Is the Behavioural Lens Out of Focus?

How to make behaviour work in CPG, financial services, technology and retail? Using behavioural science to get closer to the consumer.

Before psychologists and neuroscientists came onto the stage, Shakespeare’s Hamlet, Prince of Denmark was the best reference to understand our deep dislike of uncertainty and how it shapes our behaviour. Experimental psychology and more recently neuroscience have not replaced Hamlet but they have enriched our view of behaviour, especially behaviour within the context of uncertainty. They have also changed how we look at ourselves as consumers, shoppers, customers or citizens.

 

In this Ipsos Views paper, Pascal Bourgeat takes the helicopter view of behaviour to show:

 

  • The lens we use is often out of focus and why
  • A simpler and clearer view of how (economic) behaviour works from the overlap of various areas of behavioural science
  • Examples from different industry sectors
  • When we fit most closely around the way consumers, shoppers and customers ‘construct decisions’ that the creativity in our interventions, actions and campaigns is most effective.

 

The behaviour lens is unbalanced

Renewed interest in behaviour (or more precisely its mechanics) is taking place at the right time. Digital technology is disrupting many sectors as it transforms so many aspects of our lives: how we learn, how we search, how we form relationships, how we shop, how we keep fit, how we drive, how we work, how we connect, almost everything from the time we wake up to the time we go to sleep. As we constantly change our environment, our behaviour keeps changing as we adapt to new environments. Yet, the behavioural mechanisms underlying behaviour are unlikely to change any time soon.

 


As interest in behaviour continues to gain momentum, anything and everything is being said about how behaviour works and what those mechanisms are. The hullabaloo in the public space and among professionals about irrationality, the role of emotion, cognitive bias and auto-pilot behaviour owes as much to watering down what research actually shows as to focusing on one area of behavioural science at the expense of everything else. For all the talk about cognitive biases and consumers, the faddish view of behavioural science among professionals is itself very much shaped by conformity bias, availability bias, availability cascade and bandwagonism.

 


In this paper we examine some of the many lenses available to look at behaviour and decision-making in particular and how they create different perspectives on behaviour, sometimes at odds with each other. However from the overlay of these lenses emerges a view of decision making articulated around three major forces (maximisation, emotion and effort). We provide a series of examples of those forces at work in consumer packed goods (CPG), service sectors, technology and retail. Finally, we examine how different types of research from observational to experimental, from quick surveys to the combination of neuro-measurement methods and an increasing array of digital tools fit within this simple view of decisionmaking and helps find ways to influence and change behaviour more effectively and more efficiently.

 

Many lenses, many views

There are many lenses we can use to look at behaviour beside behavioural economics, an area of behavioural science that has gained much visibility over the past four years although the breakthrough research took place over thirty years ago and Nobel Prizes linking economics and behaviour were awarded in 1978 (Herbert Simon), 1992 (Gary Becker), 2000 (Daniel McFadden) and 2002 (Daniel Kahneman). Does economics have anything of value to say or was it just a fantasy view of economic behaviour? Consumer psychology, cognitive and social psychology, human ethology and the neurosciences are all deeply rooted in experimentation. But what do they say about behaviour that can shape our view of behaviour in a practical way?

 

Economics was first under the spotlight. Arguably, it was a sitting duck because it imagined a world where everyone forms “consistent and stable” preferences and behaves as a perfect ‘maximiser’ all the time (always choose best) in a world where all choices are only about self-interest. Behavioural economics points to limitations in our willingness and ability to behave as maximisers and shows decision making does not always reflect consistent and stable preferences (especially in situations of risk or uncertainty) as evidenced for example by loss aversion or framing effects.

 

Rationality and reasoning

Cognitive psychology has had a major impact in its foray into judgment and decision making. At times, this has led to confusion and uncertainty given over twenty-five theories or types of theories about cognition and behaviour elbow each other within a kaleidoscopic view of behaviour. Dual process theory (DPT aka system 1 / system 2 now redubbed type 1/ type 2) has benefited from visibility outside academic publications and conferences. DPT contrasts two types of ‘thinking’: the first type relying on automated processes and the second type requiring controlled and more effortful processing like reasoning. Often, the interpretation of DPT is that decision-making is irrational because it relies on automated or subconscious processes and conversely reasoning is equated with rational outcomes. Yet, rationality is about how reasonable outcomes are within the decision context, not whether we engage tight reasoning processes or not. Besides, casual observation of our own lives reveals how excessive consideration and overanalysing lead to poor outcomes (or even paralysis e.g. the choosing-feels-like-losing situation). And conversely, relying on past experiences and gut-feel with little or no upfront reasoning can lead to sensible, rational outcome (especially to avoid poor decisions). As Kahneman put it in 2003 in a summary of his work for the American Economic Review: “attention and effort by themselves do not purchase rationality or guarantee good decisions. In some instances, too much cognitive effort actually lowers the quality of performance. There are other situations in which skilled decision makers do better when they trust their intuition than when they are engaged in detailed analysis”.

 


Often lost in translation here is that the “coherence-rationality” espoused by economics is not the same as the “reasoningrationality” of interest to psychologists. More from behavioural science has been lost in translation.

 

Behaviour in context

Besides, human ethology shows that behaviour is adaptive given our curious and experiential nature and our exceptional ability to learn: the shortcuts we use on auto-pilot are as much the “tools that make us smart” as they are the processes that can lead to ‘sub-optimal’ outcomes (usually in the presence of risk and uncertainty). If we are intent on influencing and changing the real life behaviour of shoppers, consumers, customers, patients or health care professionals, there is nothing much to gain from benchmarking observed behaviour and how we form impressions and preferences to some normative fantasy of what behaviour ought to be like. On the other side, the gains for practitioners are substantial if behaviour is examined within the particular context in which it takes place (or doesn’t). Understanding how the internal forces that shape our behaviour interact with specific circumstances (social, temporal, situational, cultural, physical, etc.) is the key to influencing behaviour.

 


There is a tension between the narrow view of economics (the rational-agent model) and the more fluid view from behavioural economics and psychology. It is the contrast between those two perspectives that obscure our view of behaviour. Everyone agrees people want to make good decisions, either consciously or not, at least choices that they are happy with. The broad idea of maximisation makes sense intuitively and is not rejected by experimentation. Ipsos has conducted over 40,000 studies on the adoption of innovation in CPG, service sector, technology, durables and more by developing predictive models of behaviour assuming people behave like maximisers. Overwhelmingly, these models have predicted inmarket behaviour very well which makes it difficult to conclude that economic behaviour has nothing to do with some form of maximisation. At the other end, reducing behavioural economics to “cognitive illusions” creates a view of people as a “pile of quirks” and ignores their conscious or unconscious attempts at maximising the value of their choices and the underlying efficiency of decision processes.

 

Decision making and efficiency

A second series of lenses comes from consumer psychology and increasingly neuroscience: consumer psychology highlights the ‘constructive’ nature of consumer preferences in the choice process (they are formed ‘on the fly’) and how consumers try and minimise cognitive costs. More recently through a series of experiments, neuroscience showed the role of glucose metabolism on the use of full-on reasoning vs shortcuts in decision making (going for shortcuts or full-on reasoning is not independent of how much glucose runs in our blood because it impacts our performance). In addition, neuroimaging points to automated processes as being driven by economy not speed (lower brain activation for automated tasks indicates less effort required). These lenses mark efficiency as a major force in decision making and choice processes: Ipsos looked at shoppers in a frequently purchased category of food products from many different angles: observing their journey through in-store cameras, using eye tracking devices and conducting in-aisle and exit interviews. The results provide evidence for maximising behaviour as well as store and shelf design making attention and purchase behaviour easier.

 


Me and we

Finally social psychology contrasts self-interest with ‘social interest’, looks at the discrepancy between our ‘actual self’ and ‘ought self’ (duties and obligations at work or in society) and describes individual decisions and choices shaped by conformity, compliance, imitation and reciprocity. And evolutionary psychology tentatively shows how competition (selfishness), cooperation and altruism (selflessness) are all adaptive traits that benefit individuals in different circumstances. The evidence from the neuroscience of ‘mirror neurons’ and social cognition points to a brain wired for social behaviour, including economic behaviour.

 

Each one of these fields provides a perspective on decision-making and choice processes. These fields overlap of course but they all pull in a particular direction (maximisation for economics, errors in reasoning and hazardous shortcuts for behavioural economics and cognitive psychology, the impact of the group on individual choices for social psychology and the drive for efficiency for neuroscience and consumer psychology). So what picture of decision making and choice emerges from all the different strands of research?

 

SAM: a balanced view of behaviour

When these different lenses are superimposed, a simpler and clearer view of economic behaviour becomes apparent: three key forces shape decision and choice processes. Shortcuts and biases find their place in this view and we gain a more unified view of behaviour: it is one of efficiency, not perfection vs flaws in rationality or emotion vs reason.


The SAM consumer Seeks to maximise, wants to Avoid negative emotion and Minimise effort (SAM). When behaviour is seen from the perspective of how those three internal forces shape our behaviour in a particular situation, social context or set of circumstances, which reasoning processes we engage in decision-making, which shortcuts we turn to and which biases are at play, we move from behaviour as a “pile of quirks” to behaviour as decision-processes and outcomes in context.

 


1. Seeking maximisation

Maximisation looks different from that of economics once he lens from psychology is added:

 

Maximisation is not about choosing the best in all circumstances but making decisions that we are happy with (and sometimes not unhappy with). Hence consumers can seek to maximise very tightly or simply try and avoid poor outcomes … and anywhere in between. It is a much more elastic view of maximisation and allows for consumers behaving as effective maximisers in some cases: for examples, eye-tracking studies reveal maximising behaviour as ‘eye fixations’ move between mainstream brand and its private label look-alike on shelf. If the eye is not a window into the soul, it is certainly a window into our mind and the processes at work.

 

In other cases customers are driven by a desire to avoid stuffups: at Ipsos we have found a clear contrast in customer behaviour between sectors of financial services where the consequences of poor decisions are high like mortgage choice or wealth management vs others like credit card or online savings account. For the former, making the best possible decision is only a distant second priority to not making a poor decision.

 


Self-interest (me) is increasingly influenced by ‘me and we’ considerations that are fuelled by hyper-connectivity, a desire for transparency and a fresh sense of activism. For the launch of its plug-in C-Max car, Ford enabled people in 10 cities around the world to create their own animation and be part of a shared story using La Linea, an old animation character and the idea of plug-in. So maximisation is driven by what we need or desire as individuals but tempered by surface and deep currents of social norms and our enduring need for belonging.

 


Context colours decision situations, how we form impressions, preferences and choices. There are multiple facets to context that can be used on their own or in combination to impact impressions and decision processes: moment and location, time pressure, complexity and uncertainty of situation, presentation of options, social and personal, culture, physiological or mental state, etc. French fashion label Pimkie has teamed up with Hotel Banks in Belgium to create fashion mini-bars. The range of apparel and accessories is chosen in light of weather and local activities. Hotel customers are free to use the items from the mini-bar and purchase them on check-out.

 

The ‘hot cognition’ research points to the relationship between mood and how we process situations (more holistically and superficially, less analytically). An Ipsos R&D experiment using a range of biometrics and other measures (eye-tracking, heart rate, galvanic skin response and voice pitch) shows that handing out a flower to shoppers as they enter the drinks aisle in a large grocery store:

  • elevates their mood;
  • increases their motivation (as engagement with a broader range of products);
  • increases purchase conversion from ‘hold’ to ‘drop’ (in basket);
  • decreases price sensitivity;
  • may increase size of shop and/or spend.

 

An analysis of thousands of Ipsos experiments about the adoption of new CPGs shows that increasing choice within a range has a positive impact on penetration (through a combination of attention, appeal and other factors). A product in the range can be a poor seller but benefit all other products through a halo effect. If the range is first presented without that particular product, the purchase of the remaining products in the range decreases. How the choice options are framed as well as colour, mood and impression can have a substantial impact on behaviour. Conversely, mood can turn negative when increasing choice leads to overload and inhibit purchase behaviour (the too much choice kills choice effect).

 


At the other end, consumers may have good reasons (conscious or unconscious) to behave like serious maximisers. A recent McKinsey study highlights that ‘millennial moms’ are a lot more likely than the average US consumer to behave like maximisers by “comparing prices, using coupons or loyalty cards more often, seeking out sales and promotions, shopping at several stores to find better deals, and buying more products in bulk”.

 

2. Avoiding negative emotion

Beyond mood, any kind of negative experience, thoughts, feelings and social encounters resonate more strongly and for longer. Many of the biases at work in our decision making processes appear to keep negatives at bay or mitigate them: negativity bias, status quo bias and almost all forms of loss aversion, anticipated regret, choice overload, zero-risk bias, cognitive dissonance, confirmation bias, choice supportive bias, etc. For example, Australian health insurance provider AHM realised customers of health insurance have access to a range of health services like dentistry, optometry, physiotherapy and many others (though spend on each one is capped) but use few of them. They created an offer where customers can choose which services they want, pool the caps and spend more on services they really want. Their tagline “use 100%, waste nothing” makes the offer resonate more strongly by tapping into our loss aversion and the reaction it triggers (moving away from the sense of loss).

 


An online bank in Asia Pacific asked too many questions too early in the engagement process to customer acquisition. It made many people feel uncomfortable and drop out altogether, reducing acquisition substantially. Unilever shared some insights from an observational category study backed by neuro-measurement conducted in Turkey in partnership with a retailer. The research uncovered how consumers keep away from negative emotion in ways often unsuspected at point of sale:

 

  • The mood of males looking for personal care products goes south when they see female products in the process.
  • Shoppers’ mood turns negative when they encounter sharp edges at the end of the aisle but picks up if they see round edges.
  • Empty shelves on show with white as the dominant colour in view also impacted consumers’ emotions negatively.

 

Consumer products are sometimes categorised as ‘haftas’ or ‘wannas’ (have to buy vs want to buy). The same personal care category study showed how in-store reps pushing one product on shelf can decrease mood and purchase by inducing a negative emotion, pushing people towards ‘haftas’ and away from ‘wannas’.

 

3. Minimising effort

Minimising effort is as much about physical effort (how many clicks or steps) than it is about ‘cognitive costs’ (e.g. for a shopper accessing and updating memories of brands, attention at POS, the number of alternatives feeding into the decision and processing value for brands).


Underlying our reluctance to commit effort is some form of energy conservation. ATP, an organic molecule, is the main source of power for brain function derived from glucose metabolism. ATP remains constant within the cellular machinery and is exactly balanced by glucose utilisation. Hence our natural motivation to minimise its use and adopt efficient decision processes. It also accounts for our newfound willingness to outsource more and more cognitive functions to digital devices (memory, search, evaluation, localisation, comparison, value maximisation, etc.).

 


A (meta) analysis of almost one hundred experiments looked at how consumers choose as a function of the number of options available to them in CPG categories as well as durables (e.g. MP3 player, camera) and services (e.g. hotels). The analysis showed that whether consumers experience overload is influenced by choice set size; overload is also modulated by four factors, all of which relate to cognitive effort:

 

  1. whether consumers intended to put much effort in the decision or not;
  2. how complex the choice set is to navigate;
  3. how difficult they find the decision situation;
  4. how difficult they find forming clear preferences.

 

Speaking about brands, ex-adman Bob Hoffman says the arketing industry is deluded about consumers “caring deeply about our batteries, our wet wipes and our chicken strips”. Hoffman goes on saying that “people have shaky jobs and unstable families, they have illnesses, they have debts, they have washing machines that don’t work,…, they have a lot of things to care deeply about”. This is a very direct and frank way to highlight that underlying consumer behaviour is a brain ruthlessly selective with attention with the tyranny of ATP guiding our behaviour towards efficiency.

 

The SAM view of behaviour is in focus because it is balanced. It is not beholden to one particular lens but all lenses contribute to our view of behaviour. An unbalanced view of behaviour is likely to lead to a poor understanding of the opportunities, challenges and limitations to change behaviour in a particular environment, be it that of consumers, shoppers or customers. Conversely, a clear view of the forces at work in economic behaviour helps identify those points where we have some leverage to influence behaviour and those where the SAM forces constrain our interventions. In addition, SAM helps us see more easily which shortcuts and biases are at work in behaviour and why.

 

We examined how SAM forces are at work in a series of sector case studies, each reflecting a different type of environment:

  1. CPG
  2. Fintech and digital technology
  3. Retail

label brands and manufactured brands quality

 

Making behaviour work

 

MAPS: a framework for behavioural analysis

SAM keeps the three key ‘constructive’ forces of behaviour into the picture as we look at the behaviour of shoppers, consumers and customers. Technology however plays an increasing role in our ability to become more perceptive about their behaviour. Technology provides muscle to the type, breadth and depth of insight that we can gather.


An array of neuroscience tools also brings deeper insight to consumer behaviour in many of the consumer, shopper and customer situations encountered at Ipsos:

 

  • Implicit Reaction Time measures implicit memories of brand experiences, cues, visuals, names, shapes, colours: which memories will be accessed in the decision process? How strong are they vs the competition? How can we prime consumers as they go to the shelf?
  • Eye tracking devices are critical to gain insight into decision processes by measuring consumers’ eye-fixations (e.g. what do consumers actually look at in store, how long, how many times and what do they look at on packs or POS material).
  • Biometrics like facial coding, heart rate and galvanic skin response (GSR) reveal emotional engagement in response to advertising, a new store lay-out or a web/ app interface for online banking.

 

Technology does not replace behavioural analysis. It simply enhances it. A simple but powerful behavioural design framework like Ipsos MAPS reveals the specific personal and contextual forces that constrain or enable behaviour before interventions are designed to influence behaviour.

 


The MAPS framework looks at personal forces articulated around our motivation and ability to perform the behaviour. The contextual forces are articulated around the social and physical environment in which the behaviour takes place.

 

Decision-making in CPG, service sector and retail routinely relates to an environment featuring choice alternatives and motivation influenced by goals (conscious or not). SAM provides the critical backdrop to understand how the internal forces that shape our behaviour interact with specific circumstances (social, temporal, situational, cultural, physical, etc.).

 

Understanding this interaction is the key to generating insight and remains the key to influencing behaviour.

 

Regardless of whether one uses casual observation or a raft of neuro-measurement tools, a simple ‘lab’ experiment or a complex multi-faceted live experiment (e.g. store), insights gained from digging into a behavioural situation in CPG, service sector and retail almost surface more easily and clearly as the opportunities and the constraints created by the mindset of the consumer, shopper or customer become visible:

 

  1. What is maximisation likely to look like for them? Are they trying to make ‘best’ decisions or avoiding poor choices? How can we colour the decision process and its environment through moment, situation or occasion, time pressure or social context, complexity and uncertainty of choice options, etc?
  2. What negative emotions (or just feelings) arise in the situation or process, how can they be eliminated or circumvented? How can mood be enhanced?
  3. What are the cognitive demands? Are there any mental (or physical) barriers to be pulled down? What can be done to make the behaviour (or a behaviour in a chain of behaviours) especially easy (creating easy memories, outsourcing memory access to a device, augmenting reality to get attention, ultra-simplicity of process, cues and easy associations, visual or auditory priming, anything tapping into our sense of smell)?

 

Developing successful interventions

The Ipsos 4 I process shows that insight is a critical component to developing successful interventions, actions or campaigns:

  • Identify: the problem and behaviour(s) of interest
  • Insight: understand behaviour(s) in depth and in context
  • Intervention: design feasible behaviour change solutions
  • Improve: evaluate and refine solutions (iteratively)

 

The creativity at the heart of many interventions relies on insight. When interventions fail or are insufficient to change behaviour, the reason is almost always that the behavioural analysis was neither systematic (looking at all facets of the person interacting with the physical and social environment) nor perceptive: whatever needed to be seen was overlooked. Creativity and the success of interventions and actions depend on both.

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