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FEATURE1 February 2010

Thoughts into action

Market researchers like to believe that they have a good understanding of what makes people tick. But are we keeping on top of the latest thinking about human behaviour and how it can be influenced?

Market research is often defined as the study of what people think. In many cases, though, what people think is only a surrogate for what they do. The real point of research is to find out how people behave and work out why, generally with a view to predicting or influencing how they will behave.

Unfortunately human behaviour is fiendishly difficult to understand. We have tended to fall back on the assumption that people are rational and act in their best interests, which seems sensible enough, but is untrue. As Richard Thaler and Cass Sunstein put it in their 2008 book Nudge, classical economics invented the notion of ‘Homo economicus’, who “can think like Albert Einstein, store as much memory as IBM’s Big Blue, and exercise the willpower of Mahatma Gandhi”. Such approaches have proved to be a convenient but limite model for helping economists, politicians or marketers to get their heads around the mysteries and contradictions of how we really act.

“Just because we’re not rational doesn’t mean we can’t be understood, and in the last few years there are signs of a new confidence in the study of human behaviour and persuasion”

But just because we’re not ‘rational’ doesn’t mean we can’t be understood, and in the last few years there are signs of a new confidence in the study of human behaviour and persuasion. Where we used to talk about ‘the art of persuasion’, we are beginning to talk about ‘the science of persuasion’. This is based largely on the field of behavioural economics, which seeks to factor the vagaries of human behaviour into economic models whose basic assumptions turned out to be flawed.

A lot of the ideas currently being discussed have been around for decades, but are newly fashionable thanks in part to popular books with catchy titles, like Nudge and Predictably Irrational. Nudge, with its focus on persuasion, is especially relevant to the practice of marketing and research. Thaler and Sunstein describe how people make poor decisions because they are hugely influenced by the way choices are ‘framed’. They offer surprising examples of how much difference can be made by giving people a ‘nudge’ towards the best choice – for them, for you or for society.

For instance, changing the consent requirement for organ donation after death from an opt-in to an opt-out led to a rise in donations that no public information campaign could have hoped for, thanks simply to a bias toward the status quo. Introducing pension plans that only start to deduct money from a salary when it rises (so the saver experiences no fall in income, just a more modest raise) has helped get young people to increase their contributions - when telling them that it’s good for them has repeatedly failed. Placing an artificial fly in a urinal improves men’s aim and makes cleaners’ lives a lot easier.

This new science of persuasion has attracted the attention of the Obama administration in the US and the Conservative Party in the UK. The idea that social challenges can be addressed so cheaply and effectively through what the authors call ‘choice architecture’ has gained traction thanks to the economic crisis, the increasingly elusive nature of the consumer, and the rise of problems such as climate change and obesity the solutions to which lie in how we all behave. The RSA – the UK charity that seeks to improve society through the arts and sciences – is pinning its hopes on research based on behavioural science to help narrow “the gap between the world we say we want and the world that actually exists due to our actions”.

In the world of market research, FreshMinds Research MD Alistair Leathwood said he has seen the nudge idea catching on in the public sector: “I think what’s happened in the last year and a half or so is that the public sector is attempting to catch up with the private sector in a lot of ways,” he said. “NHS trusts are finding they are thrust into a competitive environment with independent treatment providers, and the problem is they’ve got a whole bunch of disadvantages and increasingly they haven’t got any money. So they’re looking for some wonderful point of leverage where they can get big results for very small amounts of money, and that’s why the concept of the ‘nudge’ is very appealing, because it looks like the magic answer to the problem.”

The Department of Health’s anti-obesity campaign Change4Life is one major initiative informed by theories of behaviour and how it can be changed. It aims to reframe the issue of obesity to make it relevant to people, to focus on happiness rather than hectoring, and to provide ongoing support to allow people to make positive changes. It’s too soon to judge the campaign’s impact, but the Government says early results suggest behaviour “is being influenced”.

Research behind Change4Life was handled by the Central Office of Information, the Government’s marketing arm. As the buzz around behavioural science grows, the COI has published a document outlining behavioural change theories and setting out a five-step process for applying them to communications. Ad agency body IPA also published a paper last year on behavioural economics, asking if the area was “red-hot or red herring”, and both organisations are hoping to trigger further discussion on the topic.

Of course, the COI has been concerned with changing behaviour for as long as it has existed, but this is the first stab at developing a consistent, organisation-wide approach to the issue. Research director Fiona Wood says the growing need to demonstrate ROI means that the public and private sectors are “looking very closely at these theories”.

“I have a naively optimistic view that behavioural economics plays very well with the finance director and the CEO, in a way that the language of market research doesn’t”

IPA president Rory Sutherland

About time too, says Rory Sutherland, president of the IPA and vice chairman of Ogilvy Group UK. “Anybody who’s worked for any length of time in marketing knows that the model of persuasion and behavioural change that we’ve adopted as a kind of flag of convenience is deeply flawed,” he told Research. Sutherland sees the fashion in business for behavioural economics as a welcome reaction against a trend towards “dangerously dehumanised” business metrics. It’s a backlash that conventional market research failed to bring about but now has an opportunity to exploit, he believes.

“The extent to which [market research] is cited in boardrooms is dismally slight over the last few years,” says Sutherland – a situation that he puts down to MR’s reliance on proxy measures that “just feel wrong”.

“I have a naively optimistic view that behavioural economics plays very well with the finance director and the CEO, in a way that the language of market research doesn’t,” Sutherland goes on. “And therefore I think it’s a way for the research industry and the marketing community in general to regain significant influence within the organisation, which they’ve lost over the last 15 years, partly to the shareholder value movement [which favours] reductionist spreadsheet models of what’s going on. It seems obvious that a deeper understanding of a consumer’s real needs – not only what they value but when and how they value it – is absolutely essential to the survival of businesses.”

Whether MR will be able to grasp the opportunity presented by the rise of behavioural theories is unclear. Meanwhile Sutherland is calling for the advertising business to “redefine itself around human understanding”, with ad agencies playing a more consultative role. “We can’t afford to be anywhere other than at the forefront of this thinking,” he says. The same, surely, goes for MR.

But the IPA’s behavioural economics think tank includes no members from research agencies (the closest thing being Les Binet, who runs ad agency DDB’s in-house analytics function in Europe). As for the COI, it is currently finalising its approved list of experts on behaviour change, and it has yet to be seen what sort of expertise will make the cut. Fiona Wood said: “I’m a researcher, so I would say, wouldn’t I, that I have every faith that the research industry can deliver this. I think there’s a lot of work to be done within the industry to make sure that we’re working together to deliver the most effective methodologies and the most effective practices.”

Wood sees big implications for how research is conducted, with practitioners increasingly needing to be open to experimentation and small-scale pilot studies to test and refine hypotheses. “I think there will be an increasing emphasis on what I call ‘moment of truth’ methodologies, particularly things like ethnography which don’t really on people just being able to report rationally why they did something,” she said. “Tracking is going to have to become very much more fleet of foot, to make sure that what’s being measured is exactly what the communications strategy has been designed to deliver, and segmentation models are also going to have to get much more smart. One of the things we’ve found out is that very often behaviour change models are designed with a specific behaviour and context in mind, so they kind of assume an everyman approach. What they don’t often do is look at how that model differs for different groups of people.”

But the implications of behavioural theory don’t just affect research via changes in marketing objectives – the ideas are directly relevant to research methodology - not to mention recruitment. Les Binet of DDB told Research: “What’s coming out of this newer view of science is that, first of all, people by and large are not nearly as rational as they’d like to believe they are; secondly they don’t understand their own behaviour very well; and thirdly they don’t behave in an individualist way – a lot of behaviour emerges from group behaviour. So any market research technique which is based on asking individuals how they behave about something might be a bit flawed.

“I think we do need some new techniques and maybe a slightly different emphasis. People don’t understand and can’t necessarily articulate the reasons why they buy things, and that takes you in one of two directions: you concentrate more on studying people’s behaviour – on what they do rather than what they say they do - or you try to devise techniques that reveal the things people are not conscious of or willing to admit.”

By now, most researchers are probably aware of the limitations that Binet describes, but they tend to see them as facts of life. Mark Earls, who argues in his book Herd that the defining characteristic of human behaviour is the way we copy those around us, warns that the research industry’s failure to include these ideas into its standard practices could turn out to be harmful. At last summer’s Esomar Congress Earls presented a paper together with BrainJuicer’s John Kearon on moving from ‘me’ to ‘we’ research – outlining some experiments that harness the so-called ‘wisdom of crowds’ and sidestep the problems of people misreporting their own behaviour, by asking them what they notice, believe and predict about others.

BrainJuicer already puts these ideas into practice commercially with its Predictive Markets product, but there’s not much sign of others in the MR industry embracing such unconventional approaches. BrainJuicer’s Orlando Wood said no serious ‘me toos’ have emerged yet, despite apparent interest in the ideas from other research firms.

There are signs, however, that the MR industry is shifting its focus towards qualitative techniques such as ethnography, which both Fiona Wood and Les Binet pick out as one of the areas where behavioural science can be usefully applied. When Researchasked some industry voices at the start of the year for their predictions for market research in 2010, the most prominent theme that came through was the rise of qual.

And if these lessons from behavioural science can be successfully taken on board, the potential to improve the profile of research is encouraging. Part of the popular appeal of behavioural economics has been that its ideas are intuitive – they may be surprising, but they make immediate sense to us. ‘Intuitive’ should not be read as a synonym for ‘true’, but if behavioural economics has gained traction in the minds of the public and business leaders because of a ring of truth that traditional marketing metrics have lacked, then embracing it could make 2010 the year that research begins to fulfil a potential it never knew it had.