Research Tidbit: Irrational Consumers

March 31, 2008

Consumers are swayed by what they choose to believe vs. the facts.

From the daily $4 cup of latte to the great deal on flat screen TVs, we consumers think we’re buying rationally but we’re not. Humans are predictably irrational in our decision-making process, and that’s proven over and over again by the poor buying decisions we make. We overpay, we buy things we don’t need. And, depending on one’s perspective, perhaps most discouraging, we never seem to learn from our mistakes.

“The idea that we could compute all the possible options of every motion and decide what the optimal course of action is – I just think it’s inhumane,” says Dan Ariely, a behavioral economist at MIT and author of “Predictably Irrational: The Hidden Forces that Shape Our Decisions,” a new book on how consumers really behave in the marketplace.

“We are just starting to understand that the reality that we experience is not just about what’s out there. It is about what we create.”  This of course hardly comes as news to marketers, whose very expertise is in persuading people not only to buy their products but to rest in the comfort that they made the wisest decision.

A lot of Ariely’s experiments show just how much consumers are swayed by what they choose to believe versus the facts at hand. Call it willful self-deception. While believing they’re weighing the evidence at hand, they often reach back into memory—all those associations built up over years—to make decisions.

Case in point: Ariely tested pricing on a pain reliever that was actually a placebo, vitamin C. First he priced it at $2.50, then at 10 cents. Which one delivered the greater pain relief, in the minds of test subjects? Most thought the $2.50 pain reliever was effective. Half that number thought the cheaper one did the job. Our minds are embedded to believe in a correlation between price and quality, when in so many cases it’s simply not true.

“Your ideas,” he explains, “change the realities of what you experience.”

He firms that notion up citing yet another experiment, a Pepsi versus Coke taste challenge. The participants tasted the two drinks, and as they did so their brain activity was measured. Researchers found that the brain reacted differently when the product names were revealed than and when they weren’t. The mention of Coke stimulated the area of the brain relating to higher order association. That’s to say, the mention of the Coke name earned a more positive response.” That’s where the higher enjoyment comes from, not the taste,” says Ariely.

Coke’s years of brand building were paying off where it mattered most, not in the mouth but in the brain.

What does this mean for your brand? Long-term marketing can influence consumer behavior.

Source: Media Life Magazine, 3/31/08

Submitted by:
Michelle Strom
Senior Account Executive
Fisher Communications – Seattle, WA
KOMO 1000 NEWS, KING FM 98.1,
KVI 570 TALK, KPLZ FM/STAR 101.5

Phone ~ 206-404-3629
EMail ~ mstrom at fisherradio.com

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