“With all that digital data, algorithms and AI available, you’d think marketers should be able to identify consumer patterns of behaviors easily,” noted Anna, a seatmate at a conference I attended abroad.  As the finance head of a company in the food and beverage industry, she was trying to understand what was needed to come up with a breakthrough product and service and even if, she thought, she could be a “barrier” to innovation because of her focus on managing costs and risks.
 
“Anna,” I said, “we both know data can only tell us what’s there– the what, the when, the how much, the how frequent.  What it doesn’t tell us is the why and then the what happened (when the customer disappears).  Just when we think we see a pattern, we make a plan that rationally fits that pattern, monitor the indicators or data … and by now we know, what we expect does not always happen.”  And then I tried to assure her, “An openminded finance person would play a very important role in helping manage losses or gains especially when marketing and operations become too adventurous and reckless.”
 
She knew of my anthropology background, which I shared during the break.  I mentioned the importance of using several disciplines – such as the social sciences of psychology, behavioral sciences, linguistics, history among others, in trying to make sense of today’s world – in whatever field one is in, including, and I’d like to say, most especially -- science, technology and engineering, where there is a need to humanize the hard sciences (think user friendly). 
 
I mentioned behavioral economics as an ongoing field of discipline, which was put in the limelight recently because the 2017 Nobel Prize winner Richard Thaler was awarded for this work in putting together economics with psychology in aiding people’s decision-making. Briefly, Thaler was recognized for distinguishing how people make decisions, and yes, even defy logic – because of “limited rationality, social preferences, and lack of self-control, affecting decisions and therefore market outcomes.”
 
If one thinks about it, marketers have been doing something similar already such as getting customer information and behavioral insights from FGDs, IDIs, surveys and participant observation – when they engage in every new product development, create advertising campaigns, change packaging, design merchandising and point of sale display, among many others.   While crafting the marketing mix, so must they include cost to promote, or ROI -  while under the assumption that the customer will behave based on the pattern or trend.
 
“So if people are irrational, how do we put in some sense of order in our efforts to try to understand our customers?”  Anna asked.  She already knew that people had their own social and cultural inclinations, that even politics influence many things.
 
We shared personal biases for and against issues – such as confirmation bias that has led people to unfollow each other in social media (you only share or seek news that confirms your notions), loss aversion which I felt was related to many Filipinos’ risk aversion (losing money feels so much worse than gaining the same amount), and availability bias or  complexity aversion (where we accept easily accessed or retrieved information instead of checking veracity of such information – think fake news). 
 
In both confirmation bias and complexity aversion, we also know we should keep things simple in our messaging, and yet how many times have we encountered ads and promo plans whose options or fine print are impossible to understand (perhaps the better to confuse us)?  I am often reminded by my anthropology background on how our prehistoric ancestors probably evolved in the interest of conserving energy (from standing upright to be able to gather fruits from trees, to being able to dispense heat faster in the same position).  This has not changed over the years as we still yearn for convenience.  In the case of loss aversion, we can again explain this with a perspective from anthropology where an unavailability of food (loss) is much worse and with fatal repercussions, than an excess of food (gain, which can be stored for later use).
 
(At this point, I think I have converted Anna to change careers and to go into the Social Sciences.)
 
Going back to BE, I shared with Anna 3 steps that her company can use in understanding behavior especially in any change effort – whether organization or individual:
1. Understand the culture of the people by identifying biases and beliefs (and you may have to be aware of your own biases so you can remove your own blinders)
a. Talk to people, listen to what they’re saying and not saying
b. Use structured interviews, surveys, workshops
2. Craft your offer
a. Identify ways to influence beliefs, attitudes and behaviors based on item no. 1 (language, rituals, psychological prompts, etc.)
3. Experiment by having a plan A and plan B and monitor what works and correlate with the data at hand.
a. Have hypotheses on what will trigger action and anticipate most probable scenarios
BE has often been used in framing price – for example, The Economist offered customers a choice between an annual online subscription for $56 and a print plus online subscription of $125.  Predictably, most subscribers chose the lower amount.  But when presented a third choice of $125 for print only, people shifted to the $125 print plus online subscription.
 
Applying the 3 steps above
1) People do not understand the real value of the amounts
2) When given a basis for comparison, value becomes clearer
3) Frame price options accordingly and see what works (and keep understanding customers in step 1)
 
While some people might question BE’s intentions as manipulative, another way to look at it is how it makes decision-making easier for target constituents, while achieving objectives for the marketers, who hopefully have good intentions.  If one were to pursue BE as a tool for innovation or sensemaking, step 1 or understanding customer biases and beliefs is a critical step.
 
I shared with Anna what I talked about during our “Mansmith Market Conference: 2018 Trends and Innovation in Marketing” last February 2018 – particularly BE in the restaurant industry:
1. Pricing
a. When you put an expensive dish in the menu, the intention is to make other dishes look cheaper
b. Putting a Peso sign before the price makes people feel they are “spending money” rather than “consuming good food”
c. Removing the .95 or .99 centavos makes the menu look cleaner and simpler
2. Use of language and visuals in the menu
a. The more adjectives, the better (or even the funnier like minatamis na saging with banana flavor)
b. The more connected with family, the better (Grandma’s Chicken Soup)
c. The more ethnic, the more authentic
d. Photos, colors, fonts all affect focus (though may be different in high end restaurants).
 
So BE actually is a template for ideas and innovation and if one thinks about it, these may be small changes but when done well will have big impact, and even better, at low cost. 
 
I think I just convinced Anna when I said “low cost”.   That’s BE in action, when I just used the language of my listener to connect and make her see the bigger picture of customer understanding for innovative ideas.

Chiqui is Mansmith CEO and Chief Behavioral Strategist. She will be conducting The A-Z of Behavioral Economics and Marketing on August 7-8, 2018.