Four key ideas from Decoded: The Science Behind Why We Buy, by Phil Barden (a Lazy Book Club summary)

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In our latest Lazy Book Club, we had Phil Barden talk about his fantastic book Decoded: The Science Behind Why We Buy. In what ended up being an almost two-hour long conversation, Phil shared the story behind the book; his role as MD of consultancy Decode and some of the most significant decision-making bits of knowledge we could use in our daily job as strategists.

Here are four key ideas we discussed.

 

1. Brand equity as framing

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Looking at the above image, is the inner square on the right darker than the one on the left? At first you’d think so, but if you remove the outer square you realise they’re the same colour. In behavioural science, this is called framing, and it has important implications for our work with brands. As Phil explains:

“Framing explains how brands influence purchase decisions: brands operate as the background, framing the perception and, with it, the experience of the products.” – Phil Barden, Decoded

When we talk about ‘brand equity’, essentially we’re discussing the best way to frame products and services. The more distinctive the framing, the more equity you can build (i.e. the stronger the brand) and the more people can justify spending more money on that brand. Simply put, “brand equity is the amount of money we are prepared to pay over and above the objective value”.

 

2. The difference between gain and non-loss

When framing products and services, a lot of advertising focuses on what that product or service can add to customers’ lives. But that’s not the only way you can do it. In fact, Phil argues, in some categories, it’s more effective to frame a benefit as a non-loss. How does that work?

“In the cosmetics category, where the goal is to change and achieve something, a gain focus makes sense, such as ‘get that summer beach look with Bronze Goddess from Estée Lauder’. Non-loss is important in risky environments. Anxiety caused by the recent financial crises and the risk of inflation eroding savings, for example, is used by estate agents to urge people to invest in property in order not to lose their money.” – Phil Barden, Decoded

Phil defines these as goals, and they’re crucial to how people decide whether to buy something or not. Sometimes the goal for buying a product or service is to gain something (e.g. status), sometimes it’s to avoid losing something (e.g. money). But when writing strategies, we can and should go deeper. Phil’s team has summarised the six fundamental motivational drivers as to why people choose something, and that helps define the role of a product, service or brand:

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Essentially, gain goals include excitement, adventure, and autonomy, while non-loss goals include enjoyment, security and discipline. It’s a pretty useful framework to start understanding what our ambition is with a positioning statement, or when developing campaign strategy. A few of us have started using this to guide our initial strategic thinking, and it helps loads!


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3. How frames of reference determine relative value

Let’s go back to framing. On the one hand, it’s crucial to help define the role of a brand, product or service in the marketplace. On the other hand, it can be a powerful tool to reframe who we’re competing against and helping determine the relative value (read: what people are willing to pay) of a product.

People choose according to specific frames of reference, so what our product sits next to (mentally but also at shelf) can help determine what people think it’s worth. Of course, none of this is explicit, which is why if you ask someone consciously if they’d buy a brand over another because of its cues, most people would say they’re not affected by that (or by advertising). But on an implicit level, research proves that’s exactly what determines our choices.

A fantastic example from the book is Nespresso, who helped reframe how people value coffee by moving the frame from jars to individual capsules. If you add up the cost of a single Nespresso capsule in jar terms, it feels prohibitively expensive. But if you reframe it as an individual shot of perfectly roasted coffee that is still cheaper than Starbucks, it’s a much easier choice. Why is this effective? Because we rarely make choices in isolation.

“We have no absolute idea how much we value any object, service or experience, even with excellent information. All we have is a comparison between similar things.” – Phil Barden, Decoded

 

4. Perception creates reality

Classic economics positions people as rational optimisers, that is, if we have all the available information about something, we’ll make an optimal decision about it. Decision-making research has long debunked this as a myth and proved that, in fact, we’re intuitively-led creatures who are pretty good at post-rationalising our decisions after they have been made subconsciously.

Think about how scarcity makes something feel more rare (and expensive), or how when everyone is into something we feel a bit of FOMO. These are just two examples of how we’re hugely biased in how we make decisions. Another example from the book is how a product’s perception as ‘unhealthy’ increased its taste ratings before, during and after consumption (because to our brains, ‘unhealthy’ = ‘tasty’). Our perceptions are our reality.

As a final note, none of this means that framing and perceptions are the answer to crap products. But going beyond the explicit benefits of a category (i.e. why people choose to buy something like a car), these implicit cues certainly act as a value-add that helps build long-term profitability.

“Branding, pricing and other marketing activities that can create an expectation about how good an experience should be biased not only the perception of the consumption experience but also the processes in the brain with which this is correlated. For marketing management, this implies that a certain level of product quality is important to ensure satisfied customers, but beyond that, the expectation that a brand is able to trigger might be equally important.” – Phil Barden, Decoded

 

There’s plenty more where this came from, and although Lazy Book Club is all about us providing you a quick summary of books we love, we definitely urge you to check out Decoded: The Science Behind Why We Buy. As a book authored by an ex-client who works with a team of PhDs in decision-making science, you get the best of both worlds and much more informed strategies. And hey, maybe you can get a few copies for your agency and clients as well!


Want to come to the next Lazy Book Club? All you need to do is become a member by adding your email below. It’s that easy. And free.