APPLYING BEHAVIORAL ECONOMICS
HOW SMALL “NUDGES” CAN HAVE
A MAJOR IMPACT ON SHOPPERS
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Perception Research Services (PRS)
At PRS, our mission is
to help our clients "win at retail"
in the global marketplace.
Since 1972, PRS Has Conducted Over 12,000 Studies
to Help Clients Improve Their Packaging & Shopper Marketing
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PRS and IN VIVO Have a Shared Philosophy,
Based on Our Collective Experience
Real life purchase decisions are:
 Overwhelmingly behavioral, rather than rational.
- We believe primarily in what people do, rather
than what they say.
 Greatly influenced by competitive context.
- To accurately gauge behavior, we need to place
shoppers in realistic shopping contexts.
 Driven primarily by what is seen, understood and
shop-able at shelf.
- These behavioral measures are the most
predictive of in-market performance.
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What Shoppers Say…
My
Mypurchases
purchases
are pre-planned
are pre-planned.
My purchases are driven
by features, benefits & pricing.
When Asked, Shoppers Typically Cite Rational Factors…
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…What Shoppers See…
…But at the Shelf, They Encounter Overwhelming Choice…
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…and What Shoppers Do!
…and The Shopping Process is Largely About De-Selection.
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To Navigate Complex Aisles & Shelves…
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…or a Digital World of Overwhelming Choice…
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…We Use Two Systems of Thinking.
Autonomic, unconscious,
lightening fast, leverages
emotion and generates
strong feelings of certainty.
Rational, conscious,
requires effort, works
slowly, examines, calculates
and weighs evidence.
32 + 42 = X2 ?
Shopping is Driven and Dominated by “System 1” Thinking,
but Research Often Focuses on System 2.
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Which In-Store Message is Most Impactful?
Greedy for
Danette?
More than
80% Milk
+0%
+35%
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Sub-Conscious Factors Drive Our Decisions...
We are not rational agents
maximizing self-interest…
… but humans driven by impulse,
habits and context…
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…These Implicit Forces & Biases
are Consistent and Predictable…
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The Impact of “Anchoring”
Some stores had a sign:
A Price Promotion for Soup…
($0.79 instead of $0.89)
“No More Than
12 Cans per Person”
…and Some Stores Did Not.
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Purchase Rate Without the Sign:
•
Purchase Rate With the Sign:
3.3 units/shopper
7.0 units/shopper
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The “Reciprocity Effect”
The Reciprocity Effect: A “Gift” Drives Loyalty
SALES : + 79% !
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The “Decoy Effect”
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Decoy Effect: How Context Impacts Decisions
With 3 Choices (Including the Decoy),
84% Chose the $125 Subscription.
With 2 Choices (Without the Decoy),
Only 32% Chose the $125 Subscription.
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Why is Behavioral Economics So Powerful?
A New Way to Think About
Shopping Behavior
Direct Tactical Implications
for Influencing Decisions
+
More Effective Promotions
Better
Pricing Strategies
Improved Store Traffic
& Category Management
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STICKK: Helping People Achieve Goals
Applying Social Norms, Priming & Loss Aversion
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Behavioral Economics:
Key Implications for Shopper & NPD Research
 The Need to Emphasize Behavior
(visibility, recognition, engagement &
conversion)
- And to Acknowledge the Limitations of “PI”
 The Importance of Developing & Screening
New Products within Competitive Context
- Developing New Products from the
“Outside-In”
 The Need for More Holistic Approaches
- Testing “Choice Architectures” at Shelf
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Nudge is Rooted in the Work of
Nobel-Prize Winning Economists…
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…and It is About Leveraging Human Biases &
Implicit Forces Beyond Conscious Rationality.
Reciprocity
Decoy Effects
Priming
Anchoring
Salience
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It is not a fly…
…it is a
NUDGE
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…that helped reduce cleaning
expenditure by 80% in Amsterdam
Schipol Airport!
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So What is a Nudge?
An Effective Little Help…
…That Leads People to Adopt a Desired Behavior,
Either Consciously or Subconsciously.
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This Small Nudge
Had a Big Impact on Littering
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This Nudge Dramatically
Increased Energy Efficiency
A Change in the Bill Led to Millions in Savings!
(By Applying Social Norms)
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Why is Nudge So Successful?
Efficacy in
Changing Behavior
At Minimum Cost
+
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Small Changes Can Make a Big Difference!
Prof. Dan Ariely
(Duke University)
“When we think about what drives
human behavior, we typically think in
terms of objectives, goals & aspirations.
The reality is that most behavior is driven
by small things in the environment.”
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The Nudge Revolution in Public Policy
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Applying “Nudge” to Consumer Goods
Eric Singler of PRS IN VIVO Has
Pioneered the Adoption of Nudge
to Consumer Marketing.
His Team Has Conducted 40+ Nudge
Studies with Consumer Marketers.
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Applying “Nudge” to Consumer Goods
Adopting a
New Product Form
Linking
Digital & Physical
Shopping
Encouraging New Usage Occasions
Encouraging
Healthier or More
Earth-Friendly
Behaviors
Nudge is Essentially About Changing People’s Habits
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The Vittel Refresh Cap
Increasing Saliency to Promote Water Consumption
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Nudge is a Complement to
More Traditional Approaches to Marketing.
NUDGE
RATIONAL
PERSUASION
Situational drivers
Information
System 1 goals
Feature/Benefit
Reason-to-Believe
Choice architecture
Social influences
SELLING
EDUCATING
ENCOURAGING
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Is a Topic Right for Nudge?
Nudge is a Relevant & Recommended Approach When…
The goal is BEHAVIORAL CHANGE
The business question is STRATEGIC
Traditional approaches have proven LIMITS
The desired behavior is GOOD FOR THE CONSUMER
(A Win-Win situation)
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Nudge is Not Just About Selling More Candy…
…But It Can Be About “Nudging” Shoppers Down Center Aisles.
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Nudging for Good & Long Term Success
“What we firmly believe is
that if we focus our
company on improving
the lives of the world's
citizens and come up with
genuine sustainable
solutions, we are more in
synch with consumers and
society and ultimately this
Paul Polman
Unilever
Global CEO
will result in good
shareholder returns”
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The Lifebuoy Hands Campaign in India
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Smarties Pack Innovation
Encouraging Mindful Snacking Through Portion Control
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The NudgeLab Process
A Proven & Proprietary 4-Step Nudge Methodology,
Which Has Won Several ESOMAR Awards.
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Step #1: Uncovering Triggers & Micro-Barriers
Uncovering the Subconscious Factors
That Drive (or Impede) The Desired Behavior
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Uncovering Micro-Barriers for Packed Salad
Image of an
industrial
product
=
Poor
Appearance
on Shelf
A Bad smell
when opening
Difficulty of
preservation
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Step #2: NudgeLab Workshop
An Immersive Workshop, with Ideation Driven By
Behavioral Science Principles & Learnings
(With Client teams, Nudge unit experts, Sector experts,
Consumers, Creative People, Designers, etc.)
Activating Levers
of Influence to
Develop 100+
Potential Nudges
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“Framing” Packed Salad as a Natural Product
at the 1st Moment of Truth
TOUCHPOINT
BEHAVIORAL INSIGHT
DRIVER OF INFLUENCE
Poor appearance
on shelf
NUDGE
IDEAS
WOOD CRATE SRPs
STAND DISPLAY
CHALKBOARD SIGNAGE
NAME OF PRODUCER
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Step #3: Pre-Selection Workshop
To Optimize Nudges,
Gauge Feasibility and
Rank the Best Ideas
to Test or Apply
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The Final Nudgebook as a Guide to Action
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Step #4: Testing & Tracking Impact
“We can’t do evidence-based policy without evidence.
Without evidence, they are just ideas…”
- Richard Thaler
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PRS IN VIVO Shopper Labs
Mini-Store Environments for Screening & Assessing
New Products, Packs & Shopper Marketing Efforts
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New Nudges In Market
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A Final Example of Nudging for Good…
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…And a Final Nudge from Me.
Most people think of at least 3 potential applications
for Nudge soon after reviewing this deck.
And they contact me to discuss them!
Scott Young
Global CEO
PRS IN VIVO
T: 201.720.2701
[email protected]
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Please Visit prs-invivo.com for More Learnings..
Linking Digital & Physical Shopping
Gauging Emotion in Pack & Shopper Research
Thinking from the “Outside-In” to Drive
New Product Success
Balancing Global Design & Local Customization
Conveying “Real” at the Shelf
Connecting with Hispanic Shoppers
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