The children came to a perfume shop. In the show window was a large jar of freckle salve, and beside the jar was a sign, which read: DO YOU SUFFER FROM FRECKLES?
“Well”, said Pippi thoughtfully, “a civil question deserves a civil answer. Let’s go in.”
An elderly lady stood back of the counter. Pippi went right up to her. “No!” she said decidedly.
What is it you want?” asked the lady.
No,” said Pippi once more.
I don’t understand what you mean,” said the lady.
No, I don’t suffer from freckles,” said Pippi.
Then the lady understood, but she took one look at Pippi and burst out, “But, my dear child, your whole face is covered with freckles!”
I know it,” said Pippi, “but I don’t suffer from them. I love them. Good morning.”
She turned to leave, but when she got to the door she looked back and cried, “But if you should happen to get in any salve that gives people more freckles, then you can send me seven or eight jars.”
― Astrid Lindgren
What is Behavioural Economics?
The fundamental behavioural economics (BE) premise is that – from an economic perspective - human decision-making is often irrational. Behavioural economists talk about our cognitive biases, our use of emotion in decision-making and the way that we are, often unconsciously, influenced by context and social forces.
Marketers and researchers have always known this, though we haven’t expressed our ideas in the same terminology as BE. Our focus has been on understanding consumer behaviour, especially its emotional side.
So, at Susan Bell Research we wondered what BE could teach us. We took some of our past projects and re-cast them in the language of BE, and adopted BE thinking and terminology in current work. And then we studied the implications.
We found that Sue’s background in psychology and semiotics and Suzanne’s in sociology were invaluable in this process.
Behaviour has centre stage
What we realised was that BE gives us a more rigorous framework to make sense of behaviour and reminds us that behaviour and the reasons for that behaviour should be the central focus of our qualitative and quantitative work.
We also realised that we needed to develop a model which helped our clients see how to apply BE to research projects.
Our model names the five most common ways that consumers behave irrationally – or as we would say ‘unexpectedly’. We call these the five ‘principles of irrationality’ that govern consumer behaviour.
Five ways to be irrational: how consumers choose
Virtually all consumer behaviour can be explained by the five principles. However, what our clients want to know of course is how these principles influence the purchase and use of specific products and services, and this varies from product to product.
‘Other people matter’ is all about how consumers are influenced by what they perceive to be the social norm. When we conducted research on a client's organisational culture, we saw this in operation. Staff behaved according to their perception of other staff members' behaviour.
We have seen in a recent project that how marketers have taken a product weakness and turned into a perceived benefit by focusing on what the consumer gains rather than what they lose – an example of the ‘no one likes to lose’ principle in action.