What Can We Learn From Behavioural Economics?: Ftmf 12 August

What can we learn from Behavioural Economics? FTMF 12th August

What is it?

“Behavioural Economics”

A branch of economic and financial Understanding human natur analysis which applies scientific research on human and social, cognitive and n order tofactors change emotional to betterconsume understand economic decisions by consumers, borrowers, behaviour” investors, and how they affect market prices, returns and the allocation of resources.

Influential books about helping people to make the right decisions

In summary… • Seemingly insignificant factors like environment and emotions can make a big difference in how people make a decision • It is possible to develop strategies, tools and methods to help people make the

A nudge to help people eat more healthily

Some interesting insights into why people make the wrong choices

“Anchoring”

Q: What’s the population of Birmingham?

A: 1m You said 2.45m

ople from large cities will generally gues gher number than people from small tow

8,000,000 What’s the population of Birmingham?

200,000 What’s the population of Birmingham?

You said 2.2m

You said 2.7m

Real life anchors How much would you like to donate? £1 £2 £5 £10

£5 £10 £15 £20

Your credit limit: £8,700 Minimum payment - £120

Some interesting things we can use to change consumer behaviour in our favour

“Availability” We assess the likelihood of something happening based on how easily examples come to mind

“Availability” is enhanced by recency and relevance to you

Using media to make an issue more “available”: Relevance Four houses in Abbeyville Road SW4 haven’t paid their licence fee

Combination of media placement and creative made the threat more “available”

Increasing “availability” of an issue or brand by getting into popular culture

Exploiting The “Status Quo Bias”

People have a general tendency to stick with their current situation

Status quo bias inherent in many brand choices

Exploiting The Status Quo Bias • Overcommit to lifestages when habits change

The “Conformity” phenomenon

Conformity and tax compliance “Your taxes go towards education, police, etc”

“Help if you are unsure how to fill out the form”

“Punishment for non-compliance”

“More than 90% of Minnesotans have already complied”

A successful “conformity” strategy from Sky

Desired takeout: “Lots of other people like me have done this and benefited from it”

Universal “conformity” campaigns

Desired takeout: “Lots of other people like me have seen these films and loved them”

“Priming”

Nationally representative sample of 40,000 people:

“Do you intend to buy a new car in the next six months?” Purchase Rate

+35% Asking people if they’re going to do something increases their likelihood of doing it

Simple

How might we use this? • Create an e-mail panel of potential customers and ask them regularly about new products, intention to buy, and marketing materials

Market research

Word Of Increased Mouth Purchasing

Two different approaches to changing people’s behaviour A TRADITIONAL APPROACH

B.E.-INFORMED

• Benefit led

• Getting into popular culture

• Focussing on USPs

• Partnering with influential media

• “Head” communications

• Using case-studies and testimonials of “people like me” • Asking people their opinions and to participate • Talking to people at times when new habits are formed

Your Elevator Pitch • What’s the brand / campaign? • What’s the problem? • What are your behaviouraleconomics-influenced ideas?

Team Ideas Influenced By Behavioural Economics

GSK • Polygrip – TV ad not performing – There’s currently no help for people who lose their teeth (no interest for dentists) – Invest in a “starter pack” for people with dentures (make Polygrip part of the new regime)

PRUDENTIAL • Increasing “availability”: – Taking thought-leadership on “the future of retirement”

• Priming: – Asking “do you intend to retire?” to get people doing something about it

NATWEST / RBS • For SMEs: – Conformity - use stats on the total amounts borrowed – Increase “availability” - show examples of regional business success

DIRECT LINE • Anchoring – Use average market premium value for segments to show value of DL

• Conformity – 25th anniversary - showcase the number of customers through our books since launch

• Availability – Get involved with popular culture eg Aviva / Plymouth

SKY SPORTS • How to get people to follow the ATP tennis • Conformity

– Show rea people’s support for Murray / get the nation behind him

• Status Quo

– Overinvest during Wimbledon (make the habit of watching tennis more permanent)

• Priming

– Create a tennis fantasy league

• Popular culture

DUK Help Scheme • Conformity – Testimonials featuring real people that have gone digital – Create AFPs on ITV local getting local communities talking about it

• Priming – Marketing that explicitly asks “do you know someone who needs help?”

ONS CENSUS • Conformity – Test a message which reports hgh levels of compliance i.e. 90% of people have already done this – Show “people like you” filling in forms for low response groups

HIPP ORGANIC • Conformity: – Celebrity endorsement – Find a spokesperson for the brand – Product placement

DOLMIO • Status Quo bias: – Overcommit to students to ensure they get the habit early as they start to cook for themselves

• Conformity: – Take a “nation’s favourite” stance – Target mum’s social networks

• Getting into popular culture: – Make Thursday Spag Bol day