Decoded: The Science Behind Why We Buy

Screen Shot 2013-05-22 at 17.10.05If you are interested in understanding the science behind why we buy (which you should be), then I recommend "Decoded" by Phil Barden. There are lots of books on this topic, but Decoded is the first one written for marketers. Its packed with fascinating facts, but also practical recommendations that will force you to re-think your marketing strategy.

Here are a few of my personal highlights from the book.

Flying on auto-pilot 

 We have two systems that we use for decision making:

– Autopilot (also called System 1): acts quickly and effortlessly using intuition

– Pilot (also called System 2): thinking that is slow and requires effort

The autopilot processes every single bit of information from all our five senses and has huge processing power. In contrast, the poor old pilot has a processing capacity 0.0004% the size of the autopilot.

In the same way most of a long-haul flight is flown on auto-pilot, we fly through most of our daily lives the same way. Only when absolutely neeeded do we engage the pilot.

This is how we can choose 30 items from the 30,000 in a supermarket in only 30 minutes, as I posted on here.

And this is why we spend bugger all time looking at marketing communication, as Phil's data shows:

Magazine advert: 1.7 seconds

Poster: 1.5 seconds

Banner advert: 2.0 seconds

Mailing (1st check): 2.0 seconds

This learning reinforces the need for simple, impactful and distinctive communication.

Action point: most marketing is way to complex to be processed easily by the autopilot. Does your latest poster or magazine ad pass the 2 second test?

Using shortcuts

The autopilot allows us to act without really thinking. And it does this using shortcuts. For example:

Price: pricing is one of the most powerful signifiers of brand positioning. For example, when given two glasses of wine, both with the same wine but one at $80 and one at $10, people thought the more expensive wine tasted much better. 

Social proof (I'll do what most people do): telling hotel guests that most people re-used their towels increased this behaviour

Product format: Product formats speak louder than words to communicate a positioning. For example, Unilever used of granules not powder for instant soup to suggest higher quality, as this format reminded people of the granules in premium coffees like Nescafe Gold Blend.

Notice in these examples that there was no overt, explicit message. Rather, cues were used to suggest quality or ethical behaviour to the autopilot.

Action point: are you using pricing, formats and social proof to cue the right brand message to the autopilot, or are you relying too much on explicit messaging

Context counts

Phil shows how context is key to our decision making. We don't view brands or products or services in isolation, but rather compared to other things. Some of the most fascinating examples in the book are about pricing. For example, The Economist magazine two tested different subscription price models. 

Version 1                            

Web only        $59                

Print only        $125              

Web & Print    $125  

Version 2   

Web only        $59

Web & Print    $125

Any guess on what people bought in each case?

In version 1, 84% went for Web & Print and 16% for Web only. In version 2, only 32% of people chose Web & Print. The print only offer acted as an "anchor" which the autopilot used to figure out value for money. And in doing so it significantly increased the total subscription revenue.

In another example, a catalogue company found more people bought a product when shown as reduced from $48 to $40 than they did when it was priced at $39. This is another example of anchoring, with the higher price giving an anchor against which to compare the sale price.

Action point: how can you use anchoring in your pricing strategy to increase sales of premium priced products?

In conclusion, Decoded is a real mind opener, with a strong scientific foundation and loads of pratical marketing suggestions. Highly recommended.