Systemic Thinking

“A baseball bat and ball costs $1.10, and the baseball bat is $1.00 more than the ball, how much does the ball cost?

Write down your answer… and we’ll get back to your answer shortly.

In our summary series addressing how you can grow your business we settled upon exploding a series of marketing myths, one myth- that consumers take the time and energy to consciously search through options in selecting the best brands or solution to their problems – we’ll address in more depth today.

We learned that research has shown Customers typically tend to settle for “good enough” when searching for purchases. Therefore to tap into this satisfying behaviour, businesses and brands need to trigger an emotional response by being distinctive and relevant to be the “one solution” consumers settle for.

OK, why is this?  From a psychological perspective, how does the modern consumer shop?

Again, in this previous post we described two styles of search behaviour for consumers- optimizing and satisfying.

  • If a consumer were to optimize their preferences, they would search through an entire set of options until they were absolutely certain their specific preference had been met.
  • A satisfying consumer, on the other hand, might begin searching through a set of options but stop once they’ve come across a preference that meets their immediate needs.

In a restaurant, the satisfying consumer might browse through the first three options on the menu, realize they would enjoy the steak frites enough, and then order that. The optimizing consumer would scan the menu from start to finish multiple times, until they can be certain they’ve chosen a dish that they will love.

We then said, “Knowing whether your consumer is an optimizer or a satisfier has critical implications” we left it at that, we didn’t explain how you can assess which your consumer is.

The way I think about this is with reference to  Kahneman’s System 1 or System 2 thinking. Daniel Kahneman is a nobel prize winning thinking who has spent time trying to understand ‘how’ people decide.

OK, let’s go back to the bat and ball problem… some of you would have answered 10c- the bat is $10 therefore the ball is 10c.  Except its says the bat is $1 MORE than the ball… the ball is 5c and the bat $1.05… the intuitive, fast answer is wrong.

This fast intuitive decision making system Kahneman describes a fast thinking or system one thinking. Its quick, spontaneous and often inaccurate, and system two- the other way we think, and which you have to engage to figure out how much the ball costs is slow methodical, yet when engaged, thoroughly accesses memory for facts- but it takes a lot of concentration and brainpower, and we often don’t want to use it.

OK another test, which is the longer,

optical illusion- Muller-Lyer

no, line (a) is not longer, measure, they are the same size

If you picked option (a) you are again falling victim to System 1 thinking- you jumped to a quick conclusion based on gut feel and sensory feedback; and your senses can sometimes get you into trouble.

We see these illustrations so often and so often are fooled. That’s because System 1 operates automatically and cannot be turned off at will, errors of intuitive thought are often difficult to prevent. Biases cannot always be avoided, because System 2 (the thinking-slow part) may have no clue to the error. Even when cues to likely errors are available, errors can be prevented only by the deliberate and effortful activity of System 2.

In our fast paced way of life, however, continuous vigilance is not necessarily good, and it is certainly impractical. Constantly questioning our own thinking every time we make a decision would be impossibly tedious, and System 2 is much too slow and inefficient to serve as a substitute for System 1 in making routine decisions. The best we can do is a compromise: learn to recognize situations in which mistakes are likely and try harder to avoid significant mistakes when the stakes are high.

So when do we use System 2 thinking?

To my mind, we go into System 2 deliberate and conscious thinking when we know the situation is complex or when we know there is a great risk.

Buying a beer = system 1 thinking- just satisfy your thirst with the first acceptable brand. Buying a new house, and new car- ahhh complex and risky, you slowdown your thinking and search for information before you make a decision = use system 2 thinking.

So what does this mean for your brand? Well, this behaviour helps explain why customers buy into a brand in the first place. It isn’t because the brand is differentiated or has particularly innovative products, but its because an quick and gut-level emotional response has been triggered in the mind of consumers, leading them to settle for that “good enough” brand that is available and priced right, right now.

Their mind tells them they’ve browsed a few options and now will impulsively go with the one that elicited the largest sort of internal response.

So if you are in a high risk or complex industry- financial advice, insurance, selling cars, some of your customers typically will engage some form of system 2 thinking- researching and finding information.  Others are just lazy and go straight for their gut-response.  And even those that spend time and effort going through lots of information and consumer reports may even… at the end… resort to a gut decision.

Happy branding!