Behavioural economics challenges the long-held traditional economic view that people are rational, price-minimising, value-maximising, socially-remote automatons with relatively constant preferences. While some of the traditional market research practices claim to go beyond superficial responses, most still rely on the idea that respondents understand their own thoughts and decision-making processes; this is something for which there is very little supporting evidence, whilst the contrary view is supported by countless experiments where behaviour is clearly influenced but the source of the influence isn’t recognised by the people taking part in the study.
Traditional market research also often assumes that respondents are able to recall accurately, report fully and elucidate their behaviour, when often they cannot. Reported behaviour, attitudes and declared intentions often bear little relation to behaviour in the real world. This discrepancy can often be explained by behavioural and cognitive biases. If our preferences and choices are actually less the result of linear, deliberative and inhibited processes than the standard model would have us believe, then as innovators we need to understand the “hidden” influences on human behaviour and the normal inbuilt biases residing in all of us.
“Behavioural Economics can help market research to better understand, identify, predict and influence the drivers of choice and behaviour.”
Understanding customer ‘need’ during new product development
We would do well to consider all of the mechanisms through which human beings have attempted to see into the future. Most of us are sufficiently scientific to discount tea leaves and horoscopes (and their ilk) because we can see no meaningful connection between the mechanisms they use and their claimed visionary properties. However, we’re incredibly fond of the notion that we know what we think and that we know what we’ll do in the future and so it seems reasonable to trust a research approach that relies on this mechanism. Behavioural techniques provide two tools to improve new product development:
- The enhanced understanding we have of how people think and the role of the unconscious mind, can enable us to better understand existing behaviours. Why people do what they are currently doing.The more effectively you understand ‘now’ the better your chances of developing something new that will resonate with your audience.
- The way in which potential new ideas are evaluated must use experimental techniques that minimise a reliance on respondents’ conscious evaluations and prioritise realistic contexts and actual behaviour.
Psychoanalytical interviewing techniques can explore existing behaviour and identify clues of the underlying psychological influences and drives that are shaping behaviour.
New ideas can be explored in context and, via implicit techniques, at an unconscious level. Experiments can be designed whereby one variable is changed (covertly) and, through testing on different matched samples, changes in response can be attributed to the variable in question.
Key benefits of behavioural economics:
- Uses existing behavioural data to identify the most important opportunities: i.e. what are the economics that are driving the business?
- Provides a picture of existing behaviour that draws on several decades of research to deliver a much more developed understanding of how people actually think and make decisions.
- Highlights the differences between what people do and what they say they do, and as a result finds needs that would not and could not be directly expressed.
- Reveals the drivers and associations underpinning perceptions, choice and behaviour
- Gives valuable clues as to how to influence them.
- Provides a framework for what to do and what not to do when evaluating potential opportunities.
During the design stage of the new product development the understanding obtained from these techniques are invariably, a fertile source of ideas because they provide an understanding that hasn’t previously been referenced within a business. The old adage that, if you do what you’ve always done, you’ll get what you’ve always got, certainly holds true. However, a behavioural approach isn’t just different for the sake of change, it delivers deeper levels of understanding of your target audiences.
“New Product Development research is vital for any organisation seeking to satisfy the changing needs of its customers.”
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