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APPLYING BEHAVIORAL ECONOMICS
HOW SMALL “NUDGES” CAN HAVE
A MAJOR IMPACT ON SHOPPERS
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Perception Research Services (PRS)
At PRS, our mission is
to help our clients "win at retail"
in the global marketplace.
Since 1972, PRS Has Conducted Over 12,000 Studies to Help Clients Improve Their Packaging & Shopper Marketing
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PRS and IN VIVO Have a Shared Philosophy, Based on Our Collective Experience
Real life purchase decisions are:
Overwhelmingly behavioral, rather than rational.
- We believe primarily in what people do, rather than what they say.
Greatly influenced by competitive context.
- To accurately gauge behavior, we need to place shoppers in realistic shopping contexts.
Driven primarily by what is seen, understood and shop-able at shelf.
- These behavioral measures are the most predictive of in-market performance.
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What Shoppers Say…
My purchases
are pre-planned My purchases
are pre-planned.
My purchases are driven
by features, benefits & pricing.
When Asked, Shoppers Typically Cite Rational Factors…
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…What Shoppers See…
…But at the Shelf, They Encounter Overwhelming Choice…
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…and What Shoppers Do!
…and The Shopping Process is Largely About De-Selection.
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To Navigate Complex Aisles & Shelves…
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…or a Digital World of Overwhelming Choice…
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Shopping is Driven and Dominated by “System 1” Thinking, but Research Often Focuses on System 2.
Autonomic, unconscious, lightening fast, leverages emotion and generates
strong feelings of certainty.
Rational, conscious, requires effort, works
slowly, examines, calculates and weighs evidence.
32 + 42 = X2 ?
…We Use Two Systems of Thinking.
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More than 80% Milk
Greedy for Danette?
+0% +35%
Which In-Store Message is Most Impactful?
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Sub-Conscious Factors Drive Our Decisions...
We are not rational agents
maximizing self-interest…
… but humans driven by impulse,
habits and context…
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…These Implicit Forces & Biases are Consistent and Predictable…
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The Impact of “Anchoring”
Some stores had a sign:
“No More Than
12 Cans per Person”
…and Some Stores Did Not.
• Purchase Rate Without the Sign:
3.3 units/shopper
• Purchase Rate With the Sign:
7.0 units/shopper
A Price Promotion for Soup…
($0.79 instead of $0.89)
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The “Reciprocity Effect”
SALES : + 79% !
The Reciprocity Effect: A “Gift” Drives Loyalty
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The “Decoy Effect”
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Decoy Effect: How Context Impacts Decisions
With 3 Choices (Including the Decoy), 84% Chose the $125 Subscription.
With 2 Choices (Without the Decoy),
Only 32% Chose the $125 Subscription.
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A New Way to Think About Shopping Behavior
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Direct Tactical Implications for Influencing Decisions
Why is Behavioral Economics So Powerful?
More Effective Promotions
Better
Pricing Strategies
Improved Store Traffic
& Category Management
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STICKK: Helping People Achieve Goals
Applying Social Norms, Priming & Loss Aversion
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Behavioral Economics: Key Implications for Shopper & NPD Research
The Need to Emphasize Behavior (visibility, recognition, engagement & conversion)
-And to Acknowledge the Limitations of “PI”
The Importance of Developing & Screening New Products within Competitive Context
-Developing New Products from the “Outside-In”
The Need for More Holistic Approaches
-Testing “Choice Architectures” at Shelf
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Nudge is Rooted in the Work of Nobel-Prize Winning Economists…
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…and It is About Leveraging Human Biases & Implicit Forces Beyond Conscious Rationality.
Reciprocity Priming
Salience
Anchoring
Decoy Effects
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It is not a fly…
…it is a NUDGE
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…that helped reduce cleaning
expenditure by 80% in Amsterdam
Schipol Airport!
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So What is a Nudge?
…That Leads People to Adopt a Desired Behavior, Either Consciously or Subconsciously.
An Effective Little Help…
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This Small Nudge Had a Big Impact on Littering
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This Nudge Dramatically Increased Energy Efficiency
A Change in the Bill Led to Millions in Savings! (By Applying Social Norms)
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Efficacy in Changing Behavior
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At Minimum Cost
Why is Nudge So Successful?
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Small Changes Can Make a Big Difference!
Prof. Dan Ariely (Duke University)
“When we think about what drives human behavior, we typically think in terms of objectives, goals & aspirations.
The reality is that most behavior is driven by small things in the environment.”
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The Nudge Revolution in Public Policy
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Applying “Nudge” to Consumer Goods
Eric Singler of PRS IN VIVO Has Pioneered the Adoption of Nudge
to Consumer Marketing.
His Team Has Conducted 40+ Nudge Studies with Consumer Marketers.
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Encouraging New Usage Occasions Adopting a
New Product Form
Encouraging
Healthier or More
Earth-Friendly
Behaviors
Linking
Digital & Physical
Shopping
Applying “Nudge” to Consumer Goods
Nudge is Essentially About Changing People’s Habits
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The Vittel Refresh Cap
Increasing Saliency to Promote Water Consumption
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Nudge is a Complement to More Traditional Approaches to Marketing.
SELLING EDUCATING ENCOURAGING
RATIONAL PERSUASION
NUDGE
Information
Feature/Benefit
Reason-to-Believe
Situational drivers
System 1 goals
Social influences
Choice architecture
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Is a Topic Right for Nudge?
The goal is BEHAVIORAL CHANGE
The business question is STRATEGIC
Traditional approaches have proven LIMITS
The desired behavior is GOOD FOR THE CONSUMER (A Win-Win situation)
Nudge is a Relevant & Recommended Approach When…
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Nudge is Not Just About Selling More Candy…
…But It Can Be About “Nudging” Shoppers Down Center Aisles.
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“What we firmly believe is
that if we focus our company on improving the lives of the world's citizens and come up with genuine sustainable solutions, we are more in synch with consumers and society and ultimately this
will result in good shareholder returns”
Nudging for Good & Long Term Success
Paul Polman Unilever Global CEO
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The Lifebuoy Hands Campaign in India
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Smarties Pack Innovation
Encouraging Mindful Snacking Through Portion Control
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The NudgeLab Process
A Proven & Proprietary 4-Step Nudge Methodology, Which Has Won Several ESOMAR Awards.
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Step #1: Uncovering Triggers & Micro-Barriers
Uncovering the Subconscious Factors That Drive (or Impede) The Desired Behavior
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Uncovering Micro-Barriers for Packed Salad
Image of an industrial product
=
Poor Appearance
on Shelf
A Bad smell
when opening
Difficulty of
preservation
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An Immersive Workshop, with Ideation Driven By
Behavioral Science Principles & Learnings
(With Client teams, Nudge unit experts, Sector experts,
Consumers, Creative People, Designers, etc.)
Step #2: NudgeLab Workshop
Activating Levers
of Influence to
Develop 100+
Potential Nudges
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“Framing” Packed Salad as a Natural Product at the 1st Moment of Truth
TOUCHPOINT DRIVER OF INFLUENCE BEHAVIORAL INSIGHT
Poor appearance on shelf
WOOD CRATE SRPs STAND DISPLAY CHALKBOARD SIGNAGE NAME OF PRODUCER
NUDGE IDEAS
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Step #3: Pre-Selection Workshop
To Optimize Nudges,
Gauge Feasibility and
Rank the Best Ideas
to Test or Apply
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The Final Nudgebook as a Guide to Action
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Step #4: Testing & Tracking Impact
“We can’t do evidence-based policy without evidence.
Without evidence, they are just ideas…”
- Richard Thaler
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PRS IN VIVO Shopper Labs
Mini-Store Environments for Screening & Assessing New Products, Packs & Shopper Marketing Efforts
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New Nudges In Market
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A Final Example of Nudging for Good…
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Scott Young Global CEO
PRS IN VIVO
T: 201.720.2701
Most people think of at least 3 potential applications for Nudge soon after reviewing this deck.
And they contact me to discuss them!
…And a Final Nudge from Me.
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Please Visit prs-invivo.com for More Learnings..
Linking Digital & Physical Shopping
Gauging Emotion in Pack & Shopper Research
Thinking from the “Outside-In” to Drive New Product Success
Balancing Global Design & Local Customization
Conveying “Real” at the Shelf
Connecting with Hispanic Shoppers
