http://www.fastcompany.com/article/the-most-addictive-sounds-in-the-world-advertising-neuromarketing?partner=homepage_newsletter
The 10 Most Addictive Sounds in the World
BY: MARTIN LINDSTROMFebruary 22, 2010
You're probably among the millions who have experienced it: driving in a car, listening to the radio, and suddenly this song comes on. It is not just any song--this was your favorite song when you were a teenager. As the first few notes strike up, you're transported back in time. Everything is so vivid, and your mind wanders to parties, first kisses and sweaty palms. It's as if time stands still and you suddenly realize that for the entire duration of the song, you haven't seen a single thing on the road.
There's no doubt about it, sound is immensely powerful. And yet 83% of all the advertising communication we're exposed to daily (bearing in mind that we will see two million TV commercials in a single lifetime) focuses, almost exclusively, on the sense of sight. That leaves just 17% for the remaining four senses. Think about how much we rely on sound. It confirms a connection when dialing or texting on cell phones and alerts us to emergencies. When the sound was removed from slot machines in Las Vegas, revenue fell by 24%. Experiments undertaken in restaurants show that when slow music (slower than the rhythm of a heartbeat) is played, we eat slower--and we eat more!
Is this just coincidence, or does sound make us buy more, want more, dream more and eat more? Any 50-year-old American can sing a whole range of television jingles from the 1970s--they are all well stored in the recesses of our brain. Yet if you were to ask the same of those who have come of age recently, you will find them stumped. Has the magic of a television tune disappeared, or has the advertising world lost sight of the fact that people do indeed have speakers at home? I decided to put these questions to the test.
Buyology Inc. and Elias Arts, a sound identity company in New York, wired up 50 volunteers and measured their galvanic, pupil and brainwave responses to sounds using the latest neuroscience-based research methods. We learned that sound has remarkable power. This may not be surprising for many, but it was certainly surprising to realize just how many commercial brands over the past 20 years have made their way into the world's 10 most powerful and addictive sounds--beating some of the most familiar and comforting sounds of nature.
Quiz: Can You Guess The World's Most Addictive Sounds?
Forget the sound of the waves or the songs of birds, they didn't even make the top 10. But the jingle advertising a computer chip, and object which most of us have never even seen, took the prominent second spot in our brains in terms of addiction. We strongly respond to the sound of Intel! This tells us that repetition is the key, since most of us can't even sing it. What this tells us is that there's no limit to this phenomenon, because a computer chip doesn't really have a sound.
The third most powerful sound is just over 10 years old, and yet it had such a profound effect on our volunteers that as soon as they hear it, they remove their headsets and check their bags for their vibrating cell phone. When we switch our phone into silent mode, we think it cannot be heard. But the vibration has its own sound, and almost immediately the test subjects stopped whatever they were doing to attend to their phones. It's hardly surprising that the Blackberry has been dubbed a CrackBerry--even President Obama is hooked.
Psychologically speaking, this is not a happy discovery. Recent studies show that the first thing we do when we wake is check our BlackBerry. Going to the bathroom, brushing our teeth and eating breakfast takes a back seat. Increasingly people sleep beside their phones--that message that arrives at 4.00am, is now a priority! Even though the sound of a vibrating phone has taken second place to a baby's giggles, it seems that in just over a decade technology now provides the predominant sounds of daily life.
As marketers become more aware of the power of sound, it will be used to increase brand recognition in increasingly sophisticated ways. It's just a matter of time before our brains hear sizzling steaks, newly lit cigarettes and sparkling sodas, and immediately register them as Outback, Marlboro and Dr. Pepper.
THE MOST ADDICTIVE SOUNDS IN THE WORLD
Non-branded and branded sounds:
1. Baby giggle
2. Intel
3. Vibrating phone
4. ATM / cash register
5. National Geographic
6. MTV
7. T-Mobile Ringtone
8. McDonald's
9. 'Star Spangled Banner'
10. State Farm
Top 10 Branded sounds:
1. Intel
2. National Geographic
3. MTV
4. T-Mobile
5. McDonald's
7. State Farm
8. AT&T Ringtone
9. Home Depot
10 Palm Treo Ringtone
Top 10 Non-branded sounds:
1. Baby giggle
2. Vibrating phone
3. ATM / cash register
4. "Star Spangled Banner"
5. Sizzling steak
6. 'Hail to the Chief'
7. Cigarette light and inhale
8. "Wedding March"
9. "Wish Upon a Star"
10. Late Night with David Letterman Theme
Wednesday, February 24, 2010
Benefit of Failing
The Pluses of Getting It Wrong ( Preview )
New research makes the case for difficult tests in schools and suggests an unusual technique that anyone can use to learn
By Henry L. Roediger III and Bridgid Finn
http://www.scientificamerican.com/article.cfm?id=the-pluses-of-getting-it-wrong
Key Concepts
Students who take tests on material before studying it remember the information better and longer than those who study without pretesting.
Anyone can use this learning technique to enhance recall of new information.
For years many educators have championed “errorless learning,” advising teachers (and students) to create study conditions that do not permit errors. For example, a classroom teacher might drill students repeatedly on the same multiplication problem, with very little delay between the first and second presentations of the problem, ensuring that the student gets the answer correct each time.
The idea is that students who make errors will remember the mistakes and will not learn the correct information (or will learn it more slowly, if at all). Recent research shows that this worry is misplaced. Pupils actually learn better if conditions are arranged so that they have to make errors. Specifically, people remember things better and longer if they are given tests so challenging that they are bound to fail. This phenomenon has obvious applications for education, but the technique could be useful for anyone who is trying to absorb new material of any kind.
New research makes the case for difficult tests in schools and suggests an unusual technique that anyone can use to learn
By Henry L. Roediger III and Bridgid Finn
http://www.scientificamerican.com/article.cfm?id=the-pluses-of-getting-it-wrong
Key Concepts
Students who take tests on material before studying it remember the information better and longer than those who study without pretesting.
Anyone can use this learning technique to enhance recall of new information.
For years many educators have championed “errorless learning,” advising teachers (and students) to create study conditions that do not permit errors. For example, a classroom teacher might drill students repeatedly on the same multiplication problem, with very little delay between the first and second presentations of the problem, ensuring that the student gets the answer correct each time.
The idea is that students who make errors will remember the mistakes and will not learn the correct information (or will learn it more slowly, if at all). Recent research shows that this worry is misplaced. Pupils actually learn better if conditions are arranged so that they have to make errors. Specifically, people remember things better and longer if they are given tests so challenging that they are bound to fail. This phenomenon has obvious applications for education, but the technique could be useful for anyone who is trying to absorb new material of any kind.
How brain remembers the unexpected
http://www.scientificamerican.com/blog/post.cfm?id=surprised-how-the-brain-records-mem-2010-02-24
Surprised? How the brain records memories of the unexpected
By Katherine Harmon
Remember the last time that something a friend did caught you off guard? Probably—and that's because the human brain is specially tuned to remember things that are out of the ordinary.
But just how the brain treats those instances has remained uncertain. Some scientists had hypothesized that an unexpected stimulus would trigger a loop that involved both the hippocampus (responsible in part for long-term memory) and nucleus accumbens (involved in reward and pleasure) to make those memories super sticky. But without peering into these centers, researchers could not know for sure.
One research team, however, got just such an opportunity. They were able to implant electrodes in the hippocampus of eight willing patients who were undergoing treatment for epilepsy as well as in the nucleus accumbens of six patients who had volunteered for experimental deep brain stimulation for depression. These electroencephalogram (EEG) readings allow researchers to detect changes in the brain in "milliseconds versus seconds" compared to fMRI (functional magnetic resonance imaging), Nikolai Axmacher, of the University of Bonn in Germany and lead author of the study, wrote in an email to ScientificAmerican.com.
When the subjects were shown a series of faces against a red background for several seconds and then a picture of a house on a green background, the EEG captured the time at which each of these spots activated when the brain reacted, down to the millisecond. Researchers logged these times and were able to construct the overall pattern of activity between the two groups of subjects.
Axmacher and his team found that in the instance of the unexpected stimulus (the house on the green background), the hippocampus activates twice and that the latter activation—which is closely preceded by activation of the rewarding nucleus accumbens—predicts memory formation. The findings are reported in a study published online February 24 in the journal Neuron.
Why is pinpointing these processes of such keen interest to scientists? "Learning is very selective," Axmacher wrote in the email. Though humans have huge brains, we certainly don't have the capacity to log every aspect of every experience. "Only relevant information receives a 'memory boost' by the reward system, which includes the nucleus accumbens," he noted, so people are more inclined to remember incidents from which they might learn something new.
But sometimes when we encounter something unexpected, we brush it aside because it will not jibe with our understanding of the world. Axmacher explained that in such a case, "suppression of unwanted memories appears to depend on inhibitory top-down control of hippocampal activity by the prefrontal cortex," rather than the rapid response of the hippocampus-nucleus accumbens loop he and his colleagues confirmed.
Electrode implantation has yielded new insights into the brain, including this finding on memory formation as well as previous work on language processing, but it has its drawbacks as well, Axmacher conceded. These sorts of intra-brain readings "can only be obtained from patient populations and only allow one to record from specific regions of the brain," so they provide small snapshots of the brain at work—and in brains that already have a dysfunction. But he and his colleagues note that at least in this study, it is unlikely that the patients' illnesses would change the pattern of these particular neural activations. And "these results could only be obtained in patient populations with implanted electrodes in these regions," Axmacher wrote.
Nevertheless, he and his colleagues noted in their study, their findings probably don't fully explain how and why these surprising instances get preferential memory treatment than humdrum happenings. "The occurrence of an unexpected event likely recruits a network of brain regions that extend well beyond" these two, they wrote. Just remember that next time your friend makes a scene—if it's unexpected, that is.
Surprised? How the brain records memories of the unexpected
By Katherine Harmon
Remember the last time that something a friend did caught you off guard? Probably—and that's because the human brain is specially tuned to remember things that are out of the ordinary.
But just how the brain treats those instances has remained uncertain. Some scientists had hypothesized that an unexpected stimulus would trigger a loop that involved both the hippocampus (responsible in part for long-term memory) and nucleus accumbens (involved in reward and pleasure) to make those memories super sticky. But without peering into these centers, researchers could not know for sure.
One research team, however, got just such an opportunity. They were able to implant electrodes in the hippocampus of eight willing patients who were undergoing treatment for epilepsy as well as in the nucleus accumbens of six patients who had volunteered for experimental deep brain stimulation for depression. These electroencephalogram (EEG) readings allow researchers to detect changes in the brain in "milliseconds versus seconds" compared to fMRI (functional magnetic resonance imaging), Nikolai Axmacher, of the University of Bonn in Germany and lead author of the study, wrote in an email to ScientificAmerican.com.
When the subjects were shown a series of faces against a red background for several seconds and then a picture of a house on a green background, the EEG captured the time at which each of these spots activated when the brain reacted, down to the millisecond. Researchers logged these times and were able to construct the overall pattern of activity between the two groups of subjects.
Axmacher and his team found that in the instance of the unexpected stimulus (the house on the green background), the hippocampus activates twice and that the latter activation—which is closely preceded by activation of the rewarding nucleus accumbens—predicts memory formation. The findings are reported in a study published online February 24 in the journal Neuron.
Why is pinpointing these processes of such keen interest to scientists? "Learning is very selective," Axmacher wrote in the email. Though humans have huge brains, we certainly don't have the capacity to log every aspect of every experience. "Only relevant information receives a 'memory boost' by the reward system, which includes the nucleus accumbens," he noted, so people are more inclined to remember incidents from which they might learn something new.
But sometimes when we encounter something unexpected, we brush it aside because it will not jibe with our understanding of the world. Axmacher explained that in such a case, "suppression of unwanted memories appears to depend on inhibitory top-down control of hippocampal activity by the prefrontal cortex," rather than the rapid response of the hippocampus-nucleus accumbens loop he and his colleagues confirmed.
Electrode implantation has yielded new insights into the brain, including this finding on memory formation as well as previous work on language processing, but it has its drawbacks as well, Axmacher conceded. These sorts of intra-brain readings "can only be obtained from patient populations and only allow one to record from specific regions of the brain," so they provide small snapshots of the brain at work—and in brains that already have a dysfunction. But he and his colleagues note that at least in this study, it is unlikely that the patients' illnesses would change the pattern of these particular neural activations. And "these results could only be obtained in patient populations with implanted electrodes in these regions," Axmacher wrote.
Nevertheless, he and his colleagues noted in their study, their findings probably don't fully explain how and why these surprising instances get preferential memory treatment than humdrum happenings. "The occurrence of an unexpected event likely recruits a network of brain regions that extend well beyond" these two, they wrote. Just remember that next time your friend makes a scene—if it's unexpected, that is.
Why we return to bad habits
http://www.scientificamerican.com/article.cfm?id=why-we-return-to-bad-habits
Why We Return to Bad Habits
A common mental miscalculation causes us to overestimate our self-control
By David DiSalvo
If you have ever lost weight on a diet only to gain it all back, you were probably as perplexed as you were disappointed. You felt certain that you had conquered bad eating habits—so what caused the backslide? New research suggests that you may have succumbed to a cognitive distortion called restraint bias. Bolstered by an inflated sense of impulse control, we overexpose ourselves to temptation and fall prey to impulsiveness.
Northwestern University psychologists first asked a group of smokers to take a self-control test. Unknown to the par ticipants, the test was a pretense to randomly label half the group as having high self-control and half as having low self-control. After hearing their supposed result, participants played a game that involved watch ing the 2003 movie Coffee and Cigarettes while challenging themselves with one of four levels of temptation, each with its own cash reward. They could keep a cigarette unlit in their mouths (for the most money), unlit in their hand, on a nearby desk or (for the lowest reward) in another room. Participants earned a prize only if they avoided smoking for the entire 95-minute film.
Smokers told that they had high self-control exposed themselves to significantly more temptation than their counterparts—opting on average to watch the movie while holding a cigarette—and they failed to resist lighting up three times as often as those told they had low self-control.
“Restraint bias offers insight into how our erroneous beliefs about self-restraint promote impulsive behavior,” says lead author Loran F. Nordgren of Northwestern’s Kellogg School of Management. “It helps us to understand puzzles in addiction research such as why recovered addicts often relapse after they have broken free of withdrawal symptoms.” The lesson? When you’ve made progress avoiding your indulgences and that little voice in your head tells you it’s okay to start exposing yourself to temptation again —ignore it.
Why We Return to Bad Habits
A common mental miscalculation causes us to overestimate our self-control
By David DiSalvo
If you have ever lost weight on a diet only to gain it all back, you were probably as perplexed as you were disappointed. You felt certain that you had conquered bad eating habits—so what caused the backslide? New research suggests that you may have succumbed to a cognitive distortion called restraint bias. Bolstered by an inflated sense of impulse control, we overexpose ourselves to temptation and fall prey to impulsiveness.
Northwestern University psychologists first asked a group of smokers to take a self-control test. Unknown to the par ticipants, the test was a pretense to randomly label half the group as having high self-control and half as having low self-control. After hearing their supposed result, participants played a game that involved watch ing the 2003 movie Coffee and Cigarettes while challenging themselves with one of four levels of temptation, each with its own cash reward. They could keep a cigarette unlit in their mouths (for the most money), unlit in their hand, on a nearby desk or (for the lowest reward) in another room. Participants earned a prize only if they avoided smoking for the entire 95-minute film.
Smokers told that they had high self-control exposed themselves to significantly more temptation than their counterparts—opting on average to watch the movie while holding a cigarette—and they failed to resist lighting up three times as often as those told they had low self-control.
“Restraint bias offers insight into how our erroneous beliefs about self-restraint promote impulsive behavior,” says lead author Loran F. Nordgren of Northwestern’s Kellogg School of Management. “It helps us to understand puzzles in addiction research such as why recovered addicts often relapse after they have broken free of withdrawal symptoms.” The lesson? When you’ve made progress avoiding your indulgences and that little voice in your head tells you it’s okay to start exposing yourself to temptation again —ignore it.
Guide to Behavioral Economics
https://www.mckinseyquarterly.com/Marketing/Strategy/A_marketers_guide_to_behavioral_economics_2536
A marketer’s guide to behavioral economics
Marketers have been applying behavioral economics—often unknowingly—for years. A more systematic approach can unlock significant value.
FEBRUARY 2010 • Ned Welch
Source: Marketing & Sales Practice
In This Article
About the author
Comments
Long before behavioral economics had a name, marketers were using it. “Three for the price of two” offers and extended-payment layaway plans became widespread because they worked—not because marketers had run scientific studies showing that people prefer a supposedly free incentive to an equivalent price discount or that people often behave irrationally when thinking about future consequences. Yet despite marketing’s inadvertent leadership in using principles of behavioral economics, few companies use them in a systematic way. In this article, we highlight four practical techniques that should be part of every marketer’s tool kit.
1. Make a product’s cost less painful
In almost every purchasing decision, consumers have the option to do nothing: they can always save their money for another day. That’s why the marketer’s task is not just to beat competitors but also to persuade shoppers to part with their money in the first place. According to economic principle, the pain of payment should be identical for every dollar we spend. In marketing practice, however, many factors influence the way consumers value a dollar and how much pain they feel upon spending it.
Retailers know that allowing consumers to delay payment can dramatically increase their willingness to buy. One reason delayed payments work is perfectly logical: the time value of money makes future payments less costly than immediate ones. But there is a second, less rational basis for this phenomenon. Payments, like all losses, are viscerally unpleasant. But emotions experienced in the present—now—are especially important. Even small delays in payment can soften the immediate sting of parting with your money and remove an important barrier to purchase.
Another way to minimize the pain of payment is to understand the ways “mental accounting” affects decision making. Consumers use different mental accounts for money they obtain from different sources rather than treating every dollar they own equally, as economists believe they do, or should. Commonly observed mental accounts include windfall gains, pocket money, income, and savings. Windfall gains and pocket money are usually the easiest for consumers to spend. Income is less easy to relinquish, and savings the most difficult of all.
Technology creates new frontiers for harnessing mental accounting to benefit both consumers and marketers. A credit card marketer, for instance, could offer a Web-based or mobile-device application that gives consumers real-time feedback on spending against predefined budget and revenue categories—green, say, for below budget, red for above budget, and so on. The budget-conscious consumer is likely to find value in such accounts (although they are not strictly rational) and to concentrate spending on a card that makes use of them. This would not only increase the issuer’s interchange fees and financing income but also improve the issuer’s view of its customers’ overall financial situation. Finally, of course, such an application would make a genuine contribution to these consumers’ desire to live within their means.
2. Harness the power of a default option
The evidence is overwhelming that presenting one option as a default increases the chance it will be chosen. Defaults—what you get if you don’t actively make a choice—work partly by instilling a perception of ownership before any purchase takes place, because the pleasure we derive from gains is less intense than the pain from equivalent losses. When we’re “given” something by default, it becomes more valued than it would have been otherwise—and we are more loath to part with it.
Savvy marketers can harness these principles. An Italian telecom company, for example, increased the acceptance rate of an offer made to customers when they called to cancel their service. Originally, a script informed them that they would receive 100 free calls if they kept their plan. The script was reworded to say, “We have already credited your account with 100 calls—how could you use those?” Many customers did not want to give up free talk time they felt they already owned.
Defaults work best when decision makers are too indifferent, confused, or conflicted to consider their options. That principle is particularly relevant in a world that’s increasingly awash with choices—a default eliminates the need to make a decision. The default, however, must also be a good choice for most people. Attempting to mislead customers will ultimately backfire by breeding distrust.
3. Don’t overwhelm consumers with choice
When a default option isn’t possible, marketers must be wary of generating “choice overload,” which makes consumers less likely to purchase. In a classic field experiment, some grocery store shoppers were offered the chance to taste a selection of 24 jams, while others were offered only 6. The greater variety drew more shoppers to sample the jams, but few made a purchase. By contrast, although fewer consumers stopped to taste the 6 jams on offer, sales from this group were more than five times higher.1
Large in-store assortments work against marketers in at least two ways. First, these choices make consumers work harder to find their preferred option, a potential barrier to purchase. Second, large assortments increase the likelihood that each choice will become imbued with a “negative halo”—a heightened awareness that every option requires you to forgo desirable features available in some other product. Reducing the number of options makes people likelier not only to reach a decision but also to feel more satisfied with their choice.
4. Position your preferred option carefully
Economists assume that everything has a price: your willingness to pay may be higher than mine, but each of us has a maximum price we’d be willing to pay. How marketers position a product, though, can change the equation. Consider the experience of the jewelry store owner whose consignment of turquoise jewelry wasn’t selling. Displaying it more prominently didn’t achieve anything, nor did increased efforts by her sales staff. Exasperated, she gave her sales manager instructions to mark the lot down “x½” and departed on a buying trip. On her return, she found that the manager misread the note and had mistakenly doubled the price of the items—and sold the lot.2 In this case, shoppers almost certainly didn’t base their purchases on an absolute maximum price. Instead, they made inferences from the price about the jewelry’s quality, which generated a context-specific willingness to pay.
The power of this kind of relative positioning explains why marketers sometimes benefit from offering a few clearly inferior options. Even if they don’t sell, they may increase sales of slightly better products the store really wants to move. Similarly, many restaurants find that the second-most-expensive bottle of wine is very popular—and so is the second-cheapest. Customers who buy the former feel they are getting something special but not going over the top. Those who buy the latter feel they are getting a bargain but not being cheap. Sony found the same thing with headphones: consumers buy them at a given price if there is a more expensive option—but not if they are the most expensive option on offer.
Another way to position choices relates not to the products a company offers but to the way it displays them. Our research suggests, for instance, that ice cream shoppers in grocery stores look at the brand first, flavor second, and price last. Organizing supermarket aisles according to way consumers prefer to buy specific products makes customers both happier and less likely to base their purchase decisions on price—allowing retailers to sell higher-priced, higher-margin products. (This explains why aisles are rarely organized by price.) For thermostats, by contrast, people generally start with price, then function, and finally brand. The merchandise layout should therefore be quite different.
Marketers have long been aware that irrationality helps shape consumer behavior. Behavioral economics can make that irrationality more predictable. Understanding exactly how small changes to the details of an offer can influence the way people react to it is crucial to unlocking significant value—often at very low cost.
A marketer’s guide to behavioral economics
Marketers have been applying behavioral economics—often unknowingly—for years. A more systematic approach can unlock significant value.
FEBRUARY 2010 • Ned Welch
Source: Marketing & Sales Practice
In This Article
About the author
Comments
Long before behavioral economics had a name, marketers were using it. “Three for the price of two” offers and extended-payment layaway plans became widespread because they worked—not because marketers had run scientific studies showing that people prefer a supposedly free incentive to an equivalent price discount or that people often behave irrationally when thinking about future consequences. Yet despite marketing’s inadvertent leadership in using principles of behavioral economics, few companies use them in a systematic way. In this article, we highlight four practical techniques that should be part of every marketer’s tool kit.
1. Make a product’s cost less painful
In almost every purchasing decision, consumers have the option to do nothing: they can always save their money for another day. That’s why the marketer’s task is not just to beat competitors but also to persuade shoppers to part with their money in the first place. According to economic principle, the pain of payment should be identical for every dollar we spend. In marketing practice, however, many factors influence the way consumers value a dollar and how much pain they feel upon spending it.
Retailers know that allowing consumers to delay payment can dramatically increase their willingness to buy. One reason delayed payments work is perfectly logical: the time value of money makes future payments less costly than immediate ones. But there is a second, less rational basis for this phenomenon. Payments, like all losses, are viscerally unpleasant. But emotions experienced in the present—now—are especially important. Even small delays in payment can soften the immediate sting of parting with your money and remove an important barrier to purchase.
Another way to minimize the pain of payment is to understand the ways “mental accounting” affects decision making. Consumers use different mental accounts for money they obtain from different sources rather than treating every dollar they own equally, as economists believe they do, or should. Commonly observed mental accounts include windfall gains, pocket money, income, and savings. Windfall gains and pocket money are usually the easiest for consumers to spend. Income is less easy to relinquish, and savings the most difficult of all.
Technology creates new frontiers for harnessing mental accounting to benefit both consumers and marketers. A credit card marketer, for instance, could offer a Web-based or mobile-device application that gives consumers real-time feedback on spending against predefined budget and revenue categories—green, say, for below budget, red for above budget, and so on. The budget-conscious consumer is likely to find value in such accounts (although they are not strictly rational) and to concentrate spending on a card that makes use of them. This would not only increase the issuer’s interchange fees and financing income but also improve the issuer’s view of its customers’ overall financial situation. Finally, of course, such an application would make a genuine contribution to these consumers’ desire to live within their means.
2. Harness the power of a default option
The evidence is overwhelming that presenting one option as a default increases the chance it will be chosen. Defaults—what you get if you don’t actively make a choice—work partly by instilling a perception of ownership before any purchase takes place, because the pleasure we derive from gains is less intense than the pain from equivalent losses. When we’re “given” something by default, it becomes more valued than it would have been otherwise—and we are more loath to part with it.
Savvy marketers can harness these principles. An Italian telecom company, for example, increased the acceptance rate of an offer made to customers when they called to cancel their service. Originally, a script informed them that they would receive 100 free calls if they kept their plan. The script was reworded to say, “We have already credited your account with 100 calls—how could you use those?” Many customers did not want to give up free talk time they felt they already owned.
Defaults work best when decision makers are too indifferent, confused, or conflicted to consider their options. That principle is particularly relevant in a world that’s increasingly awash with choices—a default eliminates the need to make a decision. The default, however, must also be a good choice for most people. Attempting to mislead customers will ultimately backfire by breeding distrust.
3. Don’t overwhelm consumers with choice
When a default option isn’t possible, marketers must be wary of generating “choice overload,” which makes consumers less likely to purchase. In a classic field experiment, some grocery store shoppers were offered the chance to taste a selection of 24 jams, while others were offered only 6. The greater variety drew more shoppers to sample the jams, but few made a purchase. By contrast, although fewer consumers stopped to taste the 6 jams on offer, sales from this group were more than five times higher.1
Large in-store assortments work against marketers in at least two ways. First, these choices make consumers work harder to find their preferred option, a potential barrier to purchase. Second, large assortments increase the likelihood that each choice will become imbued with a “negative halo”—a heightened awareness that every option requires you to forgo desirable features available in some other product. Reducing the number of options makes people likelier not only to reach a decision but also to feel more satisfied with their choice.
4. Position your preferred option carefully
Economists assume that everything has a price: your willingness to pay may be higher than mine, but each of us has a maximum price we’d be willing to pay. How marketers position a product, though, can change the equation. Consider the experience of the jewelry store owner whose consignment of turquoise jewelry wasn’t selling. Displaying it more prominently didn’t achieve anything, nor did increased efforts by her sales staff. Exasperated, she gave her sales manager instructions to mark the lot down “x½” and departed on a buying trip. On her return, she found that the manager misread the note and had mistakenly doubled the price of the items—and sold the lot.2 In this case, shoppers almost certainly didn’t base their purchases on an absolute maximum price. Instead, they made inferences from the price about the jewelry’s quality, which generated a context-specific willingness to pay.
The power of this kind of relative positioning explains why marketers sometimes benefit from offering a few clearly inferior options. Even if they don’t sell, they may increase sales of slightly better products the store really wants to move. Similarly, many restaurants find that the second-most-expensive bottle of wine is very popular—and so is the second-cheapest. Customers who buy the former feel they are getting something special but not going over the top. Those who buy the latter feel they are getting a bargain but not being cheap. Sony found the same thing with headphones: consumers buy them at a given price if there is a more expensive option—but not if they are the most expensive option on offer.
Another way to position choices relates not to the products a company offers but to the way it displays them. Our research suggests, for instance, that ice cream shoppers in grocery stores look at the brand first, flavor second, and price last. Organizing supermarket aisles according to way consumers prefer to buy specific products makes customers both happier and less likely to base their purchase decisions on price—allowing retailers to sell higher-priced, higher-margin products. (This explains why aisles are rarely organized by price.) For thermostats, by contrast, people generally start with price, then function, and finally brand. The merchandise layout should therefore be quite different.
Marketers have long been aware that irrationality helps shape consumer behavior. Behavioral economics can make that irrationality more predictable. Understanding exactly how small changes to the details of an offer can influence the way people react to it is crucial to unlocking significant value—often at very low cost.
Tuesday, February 23, 2010
The meaning of a touch
Great article on the effect of touching on behavior change....
http://www.nytimes.com/2010/02/23/health/23mind.html?em
http://www.nytimes.com/2010/02/23/health/23mind.html?em
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