This presentation was given at a meeting of
The Financial Services Forum https://www.thefsforum.co.uk
in London in 2015 with the title, “How Brains Buy”.
(The presentation is no longer available via the FSF web site.)
As there is another presentation on the web site with the
title, How Brains Buy, the title here has been changed to
Consumer Psychology.
It has not been designed as a stand alone presentation and the
‘notes pages’ were in my head. If you would like a slide explained
or clarified please contact me at [email protected]
‘Blank page’ so that the title page can be number 1 (on the right hand side)
should you choose to print these slides.
CONSUMER PSYCHOLOGY
Contextual Subconscious Non-rational
21 April 2015
London
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NEWSFLASH 1
CONSUMERS DON’T NEED
TO BE TRAINED IN FINANCE
FINANCIAL SERVICES NEED
TO BE TRAINED IN CONSUMER
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NEWSFLASH 2
The ‘Gap’ isn’t between
knowing and
not knowing.
It is between
knowing and doing.
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THREE BIG TRENDS
(WRONG)
DIGITALISATION
NEUROSCIENCE
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INSIGHTS FROM NEUROSCIENCE
1. MOST OF OUR DECISION MAKING
IS SUB-CONSCIOUS ( ‘SYSTEM 1’ )
2. WE ARE NON-RATIONAL (WE’RE
NOT IRRATIONAL)
3. BRAINS CONTEXTUALISE EVERYTHING
4. BRAINS DON’T DO MONEY
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A LONG TIME AGO
Bottleneck about 150,000 years ago.
2,000 to 10,000 humans.
Fast decision making
Incomplete information
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PATTERNS & ILLUSIONS
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PATTERNS & ILLUSIONS
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PATTERNS & ILLUSIONS
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‘FUNCTIONAL LOCALISATION’
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3 LEVELS OF ‘PROGRAMMING’
3 Personal. Unique
experiences.
2 Early programming.
Language; culture
1 Shared biology.
(‘Human nature’)
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WHAT MAKES YOU,
YOU ?
Your ADDICTION, your AGE, being an ALUMNUS of a particular school, your love of
all things APPLE, ARMED SERVICES experience, your AUTISM, your BANKRUPTCY,
having a BUCKET LIST, your activism for a CHARITY, your DIVORCE, DYSLEXIA, being
an ECONOMIST READER, being an ENTREPRENEUR, an EPIPHANY, being a FIRSTBORN child, FSF membership, your GENDER, your HOBBY, your favourite HOLIDAY
DESTINATION, your INCOME, having LIVED LIFE OVERSEAS, your JOB, you’ve run
the LONDON MARATHON, your LONG TERM ILLNESS, your MARITAL STATUS, being
a MILLIONNAIRE, being a PARENT OF TWINS, your PhD, your PHOBIA, your PLACE
OF BIRTH, your POLITICAL BELIEFS, your POSTCODE, your PROFESSION, your
RELIGION, being SELF-EMPLOYED, your SEXUALITY, your SIZE, your SOCIOPATHIC
streak, your STAR SIGN, your love of VINTAGE CARS, your WEALTH, something else?
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OCEAN (Big 5 Personality Test)
OPENNESS
CONSCIENTIOUSNESS
EXTRAVERSION
AGREEABLENESS
NEUROTICISM
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BRAINS DO CONTEXT
At what price
does a bottle
of wine
become
expensive?
Is £500 a lot
of money?
Are you well
paid?
Are you
happy?
Are you
lucky?
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I
didn’t
know
what happiness
was until I got
married .
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BRAINS DON’T DO MONEY
Modern human brain
125,000 Years ± 25,000
Money is 2,500 to 10,000 Years Old
(Depending on your definition)
Greek arrowhead money 600 BC
Lydian coins 700 BC
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HABITS & BIASES
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BRAINS AND TIME
“The future
is what we
make it”
Hyperbolic
discounting
HOW LONG IS
“What will
LONG TERM?
be will be.”
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THAT’S ALL VERY WELL, BUT . . .
 We are Non Rational
 System 1 > System 2
 Brains are pattern recognition and habit machines
 Knowing doesn’t make much difference
 Brains don’t do money
 Brains and time: important and complicated
• What’s the bottom line ?
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THAT’S ALL VERY WELL, BUT . . .
 We are Non Rational
 System 1 > System 2
 Brains are pattern recognition and habit machines
 Knowing doesn’t make much difference
 Brains don’t do money
 Brains and time: important and complicated
• If we want to influence behaviour we change
the context and not the people.
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MINDSPACE
It has helped to improve tax
collection.
It has helped reduce the
incidence of smoking.
It has helped increase the
uptake of home insulation.
(But there can be unintended
consequences)
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CIALDINI - RASCCaL
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WHO’S USING Ψ & BE TODAY ?
Amazon (Behavioural data → Algorithms; Norming)
Amigo loans (Time, Norms, Authority)
Crowd funding sites (Norms)
Facebook (Messenger; Norms; Salience)
Friendsurance (Messenger, Norms)
Orlov (Reciprocity)
Venmo (Norms; Salience)
Wonga (Incentives; Time)
Zopa (Reciprocity; Consistency; Scarcity; Time; Norms)
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SO WHAT ?
THE FUTURE BELONGS
TO ORGANISATIONS . . .
THAT ARE DATA SAVVY
AND BEHAVIOUR SAVVY
IS YOURS ONE OF THEM ?
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THANK YOU
CONSUMER PSYCHOLOGY
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21 April 2015
London