The classical economics view is that Economic Man makes rational, self-interested, logical decisions that weigh costs against benefits and maximize value and profit to himself. Economic Man has one fatal flaw: he only exists in theory!
If you’ve read the work of Dan Ariely or Daniel Kahneman, you will be aware how far from being perfectly rational and conscious we are when faced with a choice or decision.
Marketers struggle with unexpected observations and strange insights that cannot be explained by the prevailing wisdom.
Customers and those marketing to them, tend to be rational beings. They search for answers in rational places and evaluate their findings in rational ways. Marketers in particular, attempt to apply logical conscious thinking and connections to all they see. Therefore, they struggle with unexpected observations and strange insights that cannot be explained by the prevailing wisdom. Nevertheless, irrational behaviours are all around us.
Jilted partners who feel they’ve been wronged will attempt to exact their revenge, though doing so often harms their own interests. Many people believe that the same glass of wine tastes discernibly better when poured from a £50 bottle than from a £50 bottle. There are also several examples where changing the colour of a pill reduces the ‘efficacy’ of the medication in the eyes of the patient.
Uncovering what matters most to customers, what they really want, value and will pay for, is a big challenge to marketers. Being largely irrational and subconscious, customers are, in the main, unable to correctly predict what they might care about most, or actually want or buy. Many examples exist where companies have asked customers what they want, given it to them then regretted it when the customers failed to deliver on their predictions.
There appears to be poor alignment between what they think they might want and buy and what they actually end up wanting and buying. For these reasons, the development of marketing strategy should begin with an inquiry into what beliefs and perceptions exist and how they shape customer behaviour. Traditional customer interviews and focus groups are unlikely to reveal the gaps between what customers believe and what they do.
The McLean burger, low fat KFC skinless chicken and New Coke are all examples of new products from some of the world’s biggest companies that failed commercially, in spite of testing well using traditional market research including surveys and focus groups. These are just a few of the many examples that highlight the flaws in setting up and interpreting traditional market research where customers are asked questions about their preferences and from this forecasts are made on future buying behaviour.
Just before the recent UK General Election, a robustly selected sample of people, representing the population as a whole, when polled said they were going to behave and vote in a particular way. However, when voting actually occurred it was clear that the population as a whole behaved in a way that was different to that predicted. In this particular case, perhaps not enough rigour had gone into sampling. Or perhaps, the voters sampled were dishonest about their true intentions. Or, most interestingly, they might have been unaware of what their true intentions were, because, invariably, people’s true intentions exist outside of their conscious rational minds.
“The fundamental tenet of market research is that you can ask people questions and that what they tell you in response will be true. And yet . . . this is a largely baseless belief.” There is a simple, clear and obvious reason for this. “The unconscious mind is the real driver of consumer behaviour.” Put another way, there is no point in asking people what they want, or what they are going to do, because they themselves don’t know.
The above is astounding and suggests that traditional market research is too inadequate and blunt a tool for predicting future buying behaviour and pretty much a waste of money using this to create new product innovations. That’s £billions a year down the toilet.
A Booz, Allen and Hamilton study on the subject of new products found that “Bad estimates of market potential (or other marketing research mistakes)” were a major cause of new product failure. Clearly, what people say they want (and do) should not be the only deciding factor in creating new product innovations and indeed it might be that this could lead a company down the wrong path completely. Given that companies are (presumably) only taking forward initiatives that they believe have merit based on their broader experience, the overall failure rate suggests that traditional research is no better a delineator of potential success than a coin toss. When one considers the complete disregard traditional market research techniques have for the unconscious mind, and the extent to which psychologists believe it is an important determinant of behaviour, this should not come as a surprise.
Our opinion about traditional methods of market research is that they are often incorrectly interpreted and can frequently drive wrong decisions. We believe that asking customers what they think they will do in the future, or why they think they behaved as they did in the past, is a dangerously flawed way of actually predicting their behaviour, which means focus groups and surveys apart from costing a lot of money can be perilously misleading. With no evidence to justify basing decisions on such traditional market research methods, we believe that market research practice needs to adapt and take into account the evidence from the latest psychology research about how people think.
Specific Recent Behaviours
A better way to discover how customers think is to ask about specific recent behaviours using an approach that prevents them from post-rationalising. As we are seeking to understand a behaviour that is prevalent, what we need are the insights to help us understand what levers we might try (via a test and learn approach) to move the needle; if these are unconscious drivers of behaviour, we can’t rely on people to tell us what the solution is because they won’t have access to the ‘problem’ in their mind – they will be behaving in a particular way and we need to understand why and what has influenced that behaviour, allowing us to deduce and creatively suggest how that behaviour might best be influenced.
As a final comment, many marketers cannot resist the strong tendency to interpret new information in a way that makes it consistent with what they already believe to be true. This is called confirmation bias. We subconsciously seek to undermine information that does not align with our pre-existing beliefs about what is true.
If you want to uncover deeper additional clues about your customers’ behaviours and how to influence them, we can help. For example, if your product’s uptake is slower than expected in spite of your strategy being underpinned by you market research findings. Or you are wondering how to engage with your customers more closely than your competitors.
If you believe that there has to be a better way to understand customer behaviour, and in an efficient way, we’d love to hear from you.
To download the PDF click here