Market researchers, regardless of the industry they find themselves working in, are in the business of understanding people. Understanding how people or consumers behave has been of interest to business leaders for decades as it can determine success in the marketplace.
By understanding who customers are and what they want, businesses can tailor their product and service offerings to match expectations.
Serving as a tool to avoid managerial bias in decision-making, market research provides a necessary ‘checks and balances’ system for business leaders. This practice ensures that consumer needs are met and exceeded, further strengthening the triangular relationship between customer, product (or service) and brand. Business leaders must make decisions involving changes to products or services with the customer’s voice in mind, at all times.
Traditionally, consumer research has taken a normative approach. Normative views on behavior involve projecting how we believe consumers will act based upon available information. If you have ever conducted an online study that yielded positive results upfront, only to find out that what you uncovered didn’t hold true in the field, you have observed the nuances of evaluating human behavior first hand.
When consumers deviate from the normative path, or how we think they will act based on what we know about them or what they tell us, they engage in descriptive behavior. Descriptive behavior refers to how the person acted, regardless of the prior prediction. It is this difference between normative and prescriptive types of behavior that has given rise to a new field of social sciences that continues to grow exponentially in relevance: behavioral economics.
Behavioral economics was born at the intersection of two namesake fields: economics and psychology.
Thinking about economics, a normative field, and psychology, a descriptive field, the newfound approach to evaluating consumer insights allows researchers to observe how people behave in the “real” world when no one is watching (or paying for their input).
As Richard Thaler, the winner of the 2017 Nobel Prize in Economic Sciences, began to observe how people made seemingly irrational choices that differ from what the traditionally normative economic theory would predict, the importance of understanding how and why consumers make decisions became ever important.
Traditional market research studies (such as concept testing or brand tracking) often ask consumers to predict how likely they will be to engage with a product or brand at some point in the future. This approach is commonly believed to predict precisely how loyal customers will be, but when asked on a 7-point Likert scale without additional context, has been shown to not accurately predict future behavior.
How can it be that consumers can say how they will act at one point in time, and engage in different behavior in the future? The answer lies in the field of behavioral economics.
Daniel Kahneman, a psychologist (go figure!) who won the 2002 Nobel Prize in Economic Sciences explained this differing behavior in his 2011 New York Times bestseller, Thinking Fast and Slow. Kahneman suggests that the brain thinks and makes decisions using two separate metaphorical brains, the System 1 and System 2.
The System 1 brain is responsible for “fast, automatic, frequent, emotional, and unconscious” thinking. A few examples of thinking with the System 1 brain as explained by Kahneman are: solving the math equation 2+2, completing the phrase “war and …”, also, connecting the description ‘quiet and structured person with an eye for details’ to a specific job, all in a fast and automatic manner.
In contrast, the System 2 brain is responsible for “slow, effortful, infrequent, logical, calculating, and conscious” decisions. Examples of System 2 thinking are solving 17×24, determining the price/quality ratio of two washing machines, and actively counting the number of times that the letter A appears in this paragraph. All of these functions require a significantly more amount of time and mental bandwidth.
When consumers make decisions, they often rely on their System 1 (with the occasional moderative input from their System 2) to make choices. This approach is more efficient than thinking with the System 2 alone, saving valuable brain power to process other mental tasks that are frequent or habitual in nature.
Due to the vast amount of processing that the System 1 brain conducts, it is typically handled in the nonconscious parts of the human mind, or in the background while the System 2 is working on completing other complex tasks.
Without relying on their System 1 brain as they currently do, consumers purchasing a soda at a supermarket would be passed by dozens of other shoppers in the aisle while they deliberated over which brand has the best price/quantity trade-off. The System 1 uses automatic thinking that is guided by past experiences, relationships, and mental models to help make decisions faster, easier, and more automatically than the more deliberate and rational System 2 brain.
Unfortunately, traditional market research taps into the System 2 brain- an old approach that is normative in nature and does not begin to reflect how consumers descriptively make decisions.
Protobrand leverages behavioral economics to understand behavior better by tapping into the System 1 to evaluate the factors that drive behavior such as emotions and subconscious preferences.
This new approach utilizes methodologies such as visual metaphor elicitation and response latency. These tools can better predict actions as they tap into the emotional and non-conscious drivers that play a role in informing behavior. By asking questions that consumers can answer about how they feel, at the moment, researchers can better predict the choices that consumers will make in the future.
It is essential that the field of market research continues on its path to understanding what truly drives behavior: implicit preferences and emotions, to deliver actionable consumer insights to clients. Without a keen focus on identifying the drivers of descriptive behavior, business decisions using normative predications become at risk for failure.