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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

373. The Art and Science of Influence w/ Rory Sutherland

In this episode of The Brainy Business podcast, Melina Palmer delves into the world of behavioral science and marketing with guest Rory Sutherland, vice chairman of Ogilvy UK and a prominent expert in this field. Sutherland’s extensive experience in co-founding a behavioral science practice within Ogilvy, where he explores hidden opportunities in consumer behavior, makes him a valuable resource for marketers seeking to understand and leverage consumer psychology. 

Throughout the conversation, Sutherland provides compelling insights into the significance of unmet needs, the power of small contextual changes, and the limitations of logic in capturing consumers’ true desires. His emphasis on the role of language, the impact of evolutionary psychology, and the value of testing and experimentation underscores the practical applications of behavioral science in marketing strategy development. Listeners can expect to gain a deeper understanding of consumer behavior and how to implement effective, psychology-driven marketing strategies by tuning in to this episode.

In this episode:

  • Analyzing the marriage of behavioral science and marketing to optimize consumer engagement.
  • Identifying unmet needs in consumer behavior to drive innovative marketing strategies.
  • Leveraging language and emotions in decision-making to influence consumer choices.
  • Implementing small contextual tweaks for significant behavioral changes in consumer behavior.
  • Exploring the role of evolutionary psychology in understanding and predicting consumer behavior.
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HERE'S A 2 MINUTE TIP.

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SHOW NOTES:

00:00:00 – Introduction
Melina introduces Rory Sutherland, vice chairman of Ogilvy UK, and highlights his expertise in behavioral science and marketing.

00:01:16 – Unseen Consumer Behavior
Rory discusses the importance of small contextual changes in consumer behavior that can have significant effects on decision-making, such as the impact of a few sentences in a call center script.

00:02:05 – Met Unneeds and Unmet Needs
Rory explores the concept of “met unneeds” and “unmet needs” in consumer behavior, using examples like the unnecessary handling of luggage at a luxury hotel and the psychology behind overnight parcel delivery services.

00:04:30 – The Power of Behavioral Science
Melina and Rory delve into the power of behavioral science in uncovering consumer desires that may not be vocalized or captured by traditional market research, leading to billion-dollar business strategies and marketing ploys.

00:10:42 – Formative Influences
Rory reflects on his early influences, including children’s fables, Sherlock Holmes stories, and the principles of problem-solving backwards, shaping his interest in behavioral science and creative problem-solving.

00:15:10 – Introduction of Digital Exchanges in the UK
Rory discusses the introduction of digital exchanges in the UK, allowing users to use the star and pound buttons on their phones for various functions. They tested response rates for different ordering methods, revealing unexpected results.

00:16:15 – Testing Different Ordering Methods
The team conducted tests with 50,000 participants for phone-only, post-only, and a choice of both ordering methods. The response rates varied significantly, challenging the traditional assumptions of consumer behavior and ordering preferences.

00:17:57 – Understanding Consumer Behavior
Rory delves into the surprising impact of offering different ordering options on consumer preferences. He suggests that the addition of choice may influence decision-making, highlighting the complexity of consumer behavior beyond traditional economic assumptions.

00:19:52 – Influence of Darwinian Thinking
Rory explores the influence of evolutionary psychology and Darwinian thinking on his approach to understanding complex systems and human behavior. He emphasizes the importance of variation, selection, and experimentation in driving progress and innovation.

00:22:12 – Importance of Testing and Replicability
Rory emphasizes the significance of testing in behavioral science, particularly in the context of pricing strategies. He discusses the replicability of behavioral principles and the evolutionary basis of Robert Cialdini’s influential work, advocating for a thoughtful and curious approach to decision-making.

00:29:41 – The Value of Absurdist Humor in Content Creation
Rory discusses the influence of absurdist humor in PBS content and the importance of having a sense of humor in behavioral science.

00:31:01 – The Magic Formula of Pricing
Rory shares the story of how Netflix revolutionized its pricing model, emphasizing the psychology of pricing and the blind spots in economic assumptions.

00:34:02 – Consumer Behavior and Pricing
Rory delves into the misconceptions of economic logic in consumer markets and the impact of pricing on consumer decision-making, highlighting the role of perception and context in pricing strategies.

00:35:26 – The Psychology of Price
Rory discusses the significance of psychology in pricing, emphasizing that to economists, price is a number, but to consumers, price is a feeling, influenced by contextual factors.

00:40:01 – The Fallacy of Total Automation
Rory criticizes the trend towards total automation in customer service, highlighting the importance of human interaction, adaptivity, and resilience in systems design.

00:43:54 – The Shift from Reading to Audiobooks
Rory explains his shift from reading to using audiobooks, and how he extensively uses Google for browsing.

00:44:29 – The Value of Google Search Techniques
Rory emphasizes the importance of using advanced search techniques in Google to improve the value derived from a search, and the need to teach people how to use Google effectively.

00:45:24 – The Value of Writing
Rory discusses the value of writing as a process, rather than just the end product, and the concerns about the impact of AI on the value of writing.

00:46:16 – The Importance of the Advertising Process
The conversation delves into the value of the process involved in creating an advertisement, and the potential drawbacks of automation in short-circuiting the creative process.

00:52:19 –  Conclusion,
Melina’s top insights from the conversation. What stuck with you while listening to the episode? What are you going to try? Come share it with Melina on social media — you’ll find her as @thebrainybiz everywhere and as Melina Palmer on LinkedIn.

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