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How Small “Nudges” Can Have a Big Impact on Behavior

TMRE

October 2016

Applying Behavioral Economics

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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 Eye-Tracking

PRS Pioneered Eye-Tracking to Understand Shopper Behavior & Assess Marketing Communications

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IN VIVO Shopper Labs

Mini-Store Environments for Developing, Screening & Assessing New Products, Packs & Shopper Marketing Efforts

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What Shoppers Say…

My purchases

are pre-planned My purchases

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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Shopping is Driven and Dominated by “System 1” Thinking, but Research Often Focuses on System 2.

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 ?

…We Use Two Systems of Thinking.

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…and Our Decisions are Heavily Influenced by Context.

How Options are Framed (the “Choice Architecture”) Often Determines The Decisions We Make.

Prof. Dan Ariely (Duke University)

“Most people don’t know what they want unless they see it in context.”

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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 & Predictable

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The Impact of “Anchoring”

Some Stores Had a Sign:

“No More Than

12 Cans per Person”

…and Some Stores Did Not.

Purchase Rate Without the Sign:

3.3 units/shopper

Purchase Rate With the Sign:

7.0 units/shopper

A Price Promotion for Soup…

($0.79 instead of $0.89)

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The “Reciprocity Effect”

SALES : + 79% !

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A New Way to Think About Shopping Behavior

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Tactical Implications for Influencing Decisions

Why is Behavioral Economics So Powerful?

More Effective Promotions

Better

Pricing Strategies

Improved Store Traffic

& Category Management

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The Primary Implication for Shopper & NPD Research

VS.

The Need to Emphasize Purchase Behavior in Shelf Context (vs. Claimed PI in Isolation)

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Nudge is Rooted in the Work of Nobel-Winning Economists…

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…and The World of Public Policy.

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It is About Leveraging Human Biases to Impact Behavior.

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It is not a fly…

…it is a NUDGE

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…that helped reduce cleaning expenses by 80%

in Amsterdam Schipol Airport!

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So What is a Nudge?

…That Leads People to Adopt a Desired Behavior, Either Consciously or Subconsciously.

An Effective Little Help…

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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 Utility Bill Led to Millions in Savings! (By Applying Social Norms)

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Efficacy in Changing Behavior

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At Minimum Cost

Why is Nudge So Successful?

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Applying “Nudge” to Consumer Goods

Eric Singler of PRS IN VIVO Has Pioneered the Adoption of Nudge

to Consumer Marketing.

Eric, Pauline and the Nudge Unit Have Conducted 40+ Nudge Studies

with Consumer Marketers.

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Encouraging New Usage Occasions Adopting a

New Product Form

Encouraging

Healthier or More

Earth-Friendly

Behaviors

Linking

Digital & Physical

Shopping

Applying “Nudge” to Consumer Marketing

Nudge is Essentially About Changing People’s Habits

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The Vittel Refresh Cap

Increasing Saliency to Promote Water Consumption

The Vittel Refresh Cap

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When is a Topic Right for Nudge?

The goal is BEHAVIORAL CHANGE

The business question is STRATEGIC

Rational approaches have PROVEN LIMITS

The desired behavior is GOOD FOR THE CONSUMER (A Win-Win situation)

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“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

will result in good shareholder returns”

Paul Polman Unilever Global CEO

“Nudging for Good”

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The Lifebuoy Hands Campaign in India

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Nivea’s Approach to Promoting Sun Care Compliance…

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Nudge is a Complement to More Traditional Marketing.

SELLING EDUCATING ENCOURAGING

RATIONAL PERSUASION

NUDGE

Information

Feature/Benefit

Reason-to-Believe

Situational drivers

System 1 goals

Social influences

Choice architecture

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Smarties Packaging 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 Habits That Drive (or Impede) The Desired Behavior

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Uncovering “Micro-Barriers” for Packed Salad

Industrial Image

(not fresh)

=

Poor On-Shelf Appearance

A Bad Smell when Opening

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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

Step #2: NudgeLab Workshop

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“Framing” Packed Salad as a Natural Product

TOUCHPOINT DRIVER OF INFLUENCE BEHAVIORAL INSIGHT

Poor appearance

on shelf

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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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Step #4: Testing, Refining & Tracking Impact

Leveraging ShopperLabs to Refine and Pre-Test “In-Store” Nudges

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PRS IN VIVO Nudge Clinics

A Workshop with PRS IN VIVO Nudge Specialists, Cross-Functional Client Teams & Creative Consumers

• Review of Key Challenges at FMOT

◦ Behavioral Economics Framework

• Brainstorming Sessions Facilitated by PRS IN VIVO Qualitative Professionals

• Co-Creation of Nudge Concepts

Identifying Opportunities to “Nudge” Shoppers

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How Can We “Nudge” More Shoppers Down Center Aisles?

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Some Other “Hot Topics” at PRS IN VIVO

Optimizing Packaging for Online Shopping

Gauging Emotion in Pack & Shopper Research

Thinking from the “Outside-In” for NPD Success

Making Packaging & POS Work Together

Designing for the System 1 Shopper

Connecting with Hispanic Shoppers

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And a Final Nudge from Me…

Most people think of at least 3 potential Nudge applications after hearing this presentation!

And they contact me to discuss them and receive this book!

Scott Young Global CEO

T: 201.720.2701 Scott.Young@prs-invivo.com