Unraveling the Mysteries of Decision-Making | Dr. Sanjay Arora | TEDxDFBEDU

Summary

This script explores the myth of human rationality through various consumer behavior studies. It delves into the influence of subconscious factors on decision-making, using examples like the Pillsbury cake mix, McDonald's branding impact on children, and the 'new Coke' debacle. Highlighting the power of emotions and environment in shaping choices, the talk underscores that 95% of our decisions are subconscious, challenging the notion of purely rational human actions.

Takeaways

• 🧑‍🔬 The concept of human beings being rational is often challenged by various studies and real-world examples, suggesting that many decisions are influenced by the subconscious mind.
• 🎂 The 'Ika effect' from the 1930s illustrates how consumer behavior can be irrational, with housewives preferring a cake mix that required them to add an egg, making them feel more involved and nurturing.
• 🍟 A Stanford study shows that young children's taste preferences can be significantly influenced by branding, as they preferred fries from McDonald's packaging even when the fries were identical.
• 🥤 The Pepsi Challenge demonstrates the power of branding over taste, with consumers often preferring the taste of Pepsi in blind tests but remaining loyal to Coca-Cola due to emotional attachment.
• 🔄 The failure of 'New Coke' teaches us that consumer preferences can be strongly tied to emotional connections and brand loyalty, rather than just the product's taste.
• 🧠 Neuroscience research indicates that even simple decisions are not purely rational but are influenced by the emotional part of the brain, as shown by patients who had parts of their brain removed.
• 🎵 Environmental factors like music and fragrances can subconsciously influence consumer behavior, affecting purchasing decisions without the consumer's conscious awareness.
• 🛍️ The power of subconscious influence is evident in marketing strategies that use environmental cues and emotional triggers to manipulate consumer behavior.
• 💡 The '95% subconscious decision-making' theory by Gerald Zaltman suggests that most of our choices are made by our subconscious mind, which is a key concept in neuromarketing.
• 🤔 Kahneman's 'Thinking Fast and Slow' highlights the dual-process theory of the brain, distinguishing between System 1 (fast, intuitive) and System 2 (slow, rational), with the former being more dominant.
• 🎮 The 'color game' example shows how our subconscious mind can conflict with our conscious processing, leading to mistakes in situations where quick decisions are needed.

Q & A

What is the Ika effect mentioned in the script?

The Ika effect refers to a historical marketing phenomenon in the 1930s where women preferred a cake mix that required them to add eggs, making them feel more involved in the baking process, rather than a mix that only required water.

Why did Pillsbury initially fail with their cake mix product?

Pillsbury's cake mix initially failed because it removed the women's role from the baking process, making them feel less involved and as if they were just buying a cake from the market, which contradicted the nurturing culture of the family.

What was the outcome of the blind taste test between Coca-Cola and Pepsi?

In blind taste tests, more people preferred the taste of Pepsi over Coca-Cola. However, when the test was conducted with labeled products, the preference shifted towards Coca-Cola due to emotional attachment and brand recognition.

Why did Coca-Cola's new formula fail despite positive market research?

Coca-Cola's new formula failed because it did not account for the emotional attachment consumers had to the original taste of Coca-Cola. The reformulation led to a strong consumer backlash and the company had to revert to the old formula.

What role does the subconscious play in decision-making according to the script?

According to the script, the subconscious plays a significant role in decision-making, with 95% of purchase decisions being controlled by it. It influences our choices even when we believe we are making rational decisions.

What is the concept of 'System 1' and 'System 2' as described in the script?

System 1 and System 2 are two modes of thinking described in the script. System 1 operates on shortcuts and is associated with the reptilian brain, making quick, subconscious decisions. System 2 is the rational brain that requires more energy and thought for decision-making.

How did the script illustrate the conflict between System 1 and System 2?

The script used a color-word conflict game where participants were asked to quickly name the color of the words while ignoring the actual word. This demonstrated how System 1 (color recognition) conflicts with System 2 (reading the word), slowing down the response.

What was the impact of playing different music in a UK wine store as mentioned in the script?

Playing German music in the store led to German wines outsold French wines 3 to 1, and vice versa when French music was played. This showed that subconscious influences, such as background music, can affect purchasing behavior.

What was the effect of introducing fragrance in a Nike store as described in the script?

Introducing fragrance in the Nike store increased the propensity of purchase by about 60% and customers were willing to pay a 10-15% premium for the same pair of shoes. This indicates the powerful subconscious influence of sensory cues like fragrance.

What did Google discover about user behavior with their '50 Shades of Blue' experiment?

Google found that a particular shade of blue, slightly on the purplish side, resulted in an 8% increase in ad clicks, leading to an additional $200 million in revenue. This demonstrated the subconscious impact of minute visual differences on user behavior.

What was the simple trick used in Amsterdam's airport urinals and its effect?

A fly was painted near the outlet of the urinals in Amsterdam's airport. This simple trick led to an 86% reduction in spillage and an 8% reduction in cleaning costs, showing the power of subconscious targeting.