Strategic Planner & Choice Architect
Why brands must become architects of experience
As David Ogilvy used to say: “The consumer isn’t a moron, she is your wife.” Nowadays, this quote couldn’t be more relevant. Consumers’ expectations of brands and their services have never been so high, so we are moving past the era in which people shape where, when and how a product or service is communicated. Instead, we are approaching a new scenario in which consumers are shaping the product itself.
In fact, we live in a world where everything could, or rather, should be customizable. Consumers could buy shoes whose shape, fabric and color are completely tailor-made to fit their own preferences; insurances companies could offer policies specifically designed for individuals; vitamin pills could be created based on the buyer’s DNA; sets of clothes designed to meet the unique measurements of your body, and media content adapted to your mood and the time you have available.
Even that great bastion of standardization, McDonald’s, is now offering totally customizable hamburgers. It’s a world where everyone has the power to choose everything. In this scenario, where can brands find new opportunities?
Now that everything is a matter of decision, understanding the inner motivation behind people’s judgment becomes increasingly important. In fact, new professional profiles are emerging. Among them, “choice architects” are increasingly involved in marketing and communication processes in order to offer more effective solutions that start from a deeper understanding of human behavior.
This profession is based on psychological theories coming from behavioral economics and, in particular, from Kahneman & Tversky’s Prospect Theory: contrary to the assumptions of traditional economics, human choices are not always the outcome of optimal decisions. Our judgments and, consequently, our behavior, are influenced by the way in which options are framed. In other words, the environment that surrounds us shapes our choices, and it has a strong influence on the decisions we make.
This psychological theory is having a huge influence on current economic thinking. In fact, it is no coincidence that last year’s Nobel Prize in Economics went to Richard Thaler for his Nudge Theory, which is based on Kahneman’s previous studies. Essentially, a nudge is any aspect of the choice architecture that alters people’s behavior in a predictable way, without forbidding any options or significantly changing their economic incentives*.
Prospect Theory, Nudge Theory and, more generally, behavioral economics, can provide extremely valuable insights through which brands can turn consumers’ alleged irrationality and into a business opportunity. In fact, the main novelty of behavioral economics consists in making human irrationality understandable and therefore, more predictable.
Brands could be considered emblematic of consumer irrationality: in fact, given two products of equal quality, we are often more willing to buy the one from a familiar brand, even if that means paying more. Behavioral economics explains this apparently irrational behavior using the concept of heuristics. These are mental shortcuts that people use thousands of times a day to make fast, automatic decisions. In other words, brands are considered time-saving mental shortcuts that guide our purchase decisions.
This deeper understanding of human behavior is not an end in itself. On the contrary, having a better understanding of human behavior is the first, necessary step towards anticipating it and therefore, guiding it. How? With a nudge, of course, which means modifying the environment in which a choice is made in order to change the choice itself.
Brands need to reinvent themselves as architects (choice architects, to be precise) and start working on the environment (physical and digital) so as to shape consumer experience. In other words, working on the experience is the great contribution of behavioral economics. And its relevance is confirmed just by looking at how consumers’ expectations towards brands are changing: they don’t want better tools, they want better ways of doing; they care more about the value or impact of a product or service than the product or service itself. A product or service completely tailored to their needs is a way of providing something truly useful to an individual.
In a world where consumers’ purchasing habits are evolving towards a wider dimension, that is personal choice, nudge and behavioral economics become the ultimate weapon for turning brands into something bigger: experiences.
*Leonard, T. C. (2008). Richard H. Thaler, Cass R. Sunstein, Nudge: Improving decisions about health, wealth, and happiness.