In his book, Daniel Kahneman goes into detail on how the human brain works and how this shapes the way we think and behave. It is loaded with great examples to explain psychological theories that can help marketers understand how and why consumers behave. Having a good understanding of the human psyche will enable you as a marketer to develop powerful marketing campaigns that yield great results and stick. But remember, with great power comes great responsibility!
Quick Notes:
Our behaviour is determined by two systems. System 1 is impulsive, automatic and intuitive. It is a product of evolution, a memory code of instincts built into us from years of survival as a species. System 2 is thoughtful, calculative, and deliberate. It is what we use in decision-making and reasoning.
Our minds are inherently lazy. We often try to find shortcuts to solutions to minimise energy spent on deliberation. This is where System 1 kicks in and provides us with quick answers. However, you may find that we don't necessarily have the right answer. System 2 is always required to sense check our thoughts and answers for accuracy.
We often use heuristics to make quick decisions. Substitution heuristics is where we replace a question or information with an easier one to make it more comprehendible for ourselves. However, in doing so, we affect the quality of our response by using preconceived understandings to answer our substitute question. Availability heuristics is where you overestimate the probability of of something occurring purely because you are more aware of it or hear about it more often.
We are not always in conscious control of our thoughts. System 1 is great at making quick associations, but that also means that we are more susceptible to priming. Priming is when we create meaning or associations from information around us. These could be from social, environmental and cultural conditions.
Our minds are eager to make quick judgements. Halo effect or exaggerated emotional coherence is when our mind tries to oversimplify things by making judgements based off very little information. Similarly, confirmation bias leads us to believe that something is true based on previously held beliefs or information that is suggested to us.
When working with probability and statistics, it is important for us to keep the base rate in mind. Often, our expectations overshadow the base rate leading to inaccurate predictions. In addition to this, it is useful to remember that everything regresses to a mean. For example, a footballer may have a mean goal scoring value of 2 goals per game, but there may be a few games where the she scores 0 goals or perhaps 5 goals. Regardless, due to the law of averages, over time, we can expect her to regress to the mean of scoring 2 goals per game.
People tend to amplify the rate of an event occurring when statistical figures are expressed in relative frequency of an event as opposed to a percentage chance. In addition to that, people tend to be more influenced by statistical figures when they are expressed as a visual situation rather than pure numbers and percentages. An example of this is people responding more fervently and negatively to the statement "1 out of 100,000 children who take this drug have a chance of permanent disfigurement" as opposed to "this drug can help children by there is a 0.001% chance that it may cause permanent disfigurement".
We have two different apparatuses when remembering things. The first is the experiencing self which records how we feel in the present moment. It is solely focused on how the experience feels right now. The second is the remembering self which is a record of the entire event as a whole after the event has transpired. The remembering self often overpowers the experiencing self and is less accurate due to 'duration neglect' and the 'peak-end rule'. Duration neglect is when we ignore the overall duration of the experience in favour of a particular memory from it. The peak-end rule states that we tend to overemphasise the outcome from the end of the experience.
People do not always make rational decisions. Kahneman's prospect theory suggests that our value perception changes based on different scenarios, affecting our decisions. One factor is loss aversion, where we fear losses more than we value gain. Another factor is value assignment based on reference points - how we value our starting point determines how we perceive a potential end outcome. We are also swayed by the diminishing sensitivity principle, where the value we perceive is different from it's actual worth (e.g. going from $900 to $800 doesn't feel as bad as going from $200 to $100 at the casino).
Our minds naturally create complete mental images of various scenarios to build cognitive coherence. For example, when we think Summer, we might think clear skies, warm weather, sunglasses, beach etc. This mental image can be so strong that we fail to go by factual or statistical data to make decisions. For example, it might be a cold rainy summer afternoon, but our mental image propels us to wear light summer clothing and leave the umbrella at home.
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