Decoded

“La-La-Land”

Marketers adhere to imperfect “mental models” of how people make purchasing decisions. This helps explain why new products fail at a rate of 80% to 90% despite extensive research and testing. Alternatively, some products that tested poorly, such as Baileys liqueur and Red Bull energy drink, became runaway hits. Brand equity has always proved unquantifiable.

“Decision science” gives marketers effective techniques for influencing consumer behavior and driving brand choices. Research by social scientist Daniel Kahneman, a pioneer in decision science, links psychology and economics. His framework, which earned him the Nobel Prize, provides a way to structure the insights from new findings in decision science.

“Systems 1 and 2”

Kahneman describes two types of mental processes that influence behavior. “System 1” processing is quick, associative and reactive, an automatic jump into decision-making. “System 2” is reflective and applies to decisions requiring thought and consideration. Consider learning how to drive: Inexperienced drivers deliberate about their actions for every start, turn and stop. In time, the process becomes automatic and their...