BEHAVIORAL ECONOMICS

Behavioral Economics (BE) studies the decision making process, how we evaluate gain and loss and why we don’t always act rationally. In business, BE means analysing consumers’ choices, decision paths and their conditioning. They are analysed from the point of view of cognitive biases and heuristics – simplified methods of reasoning – which people use while buying car insurance, choosing shampoo brand or spontaneously deciding to treat themselves with a sweet. BE is about behaviors, not attitudes. What often happens, is that what people think, doesn’t always – despite their honest efforts – translate to behavior. And in the end it’s the actions that matter in business. Analysis of observed behaviors allows mapping of the desired behavior and designing series of mechanisms (nudges) that trigger it.

WHY?

In brief, behavioral economics and tools based on it, help analyse and influence behaviors.

BE-based tools allow for:

  • analysis and understanding of consumer decision process
  • persuasive communication of benefits, triggering desired behavior
  • elimination of psychological barriers in purchase and usage of triggers
  • construction, testing and implementation of decision triggering mechanisms (nudges)
  • conscious design of choice architecture

HOW DOES IT HAPPEN?

1. BE Lens Review

BE Lens Review is a trigger verification process, which we apply to clients in context of the behavioral goal that determines our actions. BE Lens Review might apply to documents (e.g. mailing, leaflets, websites, research data) and process/procedure (e.g. sales in CSP, customer service in a call center, SMS campaign, promotion mechanism) alike. Depending on the goal, the base for BE Lens Review is written or graphic material (subjected to analysis, optionally with eye-tracking) or observation data collected according to an adequate protocol.

2. BE Ideation

Ideation workshop, during which, occurrences described by BE are used to generate new solutions. Participants of the workshop, equipped with special cards, containing description of a nudge and examples of implementation in various industries, work in small teams, creating their own ideas. The resulting solutions are then verified and optimized, we offer support with testing and implementation as well.

3. BE Problem Solution

Multi-step process of research, analysis and shaping desired behaviors – from behavioral hypothesis to solution implementation. BE Problem Solution process begins with the analysis of data on specific behavior – existing or collected according to a special behavioral protocol. Next step is specifying the behavioral goal, or in other words, desired behavior (e.g. we want the clients to increase their shopping frequency from A to B, start consuming our product in a new, different situation etc.). While preparing the behavioral path – going from current behavior to a desired one – we look into barriers and triggers (1) through the lenses of the heuristics, which shape particular behaviors. We apply them to barriers and triggers, trying to find mechanisms of possible behavioral change. During the next step, we design nudges based on heuristics (2) – particular ways to gently influence the desired change. The most promising nudges are tested, optimized (3) and then implemented (4).


BE Problem Solution schema
Useful tools: BE Cards

WHO?

Agata Romaniuk, PhD, BE consultant.

Senior brand consultant and strategy planner, experienced in various categories and industries ranging from financial services to FMCG across EMEA and in Australia.

Over the past 10 years Agata worked for McCann Worldwide as Human Insights Director, leading projects for global brands such as Coca-Cola and Sabmiller. She then joined brand consultancy CPC until she moved on to the Sydney based The Behavioral Architects. She now runs her own boutique agency Blink. Spark a Change, inspiring clients to embrace new approaches and tools springing form Behavioral Economics in marketing and beyond.


Order a dedicated BE workshop led by me. The organiser of my workshops is Polish Market and Opinion Research Society. Contact us.