Unraveling the Mysteries of Decision-Making | Dr. Sanjay Arora | TEDxDFBEDU
Summary
TLDRThis 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
- ๐งโ๐ฌ 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.
- ๐ 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.
- ๐ 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.
- ๐ฅค 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.
- ๐ 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.
- ๐ง 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.
- ๐ต Environmental factors like music and fragrances can subconsciously influence consumer behavior, affecting purchasing decisions without the consumer's conscious awareness.
- ๐๏ธ The power of subconscious influence is evident in marketing strategies that use environmental cues and emotional triggers to manipulate consumer behavior.
- ๐ก 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.
- ๐ค 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.
- ๐ฎ 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.
Outlines
๐ฐ The Ika Effect and Consumer Behavior
This paragraph discusses the myth of human rationality in consumer behavior, introducing the Ika effect from the 1930s. It narrates the story of a cake mix by Betsy Crockers and the unexpected consumer response to it. Initially, a convenient cake mix that only required water was a failure, but after a market researcher suggested involving women in the baking process by adding eggs, the product became a bestseller. This illustrates the irrational nature of consumer choices, driven by the desire to feel involved and the psychological impact of participation, rather than just convenience.
๐ The Power of Branding on Taste Perception
The second paragraph delves into the influence of branding on taste perception, citing a study where children preferred McDonald's fries due to the brand's packaging. It also touches on McDonald's as the world's largest distributor of toys, highlighting the impact of early exposure to branding. The narrative then shifts to the marketing battle between Coca-Cola and Pepsi, emphasizing the emotional attachment consumers have to brands, which can override rational taste preferences. The story of New Coke's failure despite positive taste tests underscores the importance of emotional connections in consumer decisions.
๐ The Role of Emotions in Decision Making
This paragraph explores the essential role of emotions in decision-making, even for seemingly rational choices. It recounts the story of a patient who, after having a tumor removed that affected his emotional brain area, struggled with simple purchasing decisions. The narrative suggests that without emotional input, rational decisions become difficult. The paragraph also discusses the subconscious influence on consumer behavior, such as the impact of music on wine sales and fragrances on purchase propensity in stores, demonstrating the power of subconscious cues in shaping consumer choices.
๐ง Harnessing the Subconscious in Marketing
The final paragraph synthesizes the discussion on the subconscious mind's influence on consumer behavior. It references Gerald Zaltman's assertion that 95% of purchase decisions are controlled by the subconscious, challenging the belief in rational decision-making. The paragraph also touches on the concepts of 'System 1' and 'System 2' thinking from 'Thinking, Fast and Slow', illustrating how the brain's energy-efficient shortcuts can lead to irrational outcomes. It concludes with examples of neuromarketing techniques, such as Google's color shade experiment and the Amsterdam airport urinal fly, showing how subtle subconscious cues can significantly impact consumer and behavioral responses.
Mindmap
Keywords
๐กIrational Behavior
๐กBetty Crocker
๐กMarket Research
๐กNeuromarketing
๐กEmotional Attachment
๐กSubconscious
๐กSystem 1 and System 2
๐กBrand Manipulation
๐กBlind Taste Test
๐กEmotion in Decision-Making
๐กBehavioral Economics
Highlights
The Ika effect from the 1930s suggests that human beings are irrational, challenging the common belief of humans as rational beings.
Bisquick cake mix's failure in the market was due to women feeling disconnected from the baking process, highlighting the importance of emotional involvement in consumer behavior.
McDonald's branding influenced children's taste preferences, showing the power of brand perception on decision-making.
Coca-Cola's new formula failed despite taste tests due to consumers' emotional attachment to the original taste, demonstrating the role of emotions in purchasing decisions.
Neuromarketing studies reveal that subconscious factors significantly influence consumer behavior, often more than conscious reasoning.
The power of subconscious influence is evident in the impact of music on wine sales in a UK store, where German music increased sales of German wines.
Fragrances in a Nike store increased purchase propensity and willingness to pay a premium, underlining the subconscious effect of sensory stimuli on consumer behavior.
Dr. Antonio deio's patient, Ilot, lost the ability to make simple decisions after his emotional brain area was removed along with a tumor, illustrating the necessity of emotions in decision-making.
Daniel Kahneman's 'Thinking Fast and Slow' introduces the concept of System 1 (fast, subconscious) and System 2 (slow, conscious) in decision-making.
Google's experiment with 50 shades of blue for ads demonstrated the subconscious impact on user engagement and revenue generation.
The Amsterdam airport urinal fly example shows how a simple subconscious cue can lead to significant behavioral changes and cost savings.
The subconscious mind is responsible for 95% of purchase decisions, as stated by Gerald Zaltman, emphasizing the importance of neuromarketing in understanding consumer behavior.
The conflict between System 1 and System 2 during the color-word game illustrates the struggle between subconscious and conscious processing.
The subconscious mind's power is highlighted by stories of scientific breakthroughs coming from moments of non-attention, such as Archimedes' Eureka moment.
The subconscious can be harnessed for public good or manipulated for commercial gain, indicating a dual-use potential in marketing strategies.
Neurom marketing utilizes tools like eye tracking and functional magnetic resonance imaging (fMRI) to measure subconscious responses, advancing the field of consumer research.
Transcripts
you say is it a myth or we love to say
human beings are rational beings we we'
mouthed it so many times but is it the
truth tell me yes no oh I love this
audience so your very human beings are
irrational right let's let's try and see
if we can prove this hypothesis right or
wrong either way so I start with what is
called as the Ika effect in the
1930s and whatever I'm going to be
talking today is not sanay with no
research behind it whatever I'm going to
be talking about this morning has data
research from well established
institutes across the world so it's not
coming as San please don't say
understand sanj speaking it's research
that's coming to you directly so in the
1930s um in America like we have even
today in our own homes the mother is the
nurturer of the family and she believes
that she cooks well the family is taken
care of that was the same thought that
was there in America the 1930s and
making a baking a cake was a huge thing
for every family and when the housewi
could make a good cake that meant she
was caring for the family Etc and
therefore making a cake was you know a
difficult task also because you had to
start from scratch get all the
ingredients put them together put them
in the oven and wait for those one or
two hours then of those old ovens
whether that cake will rise is or not
and that was the asset test for every
mom or every Homemaker and most often
the cake would write but sometimes it
won't so um bilsbury large company there
uh with their brand called bety Crockers
they were working on something called a
cake mix there were no cake mixes before
that so they came up with a cake mix
which they researched in the marketplace
and uh you had to do nothing at all just
add the right quantity of water to it
put it in the oven at a certain temper
of a certain time and the cake would
rise period And once this was tested out
in the marketplace every housewi said
they' love to buy it right so all test
clear they would went ahead and lost in
the marketplace what happened the cake B
miss the C Mix bom Miss what did go
about research said this would be a very
huge
success now there was a guy called
ditcher then who was a market researcher
and marketer and he conducted the
research he came back to Pillsbury and
said look you got to do nothing else
just get the woman involved in the
baking of the cake process once again so
he separate the eggs have the have the
rest of the mix in one place and ask the
woman to add the eggs
again just batter it up and put it in
the oven and it do wers BSB was was
suspicious about this when they aren't
able to do the whole thing why would
they want to add eggs to it but they
tried it down and lo and behold this
time it did very well it became a
bestseller product what had happened
rationally women's women wanted a mix
which they would just simply add water
to and be successful Ed 100% guaranteed
and now the campaign said take the mix
and your eggs and your cake you've made
the best cake something of this time the
headline said you bake the best the idea
was research then later told them that
you have removed when you remove the
woman's role from baking the cake she
felt it was like any other cake you
buying from the market and she was not a
part of the nurishing culture of the
family step one step
two something St can anyone help me
please nothing's
working so I few interesting stories
about it's on the
green
yeah okay then comes McDonald's we've
all been exposed to it from since
childhood you know now there was a
research conducted at Stanford in which
children age between 3 to 5 years were
given packets of um fries okay some
fries came out of unmarked packets and
they tasted that imagine kids between 3
and 5 years of age and some will give
packets of McDonald's and the fries
coming out from there 74% kids said the
the fries coming out of the McDonald's
pack tasted far better where as this the
truth was both fries came from the same
Source what had happened Kids 3 to 5
years of age The Taste was being
manipulated by the brand on the package
that's how impressionable we are and of
course there's been there were latest Su
F against McDonald's for not
manipulating kids in fact I don't know
whether you're aware world's biggest toy
distributor isn't the toy company it's
McDonald's the world's biggest toy
company all right so since childhood
when you giving out toys as incentive
and bombarding them with that
advertising that Aroma the minds the
brains of kids are impression to believe
and I'm coming to that research in a
while where they The Taste birds are not
making a rational decision but are being
the decisions are being filtered through
certain other areas of the brain which
tell them something else so the tast is
not the point there what is in the mind
is the point there third story I I'm
sure most of the marketing F would have
heard the story cook uh in the 80s they
were been challenged by Pepsi to the
blind taste test campaign right blind
taste test campaign what P was doing was
serving up unlabeled colas Mark AB to
everyone in stores Smalls Etc and asking
them which is better and 51% 51% plus of
people would say this is better and that
turned out to be Pepsi and that was the
truth even C did its own market research
and found out that in blind test
situations Pepsi stands out a as a
better tasting drink as a better tasing
Cola
now they went back to the into the
market share was into C's market share
so what they did was they reformulated
the core and relaunched it as the new
core that's the classic version and
that's a new Cod it was launched as a
new Cod before this before the launch 2
lakh respondents were tested with the
new formulation of c 2 lak 71% said the
new C is not only better than the old C
but is far better than Pepsi who lag is
a huge number to test out in Market
search the company was very sure it was
onto a winner launch it with a lot of
fanfare huge humous budgets has no
probably you know limitations of what
they can spend huge budgets what
happened within 70 days they had to
withdraw the new C what had happened was
they were getting a few lack calls
complaining why has the old C been
withdrawn they were
getting in fact people were buying new C
and and putting it in sewers in Los
Angeles and other cities okay there was
virtually roets in the streets those who
had old Coke available that was selling
in the black market for a premium people
just refused to buy the new code why
could two lak people be wrong who were
tested and they completely agreed that
they would buy this product tastes far
better so then the real answer in fact
the co then Don said all the time and
money poured into consumer research of
new C could measure and reveal the depth
and abiding emotional attachment to the
original cook so there's something more
than reason that was happening there and
this was proved by another study which
happened in 2005 when fmis came out so
they would be given unlabeled Rings new
Co old C Pepsi so like the earlier
studies every respondent said blind test
Pepsi is better than old book now the
second time around with the on they were
labeled and told this is Coke and this
is Pepi and the results would change 74%
would say the new Coke is the old Coke
is better than the Pepsi what had
happened so the brain scans R in the
first stage in the blind test scenario
the area of the brain responsible for
detecting taste was lighting up that
means there was more blood supply there
activation of the neurons there only
that area was becoming active whereas
when the labels were put on on in
addition to that area a lot of areas
surrounding it also became active that
means this was the area responsible for
memories thinking good times Etc all
right this area was also lighting up
just the label coming on and different
areas of the brain become involved in
the decision making of human is another
study and that comes from the field of
medicine again Dr Antonio deio had a
patient called ilot now ilot developed
tumor in his for brain so surgically it
was removed OT was a typical businessman
good at everything good human being good
husband good father running his business
well had this brain tumor and cutting a
very long story short and the tumor was
removed surgically so when you remove a
tumor you have to remove a lot of area
around that so that was also removed a
long way after recovery most of his
behavior was all right perfectly all
right but when he would go to a
Superstore or and buy basic stuff like a
toothpaste breakfast Cal he would stand
there for us not knowing what to buy
simple decisions which you would do
earlier very easily not even think about
it buy a seral box put it in the C Etc
he was unable to make these kind of
decisions what was going wrong so there
was another research conducted and it
was
found because his emotional area was
also surgically removed along with the
tumor without the participation of
emotion even ration reasonable simple
decisions could not be made that tells
us that even the decisions which we
believe are purely reason based cannot
be taken without the emotional support
what involvement of the emotional brain
in it that tells us how important
emotion is in fact I have two very quick
stories to tell you one is the music
manipulation now something's gone with
the SL
formatting the whole thing is shrinking
and something is happening there just
don't pay attention to that I'm here
okay so uh in a store in UK this
experiment was conducted that store
would sell wines okay so they notice on
the days when you played German music
German wines outsold French wines 3 to
one and on days when you played French
music French wine sold outsold German wi
3 to one but the schematic part is after
that when they inquired from the buyer
whether they had heard the music paid
attention to the music they were
blissfully unaware of any music or maybe
something in the background was
happening so consciously they were not
being influenced by that music but
subconsciously it was influencing their
buying Behavior so go back to the
rep then that's not only the case
another study which was reported in the
Indian General marketing uh in a in a
typical Nik store what they did was on
Sundays they would introduce a certain
fragrance on other days they would not
introduce the fragrance in the St guess
what the results were on days when
fragrance was introduced the propensity
of purchase as reported by the audience
was about 60% higher and they were ready
to pay a 10 to 15% premium for the same
pair of Nike shoes whereas on the days
when the fragrance was not introduced
this is not the case just in intruction
now you know why malls introduce baking
fragrance through the AC events when
you're on the second or the third CL
that you start feeling hungry and rush
to the food court there a lot of such so
this the whole reason I do this talk is
for both one which I'm going to prove
again and there are many such cases
because we have only 18 minutes so I can
only outline a few you can use this for
the goodness of humanity by improving
customer experience and customer
experience is experienced by the
subconscious okay not the conscious at
times I come to that too and you can
also use these Sciences to manipulate
consumer Behavior especially children so
we have to be aware of that so what are
the learnings from this Geral zelin
Harvard Business School he says 95% of
purchase decisions are controlled by the
subconscious why we love to believe we
are rational human beings making
reasonable rational choices most of our
choices are happening below that
conscious radar we don't know you
selected your husband or wife remember
this or you going to do that soon so be
aware of your subconscious that gu will
make the reptile will make the decision
not the human being all
right and there was there's a famous
book Thinking Fast and I don't know how
many of you read it you you are
Department of Business economics you
should read this book you can't avoid it
he's a noble a and he has this um proven
hypothesis now that our brain has two
systems system one and system system two
the system one works in shortcuts it
comes from the repan brain where we
don't consciously think and take
decisions where the system two is the
rational brain where you have to think
about so if I give you a mathematical
problem 238 to mtip 429 you will have to
use the rational brain the system 2 the
system 2 takes more
energy more blood instantly brain makes
up only about 2% of the body weight but
consumes about 18% of our blood energy
blood so right so in any case it is
using more energy so it wants to um
conserve energy so system 2 will use
more energy is not energy efficient will
use conscious more number of neurons Etc
and therefore it's difficult and
therefore Evolution has primed us
programmed us for survival and therefore
be alert and therefore act
subconsciously so if if something
pounces before something pounces on us
and we hear some russle we have to take
the me okay that's a subconscious so we
primed for that remember this so this
system one and system two we can always
prove this through a game everyone ready
yeah your time and you have to do it
very fast only then this will work
otherwise this is not over read this
with me blue red yellow green orange
come on quick blue red yellow green
orange yellow red blue orange green red
orange green yellow blue yellow blue red
orange green red blue orange green
yellow what's happening system one is
fighting the system two your system one
sees the
color Optical nerves are many many times
faster than the other in stimula so you
see the color you say you don't read the
alphabets whereas When You Reach here it
reads yellow but it is red so there is a
conflict between system one and system
two okay and therefore you go slow so
shortcuts lead to short circuits in our
mind
is that clear so we prove it every time
every Hall this happens suddenly your
volume goes down your speed goes down
because the system one is conflicting
with the system two and this is the
world of neurom marketing essentially
all that all the stories that you've
told you are basically now a part of a
huge new area not new anymore it was new
10 years ago but a lot of work has done
now and there are a lot of equipment
tools available to measure the sweat on
your hands eye tracking exactly where
your point eye is poed that tells you
the interest the fmis which talk about
excitement where the blood flows more
and which part of the brain is active
Etc so all that there lots of tools
and the 50 Shades of
Blue Google conducted an experiment you
search anything on Google results are
thrown up on a page and you know that
top three or four are advertisements
when you click on them that's how Google
makes money as simple as that right the
first two or three ads now as human
beings we would believe that if
something interests us we will click on
that won we and if it doesn't interest
us we will not click on that right but
Google's results prove something very
different then they had 43 shades of
blue tested out first then this list was
expanded to 50 shades of blue tested out
1% sent out as one color of blue to one
set of the population one% to another
one etc etc these Shades were so close
to each other that on the conscious
level you would probably never see a
difference between the two never see a
difference between the two yet
particular shade of BL slightly on the
purp side resulted in 200 million worth
dollars worth of extra for Google that
this one and there of course L that shap
at the conscious level I see no
difference in that but my subconscious
is far more powerful and as creative
people we know it because when you
thinking about an idea you working on it
it never comes to you but when you are
some doing something completely
different and not in that zone probably
having a bath suddenly ah
this AA moment is nothing but
subconscious s signal all your urea what
was urea remember arus he he said to
have ran out of the Bas of naked through
the streets of Street
shouting he was searching for something
he was he applied all his mind he was
the biggest scientist then could find it
and suddenly while in his bath he found
it he was not thinking about it
subconscious similarly Kul who was Kul
remember some of you Benzene aromatic
structures
how did he discover it he in his dream
saw a snake with with its own tail in
its mouth and therefore he would think
of structures it didn't come to
scientist it came to from the
subconscious he start Believing on a
subconscious it's far more powerful than
we are conscious and 95% decisions are
still being taken by that and the last
one this comes from Amsterdam the urinal
of Amsterdam call airport Amsterdam's
airport so you know male urinals are far
more difficult to clean are far more
expensive to clean because there is a
lot of spillage why because M are bad
Shooters all right so they they tend to
be in their own world and there's a lot
of spillage and a lot of cost of
cleaning up so they were conducting this
meeting there and figuring out what can
be done about it so someone suggested a
very simple trick okay and which was to
paint a fly near the
outlet guess what happened
86% reduction in spillage and 8%
reduction in the cost of cleaning up at
that level means a lot what were we
doing subconsciously aiming for the
fly that's how powerful subconscious so
you can use it for public good or you
can use it for manipulating people and
making them thank you so much for being
so kind thank
you
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