Smart (ish) Choices

Back in 1980, Devo, those men in the funny flower pot hats and weird alien masks, advised us to “use your freedom of choice…” (… yes, I know that they also said, “When a problem comes along, you must whip it!“).

But is that really want we want – choice, not whipping it – or is it something more complex than that? If we are given choice, do we really make a smarter choice? And when we choose, are we fully in control?

Giving people choice is important, but we need to understand when consumers are able to exercise that choice. The most critical issues when it comes to smart choices, are real availability, awareness, and consumer use of options, as well as the nudging that marketers, and others, undertake leading up to the choice.

In other words, I would argue that we really only exercise rational choice at the point where we have the resources to make the decision to choose, however, much has gone on before we get to this point.

Of course consumers can make smarter choices, but I would argue that by the time they “choose” they have already succumbed to so many aspects of marketing that the choice is not the choice that classical economists would like us to be making – it’s something akin to Ikea furniture, it looks like a birch bookshelf, but peel back the surface and it’s mostly chipboard – in other words, it’s a veneer of choice.

One problem I have is the concept of “smart choices” which suggests that some consumers make “dumb choices”. It implies that the consumer has a complete, and unmitigated ability to make a sensible choice, but chooses not to. It is a neo-liberal, Platonic, Cartesian, rationalist view of decision-making, and it oversimplifies the decision-making process.

I would argue that, yes, consumers do have choices, and, in many cases they are given choices, and interventions that are aimed at helping people to choose better, such as competition and the market, generally is a good thing – although there is much to be said about the way we choose, and whether too much choice is barely enough.

But I would also argue that marketers spend millions of dollars influencing the choice process, both explicitly through factors such as supply chains, availability of products, pricing, and even intentionally creating consumer confusion, as well as implicitly, through persuasion techniques such as brand building, integrated marketing communications strategies, and, yes, even subliminal suggestion.

And to think that their marketing is benign, and that we are able to resist it, suggests a naïve and unsophisticated understanding of the way that business works. To go further and suggest that marketing is simply communication, as the Institute of Public Affairs has suggested, is foolish and dangerous.

I will say that they business and marketers don’t know everything, and I will admit that they get it wrong, make mistakes, experiment, do dumb things (iSnack 2.0) and fail, but they know more about behaviour than the individual, AND, in general, they have a supreme focus, something that individual consumers do not have – they are driven by a bottom line focused on business profit.

See, the issue is that the best marketers know more about your behaviour, and how to persuade you, than you do. So, that instantly puts you at a disadavantage.  They are interested in working out how to get you to choose their product over and above, 1. Not choosing any product and 2. Not choosing their product. They spend lots of dollars working out how to increase their customer base by as little as one or two per cent, or getting you to spend an additional $2 per trip.

Education and information about the best choices is useful, but only for the people who want to be educated and informed. But we need to be careful about how we approach the provision of information, and that we recognise the limits of education. There is an implication, when we talk about educating consumers, that they want to be educated.

Realistically, how many of us actually learn or educate ourselves, until we are motivated to do so? That motivation usually comes after we’ve cocked-up, or if we perceive (and perception is the key, here), that there is a benefit in being educated. I also question this idea that everyone, or even a majority, will make better choices through education – educational programs have made it pretty clear that smoking is not that good for you, but people still smoke.

It is naïve to think that the population simply needs to be taught how to make smart choices and that through some magical transformation, will begin to make smart choices. Learning requires significant effort, and cognitive resources, and although education seems to often be a key element of consumer action, as a consumer psychologist, and a marketer, I would suggest it may only be useful for certain segments of the population, across certain product categories.

In other words, smart marketers wouldn’t be silly enough to assume that all consumers think like them, and that all consumers in a particular segment will have the same preferences across all products – in this context, a willingness to be educated. No good marketer will say, let’s just educate them on how great our product is, and they won’t be able to resist it… although I have heard this across a range of industries and government.

Giving people options or choices is also useful, but only for the people who want to commit the energy involved in considering the options. We also know that choice itself, is a bit of a complex phenomena – many of you by now probably know the research conducted Iyengar and Lepper in 2000 that suggested that the human ability, and desire, to manage choice is limited.

Their research, conducted in both the field and the laboratory found that people are likely to purchase gourmet jams, chocolates, or even undertake optional class assignments, when they were offered limited array of choices – in their research they suggested that six choices was the optimum number if you wanted people to actually choose, rather than an extensive array of 24 or 30 choices. They also found that participants in the six choices group recorded higher satisfaction with their selections, and got higher marks for their essays when the number of options was limited.

The bottom line with giving people choices, is that you need to understand how people choose, and when and why they don’t. It is not simply a case of providing more choice, asking people to make smart choices, or even giving people information about how to make better choices.

We need to recognise that people are subject to a range of cognitive biases, as well as persuasion techniques, and that making a smart choice is more complex than we think.

~

This is an edited excerpt from a speech I gave at the National Consumer Congress, 2010, held 15 – 16 March, in Sydney, Australia. Speakers were asked to consider key challenges facing consumers in three areas: ‘Smart Choices’, ‘Getting Policy Development Right’ and ‘When Things Go Wrong’. I spoke at the Smart Choices session, along with Claire Noone (Consumer Affairs, Victoria), Nicole Rich (Choice/Consumer Action Law Centre) and Vic Woolf (ING Direct).

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One Response to Smart (ish) Choices

  1. Pingback: Competition… at all costs | tribalinsight

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