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Harish Bhat | Updated on May 03, 2021

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How ‘misbehaviour’ is relevant to effective marketing

Last month, I was invited to deliver a keynote address at a conference organised by the NSE Centre for Behavioural Science, which was recently established at my alma mater Indian Institute of Management, Ahmedabad. My thoughts turned immediately to my first formal brush with behavioural economics — the book Misbehaving, by the Nobel laureate Richard Thaler.

Thaler makes the powerful point that human beings are not rational in how they think and act — in fact, viewed through the lens of traditional economic theories, they misbehave. He narrates an interesting story of a dinner party he once hosted. As his guests waited for the main meal, he served them cashew nuts with cocktails. The cashews disappeared within minutes. Worried that his guests would fill up on these salty snacks, Thaler returned them to the kitchen. His guests thanked him for taking away the cashews.

Thaler was surprised. Why were his guests thanking him for depriving them? This went totally against the principles of rational economics, which says more choices are better than fewer choices.

This episode made him see that people don’t always make the choices that are best for themselves. If there are cashews in front of them, they often misbehave by overeating the nuts, leaving little space for a delicious dinner. But you can help people make better decisions, by intervening to guide them in a certain direction (in this case, taking the cashews away).

From that episode evolved an understanding of many biases and tendencies, and, consequently, the heuristics or rules of thumb that lead people to often behave in an irrational manner. Here are a few examples of “misbehaviour” that are relevant to marketers:

• If a product is sold at a fantastic discount, many consumers will buy it even if they do not need it.

• Consumers tend to accept views that confirm their own deeply held beliefs. Therefore, Indian consumers, who traditionally believe in the health benefits of local herbs and spices such as tulsi and turmeric, typically prefer food products containing these rather than foreign ones such as ginseng, which may be equally efficacious. Behavioural economics calls this the “confirmation bias”.

• People place a disproportionately high value on products which they help partially create, even though the end-product may resemble something they can buy off the shelf. This bias is known as “IKEA effect”, since furniture sold by the company require buyers to assemble them.

Experienced marketers usually have an intuitive understanding of such behavioural tenets. The important question is: Can they use them to help people address some of the biggest problems of today?

For instance, how can marketers persuade more people to overcome their vaccine hesitancy? Can we nudge the fence-sitters to vaccinate themselves against Covid-19 by leveraging the confirmation bias — for example, by showcasing the superlative success of the polio vaccination programme, which most Indians now deeply believe in? Or can we use the ‘endowment effect and loss aversion’ (another behavioural economics concept) by painting a compelling picture of what our communities, and each of us, stand to lose if we do not vaccinate ourselves ?

Similarly, can marketers use behavioural science to help consumers make the right choices to counter the biggest threat our planet faces — climate change? Can utility companies provide real-time energy use monitors in our homes, which blink red when we overuse, thereby delivering a powerful “recency effect”, which, in turn, will nudge us to use less? Can we use the power of age-old Indian cultural and social norms to help us eat more sustainably — locally sourced, healthier, rather than packaged or junk food which consumes a lot more of the world’s resources?

Equally important, how can behavioural economics help us live better in a digital-rich, attention-poor world? Can the power of biases and heuristics be used to counter loneliness, addiction and thought bubbles, which are fast becoming the markers of our age ?

I concluded my keynote address with Thaler’s number one mantra for behavioural change: “Make it easy”. If you want to get people to do something, make it easy for them.

(With inputs from Kavita Mahto, Tata Sons)

Harish Bhat

 

Harish Bhat is Brand Custodian, Tata Sons. These are his personal views

Published on May 02, 2021

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