Hi there. I'm Matt. Don't hate the player. Hate the game.1

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Mar 9, 2010 | Comments

My last post praised the glory of behavioral economics. I discussed how marketers can use behavioral economics to influence behavior. One example was a behavioral economist who manipulated the elements of a bank letter, like the interest rate, copy, and imagery. He discovered that the photo played a larger role than the interest rate in converting loan letters.

And it got me thinking: what about the bank itself? What if the same letter tested the brand, like Citibank, Bank of America, Capital One? What would we learn?

In short, what if behavioral economists took a critical eye to brands?

It’s a question of strategy vs. tactics. Behavioral economics, sadly, favors the latter. Time to throw down some classic Sun Tzu:

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat” [via Mike Hudack].

When we apply behavioral economics, in its current state, to marketing, it’s overwhelmingly tactical. Everything is framed on our decisions in the moment, how to exploit our irrationality by leveraging a host of cognitive biases.

Could behavioral economics advise on the strategic side of creating and managing brands? The current frameworks for brand strategy (brand equity analysis, positioning) aren’t scientific enough. The core tools are based on a 50 year old methodology developed by P&G. I’d welcome any new research, especially with the degree of academic rigor that I’d expect from behavioral economists.

Imagine this: research on how to create a brand identity that drives loyalty and passionate fans. Or why are we emotionally connected to some brands.

Just as a prospect can be influenced by a photo on a loan letter, so too can the emotional qualities of a letter’s brand affect our behavior. Such research isn’t accomplished by a marketer-led analysis with focus groups–I’m talking hard-core fMRI.

Something to think about: Can there be a more disciplined approach to brand building, where we determine the right emotional qualities via a scientific process? Would this free us from sweating over the tactical stuff?

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  • Jamie Gordon

    The key is understanding human values (for a brand - that means identifying who their truly most valuable customer is and looking at those people as a collective) - those are what create the behaviors that create the culture within which our choice frameworks operate. Behavioral economics only focuses on the head / heart battle without seeking to context to the deeper context of belief that guides those decisions. In my opinion. ;)

  • As a behavioural economist I see what you are saying and agree that much of what behavioural economics offers appears to be tactical. That isn't the whole story though.What behavioural economics does is give much deeper understanding of buyer behaviour. Ultimately brands should be about influencing buyer behaviour. Behavioural research is uncovering some fascinating details about buyer behaviour. You should have a look at the stuff coming out of Ehrenberg Bass institute in Australia. Have you heard about the concept of double-jeopardy? Check it out and you will see that this approach is answering questions like: How do brands actually grow? How valuable is differentiation? What purpose does a focus on brand loyalty have?
    With these sorts of insights it starts to build up to a very strategic tool. Not a replacement for creativity and passion but a way to harness it.

  • Do you have examples of the things that you listed, beyond lab studies? I don't discount the insights that or concepts, but it's tough to understand its value until I see it in practice.

  • Hi Matt, I specifically avoided referring to things that are 'lab'-based. I guess to an extent it all hinges on what one's definition of behavioral economics is. In my (granted broad) definition it is looking at how changes in situation/context lead to changes in behavior, or how different behavioral patterns can be seen in differing contexts/scenarios. The work I mentioned is available for perusal at http://www.marketingscience... . It is a body of research based on actual purchases in the real world. Not a lab result in sight. Best. S

  • Thanks Simon--I'll check out some of the articles from the Ehrenberg Bass Institute. You're right--most behavioral economics insights will not be lab-based--I'm just looking for some actionable examples of brands actually doing stuff, rather than studies/experiments from academics

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