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1
How Small “Nudges” Can Have a Big Impact on Behavior
TMRE
October 2016
Applying Behavioral Economics
2
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
3
PRS Eye-Tracking
PRS Pioneered Eye-Tracking to Understand Shopper Behavior & Assess Marketing Communications
4 4
5
IN VIVO Shopper Labs
Mini-Store Environments for Developing, Screening & Assessing New Products, Packs & Shopper Marketing Efforts
6 6
7
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…
8
…What Shoppers See…
…But at the Shelf, They Encounter Overwhelming Choice…
9
…and What Shoppers Do!
…and The Shopping Process is Largely About De-Selection.
10
To Navigate Complex Aisles & Shelves…
11
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.
12
…and Our Decisions are Heavily Influenced by Context.
How Options are Framed (the “Choice Architecture”) Often Determines The Decisions We Make.
Prof. Dan Ariely (Duke University)
“Most people don’t know what they want unless they see it in context.”
13
Sub-Conscious Factors Drive Our Decisions...
We are not rational agents maximizing self-interest…
… but humans driven by impulse, habits and context…
14
…These Implicit Forces & Biases are Consistent & Predictable
15
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)
16
The “Reciprocity Effect”
SALES : + 79% !
17
A New Way to Think About Shopping Behavior
+
Tactical Implications for Influencing Decisions
Why is Behavioral Economics So Powerful?
More Effective Promotions
Better
Pricing Strategies
Improved Store Traffic
& Category Management
18
The Primary Implication for Shopper & NPD Research
VS.
The Need to Emphasize Purchase Behavior in Shelf Context (vs. Claimed PI in Isolation)
19
Nudge is Rooted in the Work of Nobel-Winning Economists…
20
…and The World of Public Policy.
21
It is About Leveraging Human Biases to Impact Behavior.
22 22
It is not a fly…
…it is a NUDGE
23 23
…that helped reduce cleaning expenses by 80%
in Amsterdam Schipol Airport!
24
So What is a Nudge?
…That Leads People to Adopt a Desired Behavior, Either Consciously or Subconsciously.
An Effective Little Help…
25
This Small Nudge Had a Big Impact on Littering
26
This Nudge Dramatically Increased Energy Efficiency
A Change in the Utility Bill Led to Millions in Savings! (By Applying Social Norms)
27
Efficacy in Changing Behavior
+
At Minimum Cost
Why is Nudge So Successful?
28
Applying “Nudge” to Consumer Goods
Eric Singler of PRS IN VIVO Has Pioneered the Adoption of Nudge
to Consumer Marketing.
Eric, Pauline and the Nudge Unit Have Conducted 40+ Nudge Studies
with Consumer Marketers.
29
Encouraging New Usage Occasions Adopting a
New Product Form
Encouraging
Healthier or More
Earth-Friendly
Behaviors
Linking
Digital & Physical
Shopping
Applying “Nudge” to Consumer Marketing
Nudge is Essentially About Changing People’s Habits
30
The Vittel Refresh Cap
Increasing Saliency to Promote Water Consumption
The Vittel Refresh Cap
31
When is a Topic Right for Nudge?
The goal is BEHAVIORAL CHANGE
The business question is STRATEGIC
Rational approaches have PROVEN LIMITS
The desired behavior is GOOD FOR THE CONSUMER (A Win-Win situation)
32
“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”
Paul Polman Unilever Global CEO
“Nudging for Good”
33
The Lifebuoy Hands Campaign in India
34
Nivea’s Approach to Promoting Sun Care Compliance…
35
Nudge is a Complement to More Traditional Marketing.
SELLING EDUCATING ENCOURAGING
RATIONAL PERSUASION
NUDGE
Information
Feature/Benefit
Reason-to-Believe
Situational drivers
System 1 goals
Social influences
Choice architecture
36
Smarties Packaging Innovation
Encouraging Mindful Snacking Through Portion Control
37
The NudgeLab Process
A Proven & Proprietary 4-Step Nudge Methodology, Which Has Won Several ESOMAR Awards.
38
Step #1: Uncovering “Triggers” & “Micro-Barriers”
Uncovering the Habits That Drive (or Impede) The Desired Behavior
39
Uncovering “Micro-Barriers” for Packed Salad
Industrial Image
(not fresh)
=
Poor On-Shelf Appearance
A Bad Smell when Opening
40
An Immersive Workshop, with Ideation Driven By Behavioral Science Principles & Learnings
(With Client teams, Nudge unit experts, Sector experts, Consumers, Creative People, Designers, etc.)
Activating “Levers of Influence” to Develop 100+ Potential Nudges
Step #2: NudgeLab Workshop
41
“Framing” Packed Salad as a Natural Product
TOUCHPOINT DRIVER OF INFLUENCE BEHAVIORAL INSIGHT
Poor appearance
on shelf
42
Step #3: Pre-Selection Workshop
To Optimize Nudges, Gauge Feasibility and Rank the Best Ideas
to Test or Apply
43
Step #4: Testing, Refining & Tracking Impact
Leveraging ShopperLabs to Refine and Pre-Test “In-Store” Nudges
44
PRS IN VIVO Nudge Clinics
A Workshop with PRS IN VIVO Nudge Specialists, Cross-Functional Client Teams & Creative Consumers
• Review of Key Challenges at FMOT
◦ Behavioral Economics Framework
• Brainstorming Sessions Facilitated by PRS IN VIVO Qualitative Professionals
• Co-Creation of Nudge Concepts
Identifying Opportunities to “Nudge” Shoppers
45
How Can We “Nudge” More Shoppers Down Center Aisles?
46
Some Other “Hot Topics” at PRS IN VIVO
Optimizing Packaging for Online Shopping
Gauging Emotion in Pack & Shopper Research
Thinking from the “Outside-In” for NPD Success
Making Packaging & POS Work Together
Designing for the System 1 Shopper
Connecting with Hispanic Shoppers
47 www.prs-invivo.com
And a Final Nudge from Me…
Most people think of at least 3 potential Nudge applications after hearing this presentation!
And they contact me to discuss them and receive this book!
Scott Young Global CEO
T: 201.720.2701 [email protected]