Richard Chataway, author of ‘The Behaviour Business’, said: “If you are in business, you are in the business of behaviour — and unless a business influences behaviour, it will not succeed.”
This is certainly a mantra that we take seriously. Understanding people and what motivates their day-to-day decisions is vital for any successful marketer.
Key learnings from Daniel Kahneman's book 'Thinking, Fast and Slow'
One of the modern legends of behavioural science is Daniel Kahneman. In his seminal book ‘Thinking, Fast and Slow’, he sets out many principles that have influenced many the advertising industry, behavioural economists and psychologists alike. While the book is hard going, we think it’s an absolute must-read.
1. Dual-process theory
a central concept in the book is the idea that our brains operate using two different systems of thinking: System 1 and System 2:
- System 1 is fast, intuitive, and automatic
- System 2 is slow, deliberate, and effortful
Understanding how these systems work can help us make better decisions and avoid cognitive biases. This concept had a massive impact on the advertising industry, from how brands grow to how memory works in brand recall.
2. Cognitive biases
The book highlights a wide range of cognitive biases that affect our thinking, including confirmation bias, hindsight bias, and availability heuristic, to name a few. Recognising these biases can help us become more aware of our own thought processes and avoid making irrational decisions. For brands and public-sector organisations, understanding these unconscious biases can lead to a whole new way of idea generation and creative opportunities.
3. Anchoring effect
The book discusses how our decisions can be influenced by irrelevant information, such as an arbitrary starting point or ‘anchor’. This can lead to irrational decisions, as our judgments are often anchored to irrelevant or inappropriate information. Drinks brands, cars marques, and even estate agents use the anchoring effect. eCommerce brands use this effect in their pricing strategy using enterprise ‘decoy’ prices to make their ‘pro’ subscriptions seem like good value.
4. Prospect theory
Kahneman’s research on prospect theory shows that people are more averse to losses than they are motivated by gains. This can lead to risk aversion and irrational decision-making.
The book highlights the importance of framing in decision-making. How a question or problem is framed can significantly impact how we perceive and respond to it. By changing the framing of a problem, we can influence how people think about and approach it.
The book explores the concept of happiness and how it is affected by our perceptions and experiences. It suggests that we are not always good judges of what makes us happy, and that our perceptions of happiness can be influenced by factors such as social comparisons and our expectations. System1, the market research company, has shown that advertising which generate positive emotions, including happiness, are much more effective, memorable, and improve likeability.
Although a really long read, ‘Thinking, Fast and Slow’ provides brilliant insights into the workings of the human mind and the cognitive biases that can affect our decision-making. The principles in the book also provide a solid background to marketing books from Shotton, Barden and Sutherland.
Find out more about our approach to behavioural science and how we integrate it into clients’ campaigns.
Learn more about how you can boost your digital marketing, PR, and social media skills at the Leopard Co Summer School in this update from recent Summer School student Saswatha.
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