Two Modes Of Thinking

By now, everyone in marketing, advertising, and related disciplines, has probably read something about the two modes of thinking: intuitive and deliberative. The intuitive is fast, triggered in fractions of a second, before the conscious mind can figure out what is going on. Conscious deliberation, on the other hand, is often slow, difficult, and tiring. Often portrayed as separate systems (as above), this is just a convenience used to explain two inter-related modes of thinking.

To navigate our complex world quickly and effectively we use a set of heuristics, intuitive shortcuts that help us decide what to do in any situation. A need, occasion or mindset triggers the decision process, and we respond. Provided the context is familiar we respond automatically, no need to think about what to do. (Importantly, the context need not have been directly experienced before, it could just be similar to a familiar situation.) However, when the context is disrupted – our favorite brand is not available – or is unfamiliar – we have never bought the product category before – we must consciously think about what to choose.

The Intuitive Influences The Deliberative

Both types of thinking come into play when making decisions, but the balance shifts between them based on the strength of the intuitive response. When the intuitive response is strong, the conscious mind either goes along with the decision or uses that initial response as an anchor for further deliberation. So, a brand that is the obvious solution to a need – the most salient one – is likely to be chosen.

When the intuitive response is weak, the conscious mind steps up to figure things out, although it does not do any more work than it needs to in order to reach a final decision. Most likely its deliberation will draw on easily accessible facts, judgements, and feelings, or, in the age of search, simply type, “Best…” into Google and take it from there. Both modes will be drawn on during the search process, allowing people to reach a satisfactory solution as quickly as possible. Importantly, while shaped by the intuitive response, the deliberative mode can override that initial response, but it will require effort to do so.

Heuristics Are Learned

If I understand it correctly, heuristics are mental shortcuts based on experience and learned knowledge. Biases are systematic influences on our decision making, which could arise from a heuristic, or from the way our brains have evolved.

Why is this distinction important? Both heuristics and biases influence peoples’ purchase decisions, but I believe that the fundamental difference from the marketer’s viewpoint is that heuristics can be built up over time from direct and indirect learning. Brand users have direct experience of the brand. A potential user may come to learn of (and maybe desire) a brand through casual exposure: seeing others use it, reading online content and reviews, listening to the news, chatting with friends and, of course, noticing its advertising. Most indirect learning is likely to be passive; impressions are absorbed with little reflection.

Experience Confirms Or Denies Expectations

Obviously, the process does not stop at purchase. As noted above, usage brings direct experience of the brand. This is the acid test. Does the brand live up to the expectations created by prior exposure and claims encountered during the purchase process? Experience will add to and amend peoples’ impressions of the brand, hopefully for the better. Importantly, as experience continues, it is the highs and lows, and how people feel when the time comes to buy again, that will determine how predisposed people are to stick with the brand.

Initial Impressions Anchor Future Decisions

This framework does not necessarily change our understanding of the role of brand-building marketing activities, but it does explain why they are important and how they can influence future purchasing behavior. By creating a set of positive, motivating, and memorable impressions of the brand marketing activities create an anchor for future decision making, not just among current category buyers but among those that might buy the category in future. Well executed, these activities predispose people to choose the brand directly, or failing that, notice and more readily respond to its sales activation.

OK, that is my take on how people make purchase decisions. My reading makes me think that too many people are focused on using behavioral economics at the point of decision making and too few recognize the implications for longer-term brand growth, but what do you think? Please share your thoughts.

Contributed to Branding Strategy Insider by: Nigel Hollis, author of The Global Brand

At The Blake Project we are helping clients from around the world, in all stages of development, define or redefine and articulate what makes them competitive at critical moments of change. Please email us for more.

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In the late 1980s, Joseph S. Nye, Jr. developed the concept of “soft power” in international relations to explain how the United States could still dominate the world, in spite of the apparent decline in its military might. Nye contrasted soft power to hard power, defining soft power as “the ability to affect others by attraction and persuasion rather than just coercion and payment.” As described by Nye, soft power originates from a country’s culture and values rather than its political system, although the term became almost indistinguishable from the promotion of democracy by the United States and Western European countries. With democracy now facing challenges around the world, soft power is no longer in the spotlight, and today most of the world has shifted its attention back to wielding the hard power of economic and military might.

For anyone in marketing the similarity to brand power should be obvious. Brands wield both hard and soft power to build market share. Hard power comes in the form of meaningful innovation in products and customer service, in the control it has over its distribution system and in the leverage that the company has with retailers and resellers. A patent is a form of hard power because it is a means to stop other companies copying an asset, which is why tech companies often acquire a company simply to gain access to its patent portfolio. Soft power, by contrast, is a company’s ability to create demand, to get people to want to use the product or service, to seek it out, and, importantly, be willing to pay the price asked. An online video has little coercive power, although many advertisers delude themselves that it has, but it does have the power to seed ideas, to influence and attract.

The thing that intrigues me about the concept of soft power in international relations is that the idea has been misunderstood and misinterpreted in just the same way that people misunderstand and misinterpret how brands help generate sales. An article by Eric Li in Foreign Policy summarizes the rise and fall of soft power and it struck me that there are distinct parallels with the shift of budgets from brand building to innovation and sales activation.

First, and the most important parallel is that soft power cannot exist in isolation of hard power. As Li notes in his Foreign Policy article,

In reality, soft power is and always will be an extension of hard power. Imagine if the United States had become poor, destitute, and weak like many of the new democracies around the world but had retained its liberal values and institutions. Few other countries would continue to want to be like it.

The same is true of brands. You cannot have a strong brand without a strong business model and a good product. There is a reason that Apple is one of the most valuable brands in the world. From the start, the iPhone set the standard for a smartphone, and while we can argue about whether the actual product is worth a third more than the technically equivalent OnePlus phone today, there is no doubt that the iPhone remains the pre-eminent choice of smartphone in the minds of many. But that strength would not last long if the iPhone 12 proved to have flaws that could not be fixed, if Apple’s supply chain broke down repeatedly or if an upstart really did create an iPhone killer and Apple failed to respond. A strong brand will buy some forgiveness from customers, but only so much.

A consequence of the fact that soft power originates from hard is that it provides inadequate power to achieve a goal on its own. For two decades the idea of democracy – perhaps conflated with the American dream – caused people around the world to overthrow authoritarian governments, to seek freedom and the right to decide their own future. However, as Li notes, soft power did not stop North Korea developing its nuclear missiles or Iran to back down in the face of pressure from the U.S., and China has proven that trade embargoes are a two way street, bringing little but chaos to the individuals and businesses affected. If a leader chooses to wield hard power and has the strength to do so, then it will trump soft power, just as the iPhone trumped Nokia and Blackberry.

Second, soft power does not originate from governments, although their actions can contribute to it or detract from it. Nye goes to some lengths to assert that soft power is driven less by government than by the cultures and values of a country. And in an abstract Nye states, “Propaganda is not credible and thus does not attract.” Soft power requires walking the talk, but it is not just a government’s actions that matter but those of its people, institutions and culture. And the same is true of brands. Everything a company does builds its brand, for good or ill. A company’s actions shape what potential customers experience and how they interpret that experience (and in this context I use experience in the widest possible meaning). Just as a carefully crafted ad says something about a brand, so too does the stultified, voice-activated customer call system that implies, “Your call is a burden to us, so we are going to minimize the time and cost spent on solving your problem.”

Third, in his book, Soft Power: The Means to Success in World Politics, Nye admits that soft power is not easily directed to achieve specific goals, rather it creates the condition by which specific policy goals are more easily achieved. From a brand perspective, this is the eternal battle between investing in brand building versus sales activation. A strong brand creates the conditions under which sales activation works harder than it would do otherwise, because people are predisposed to choose the brand, making them more likely to click on a link, visit a store or cut short their search. It is possible to say that the brand is more attractive than others, but it is impossible to ensure that a specific person will buy the brand. There are just too many variables in play in the purchase process that could cause someone to end up choosing a brand they have never even heard of before. A strong brand improves the probability of purchase, it does not guarantee it.

What do you think about this comparison? Let me know your thoughts.

Contributed to Branding Strategy Insider by: Nigel Hollis, author of The Global Brand

At The Blake Project we are helping clients from around the world, in all stages of development, redefine and articulate what makes them competitive at critical moments of change. Please email us for more.

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Disruption Creates Big Gains

The early years of any brand are a frenetic attempt to establish a viable user base and work out the kinks in the business model. Growth is everything, either to keep your share as a first mover or establish it as a new entrant. McKinsey finds that for software and online-services companies the growth trajectory is the best predictor of long-term success. Think Amazon, Airbnb or TikTok. But if it has a truly disruptive offer any brand can gain share rapidly, even in established and apparently inactive categories where market share has changed little for years. Think Chobani, Halo Top or Dollar Shave Club.

Start Different, Make It Meaningful And Salient

What is the best form of disruption? Something that the end-consumer perceives to be different from the current offers and which they find functionally and emotionally relevant – in other words, more meaningful. Too many marketers discount the value of perceived differentiation, and yet, when you look at the brands people think are the most disruptive they are also perceived as different. In 2018, an analysis of BrandZ data found that brands that grew over time were seen to be different compared to their competition. However, to grow in the longer-term, both the disruptive and growth brands had to make their difference salient and meaningful to more people.

Marginal Gains Sustain Growth

But what happens when growth begins to taper off? It is time to think about marginal gains, not disruption. Big brands must seek growth wherever they can find it, from cross-selling to existing users, targeting specific segment needs, or from expanding the whole category. But here is the thing, incremental growth requires the same mindset that empowers true disruption; a mindset that questions everything and continuously seeks better ways of doing things.

Growth Is The Result Of A Series Of Inter-Related Actions

Sustained market share growth is rarely the result of any one event or action. Instead, it is the outcome of actions based around the buyer cycle of experience, exposure, and activation. Actions have differing effects and their influence on sales plays out over different time frames, but together they add up to more than the sum of the parts. An update of Kantar’s Mastering Momentum analysis finds that brands which over-performed at experience, exposure and activation grew by an average of 48% over three years.

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1. Create A Difference That Has The Potential To Be Meaningful

Competitive advantage can be found in design, route to customer, service, purpose, positioning or communications not just product innovation. Whatever form it takes, innovation must differentiate the brand from competition and must address a functional and/or emotional need to be meaningful to potential consumers. Without meaningful differentiation brands become commoditized and struggle with weak consumer demand.

2. Maximize Availability And Ensure Your Brand Is Easy To Choose

Today’s “omni-channel” is just another way of saying you cannot buy what you cannot easily find. Brands need to ensure that they are available everywhere consumers expect them to be; there are few brands so attractive that people will actively seek them out. Marketers should seek new ways to allow customers easy access to their brand. Within a retail channel, make sure the brand is obvious. Make purchasing ‘frictionless’ by removing any current barriers to purchase. Seek ways to make purchasing easier, like automatic replenishment.

3. Amplify Your Brand’s Meaningful Difference

Make sure the brand’s meaningful difference is obvious to all. Reflect it in every touch point and consumer interaction with the brand in order to create coherent mental “real estate” and a strong predisposition to buy. Create positive anticipation of usage based on the meaningful difference in order to enhance people’s experience. Ensure brand can live up to its promise.

4. Ensure Product And Equity Justify The Brand’s Price Point

Ensure the brand’s meaningful difference justifies its price point and helps return a better margin or higher demand (remember that margin improvement will have a greater impact on the bottom line than an increase in volume). When variants are sold under the same brand name but at different price points make sure the perceived value of each offer is well-differentiated to avoid people trading down to the cheapest option.

5. Ensure Your Brand Is Distinctive

Recognition automatically triggers instinctive desire based on pre-existing brand associations. Build and leverage distinctive brand assets to ensure recognition, whether online or instore. Assets will include design and logos but can extend to many different properties including celebrities, images, sensory experiences, rituals, jingles and tone of voice. Consistently integrate assets into communications and experience to build mental connectivity and then leverage those assets to trigger positive associations during search and shopping.

6. Make Your Brand As Salient As Possible

Given the impetus given to e-commerce by the pandemic, ensuring your brand is salient has become more important than ever. People cannot search for a brand unless it comes to mind immediately a need is realized. Invest in paid communications to ensure your brand is thought of automatically when a relevant need or occasion arises. Invest more in SOV than SOM to improve salience relative to competition. Leverage that spend with compelling creative designed to establish and strengthen strong, brand-linked, memory structures to influence purchase now and for the future. A consistent idea, rooted in the brand’s meaningful difference but refreshed with new executions, will help build strong memory structures. Stimulate positive word of mouth and social buzz.

7. Maximize Retention Of Existing Customers

Every retained customer is one less that needs to be acquired in order for the brand to grow. Deliver a consistently positive, memorable customer experience that lives up to what the brand promises. Fix problems promptly and create experiences that delight and inspire. Delighted customers are more likely to choose your brand again, buy new products and services or trade up to a premium variant. Find ways to facilitate repurchase and bypass search and shopping.

8. Give Your Brand The Greatest Possible Exposure

Aim to reach and influence all potential buyers. Within the available budget, choose media channels that combine to maximize effectiveness and make the brand’s meaningful difference salient, then target specific needs and behaviors. Find the right balance between demand generation and activation for your brand and category. Adapt creative to each media channel and continually optimize reach and frequency.

9. Trigger Desire During Search And Shopping

On average, three quarters of growth comes from people predisposed to choose a specific brand. Ensure brand recognition at point-of-purchase to trigger pre-existing positive associations among the predisposed. Ensure point-of-purchase content triggers perceptions of immediate relevance and conveys the brand’s meaningful difference. Use price promotion strategically to drive penetration and satisfy retail partners but do not rely on it to drive volume, otherwise consumers will come to expect deals and perceived value and margins will be undermined.

10. Continue To Innovate Or Risk Disruption

Stay true to the brand’s meaningful difference and add real value for the brand’s primary target audience. Stay alert for changes in consumer needs and context that create new opportunities or which might create the need for revitalization. Ensure that all types of innovation add incremental sales: new users, new occasions, new value or new premium. Do not fragment the brand with meaningless variants and line extensions.

Contributed to Branding Strategy Insider by: Nigel Hollis, author of The Global Brand

At The Blake Project we are helping clients from around the world, in all stages of development, redefine and articulate what makes them competitive at critical moments of change. Please email us for more.

Branding Strategy Insider is a service of The Blake Project: A strategic brand consultancy specializing in Brand Research, Brand Strategy, Brand Growth and Brand Education

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The initial UPS analysis was conducted back in 2001 well before the hype about big data, but it does indicate the sort of benefits that might be derived from analyzing the masses of data now available to us in business and marketing. Since 2004, UPS claims the no left turn policy has saved over 10 million gallons of gas and reduced carbon emissions by more than 100,000 metric tons.

Would the tracking data used in the analysis qualify as big data today? That all depends on which definition is used. If all UPS vehicles were included in the analysis – about 90,000 at the time – then it would be big data according to Professor Viktor Mayer-Schönberger. An article in the Financial Times reports that his favored definition of a big data set is one where “N = All,” in other words, you do not need to worry about sample bias because everyone or everything is included in your data set.

That, of course, is still one of the biggest issues facing the use of big data today. Rarely does “N=All.” In his article, “Big data: are we making a big mistake?” Tim Harford seeks to highlight why big data might lead us astray, citing the examples of sample bias and also hidden causation as reasons why big data might cause us to make big mistakes.

Harford is unlikely to be a popular viewpoint, because, as he notes in the article, who worries about sample bias or causation when there is money to be made?  However, as far as I am concerned, he hits the nail on the head with the following comments:

“New, large, cheap data sets and powerful ­analytical tools will pay dividends – nobody doubts that. And there are a few cases in which analysis of very large data sets has worked miracles… But big data do not solve the problem that has obsessed statisticians and scientists for centuries: the problem of insight, of inferring what is going on, and figuring out how we might intervene to change a system for the better.”

All data – big or small – is subject to one overriding and inescapable source of bias: the beliefs and expectations of the analyst. And even if we manage to suspend our preconceptions and understand the full implications of our analysis the biggest question of all remains, “And what should we do as a result of our findings? How do we change things for the better?”

So what do you think? Under what circumstances can we safely ignore sample bias and causation? Please share your thoughts.

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