Nudge Marketing Event at Cogent Elliott
12th July 2011
"The mind is flat: Why nudges work; and why they don't" with Nick Chater, Warwick Business School
Nudge Marketing, or Behavioural Economics, is a topic that has been discussed and debated for many years in the marketing industry.
Rory Sutherland, during his tenure as IPA president, was very keen to promote this discipline and created an IPA Behavioural Economics Think Tank. If you have an IPA log in, you can access the BE microsite where you will find a host of fantastic information.
Nudge Marketing's use by some major brands including Hyundai and Lloyds TSB, has been described brilliantly in this article by Marketing Magazine.
We were keen to invite our clients and contacts into Cogent for a fantastic evening learning more about this discipline. We asked Nick Chater, Professor of Behavioural Science at Warwick Business School to help take us through it.
As Nick has also served on the IPA's Behavioural Economics Think Tank and is on the board of CREDOS, the research arm of the Advertising Association, we felt he was the right person to bring this fascinating subject to life.
The Fictional Self
The presentation began by outlining the basic concept of our perception of self. Nick argued that we don't all have an inner oracle that we consult at each decision point; instead we are all open to have our opinions changed pretty quickly by a broad and diverse range of factors given at that specific moment.
And, crucially, if we can be nudged into making a different choice, from one brand to another then we might be tempted to stay with that brand for a long time.
So how can we be nudged at that moment into making the right decision? And when does Nudging work and when does it not?
Nudges that work...
Nick talked us though a series of examples, but the key learnings are that nudges work for isolated decisions, for example: - Defaults for organ donations, pensions - Changing pension risk options - Power of familiar brands for unfamiliar purchases - Power of modifying social norms (how many people cheat on tax). Nick highlighted that by telling people that very few people cheat, and therefore putting them outside of the norm, reduced the propensity for people to cheat.
Nick also showed how nudging by comparison is powerful because brains think relatively. Brands need to consider their comparison set.
For example. Nick highlighted an example of the current problems newspapers are finding in charging for online content. If the comparison is made between a newspaper and a monthly subscription online, there is no contest. But to compare a paid for website with free services from the BBC, then the comparison is unfavourable. Clearly, brands need to find the right item to compare against.
Nudges that don't...
With regards to Nudges that don't work, Nick talked about when behaviours are intrinsically linked and decisions are deeply embedded. For example, the government have a lot of work to do to change behaviour that is embedded into narratives and social norms. Such as drinking and eating behaviour.
Nudges won't work when they conflict with the rest of the story.
Nick finished by discussing some real life applications of Behavioural Economics and the audience were then able to debate the application of the theory.
All in all, it was an insightful evening, and one which should be continually revisited to gain greater understanding and appreciation of what is a new way of thinking to many marketers.
To see the presentation in full, please click here