One of the best sessions at the Goafest seminar was by Robin Wight. He spoke about how human beings are an emotional species masquerading as a rational one. He took us into a journey into neuroscience to arrive at this conclusion. Sir John Hegarty gently mocked him later, saying, he didn’t need neuroscience to tell him that human beings were emotional. ?
Mr Wight also spoke about the new science of Behavioral Economics, made popular through books like “Predictably Irrational”. This book should be required reading for all marketing and advertising people. Indeed, Partha Sinha of BBH told me after the session, that he had told his people not to come to work if they hadn’t read the book.
Behavioral Economics is the branch of economics that drops three major assumptions that marketers and economists have made over the years. The first is that human beings are rational. The second that they are always selfish. And the third that they have incredibly strong will power to pursue their rational self interest.
Once you recognize that human beings are irrational creatures with weak wills who sometimes act for altruistic reasons, you then start to get new consumer insights that you didn’t notice when you thought consumers were rational.
One tenet is that people hate losing much more than they like winning. So it is important for marketers to create no-loss situations for their customers.
Before you buy a product, you worry about what would happen if you didn’t like it after you had bought it. Or if the product didn’t work to your satisfaction. This is normal. If you are then told that you can return the product if you are not fully satisfied, then you have no-loss situation and this makes it easier to buy. Once you have bought the product, it becomes yours and, irrationally, you fall in love with it and refuse to give it back. That is why people rarely return products that they have bought with a money back guarantee or on a trial basis.
This insight has been used brilliantly in this commercial for Tanishq. Watch it, enjoy it and let this be your first lesson in Behavioral Economics. Now you can go out and buy Predictably Irrational.
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