Which features are important?

  • “Here is a list of 20 features. You each have four green dots and four yellow dots. Put a green dot on the features you want the most, and put a yellow dot on the features that you want, but that aren’t as important to you as the green-dot ones.”

  • (Or give them a certain number of dollars to allocate.)

  • “Imagine this is the box for this product. What goes on the front of the box? What goes on the back?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Evaluating a new product

Evaluating a new product

  • Direct questioning:

  • “Do you like this product? Why do you say that?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Evaluating a new product1

Name: ____________________

Lives where? ________________________________

Car drives: __________________________

Marital status: __________________

Kids? How many? ________________

5 adjectives to describe lifestyle:

____________________

____________________

____________________

____________________

____________________

Name: ____________________

Lives where? ________________________________

Car drives: __________________________

Marital status: __________________

Kids? How many? ________________

5 adjectives to describe lifestyle:

____________________

____________________

____________________

____________________

____________________

Evaluating a new product

  • “The first stick figure is the typical customer for this product. Let’s describe that person…”

  • “The second stick figure is you. Let’s go over the same descriptions.”

  • “Now let’s compare the two.”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Evaluating a new product2

Evaluating a new product

  • “Imagine yourself using the product.”

    • “What would change?”

    • “How would it fit in to your routine?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Evaluating designs logos

Evaluating designs, logos

  • Direct questioning:

  • “What does this communicate to you?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Evaluating designs logos1

Evaluating designs, logos

  • “What’s the first word that comes into your mind when you see this logo?”

  • Or:

  • Place the designs on a perceptual map, with the axes based on the attributes we want to convey.

  • Or:

  • “What if this logo came to life…”

Higher

Less

More

Lower

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Likelihood to buy

Likelihood to buy

  • Direct questioning:

  • “How likely would you be to buy this?”

  • Alternate approach:

  • “Here are your options and their prices. How do you go about choosing?”

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Many other options

Many other options

  • Examples?

  • Use your creativity. Consider:

    • Context

    • Emotions

  • Also, consider calling us for advice!

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


Thank you

Thank you

  • Jay Zaltzman

  • Bureau West - Market Research & Marketing Strategy

    • Our Research Tidbit newsletter keeps you up to date on what's new and interesting in marketing and market research each month

    • Please send me an email if you'd like to receive it. Just email [email protected] and write “newsletter” in the subject line

Bureau West ▪ Market Research & Marketing Strategy ▪ Los Angeles, CA ▪ tel: (818) 588-6050, email: [email protected]


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