decision making

Simplistic explanations of consumer behavior abound. Push this button, trigger that emotion, pitch to a particular need, and people will buy. The decision making process is much more complex, of course. In Incognito: The Secret Lives of the Brain, David Eagleman includes a chapter that aptly sums up the ongoing conflict in our brains with its title: A Team of Rivals.

An interesting thought as part of the whole agile thing, is about how competitive advantage will increasingly come from not only being able to make an informed prognosis of the future, but an informed prediction of the present. Much market intelligence, and even important indicators such as retail sales data, are published weeks after the events on which they are reporting on have taken place.

Every merchant seems to have a loyalty program these days. It makes sense to reward customers for their patronage and encourage even greater frequency. But, it appears there’s one kind of loyalty reward that may be more effective. One study showed that “irrelevant information” (in this case, largely valueless loyalty points) changed consumer buying decisions.

Co-authored with Chris Curran

Never before has such a mass of data existed. Needless to say, all this information complicates the decision-making process. Businesses need new strategies to answer the biggest question:

We have to deal with economic decisions on an everyday basis without knowing it. Here’s a few example of what I have been dealing with the last two days. From buying a pair of sneakers to using the iPad.

In a fascinating study just published in the Journal of Neuroscience, researchers have shown that we make buying decisions even when we aren’t paying attention to the products, and that fMRI observation of brain activity can predict these decisions. This new work builds on previous research by Stanford’s Knutson and CMU’s Loewenstein which showed that purchase decisions could be predicted when subjects were shown explicit offers. Here’s the abstract:

I’ve written a few times about the effects of pictures of attractive women on decision-making by men. In Bikinis, Babes, and Buying, we learned that guys who looked at pictures of bikini-clad women made impulsive decisions. In A Pretty Woman Beats a Good Loan Deal, we found that men accepted higher loan rates when the direct mail offer included a picture of an attractive woman. Do women just make men crazy? Actually, there’s a scientific explanation for these effects.

Many of the decisions we make are guided by some kind of reward. Do I go through the McDonalds drive-thru window and get a burger and fries that will light my brain up like a Christmas tree, or do I delay eating until my planned meal-time and consume something healthy?