Why Challengers Appeal to Human Nature: Part 1

By Guest Author, 12/07/2013

Part 1 of a 3 part series by Matthew Willcox

Human beings need reference points.

 

Everything is relative, and never more so than when it comes to us reaching decisions. And it is not just a rational comparison thing. In a phenomenon behavioral scientists call anchoring, we are more comfortable in letting our intuitions or our autopilot guide us when there is something to “anchor” our decision on.  The remarkable thing is that the anchor doesn’t even have to be relevant.   In an experiment from 2004 by Ariely, Loewenstein and Prelec, the researchers anchored participants with the last two digits of their social security number.  When they where then asked to bid on an assortment of goods, those with the higher numbers (80-99) bid an average of $56 for one item; those with numbers between 1 and 20 bid an average of $16 for the same item.

Anchoring is a great example of the economic effect of reference points.  I would suggest that abolishing reference prices in a well-intentioned move to provide greater clarity in their pricing structures was one of the major contributors to JCP’s staggering decline last year.  Reference points extends beyond pricing, and one plausible hypothesis would be, that by their nature, Challengers invite, even encourage comparison, whether it is to a convention, a philosophy or out and out with a brand.  Apple did this very effectively with Mac vs PC, and had the same weapon used against them to equal effect by Samsung.  Contrary to conventional marketing thinking, comparing doesn’t dilute who you are – in terms of our autopilot, it makes it clearer. Brand gurus often talk about putting a stake in the ground.  Behavioral sciences would suggest that lassoing an existing stake might be the best approach.

Matthew Willcox is Executive Director and founder of the Institute of Decision Making at Draftfcb. The Institute is a global group whose role is to help the network deepen its understanding of human decision making, through the relationships that the Institute has developed with academics and experts in the areas of behavioral and neurosciences around the world. His background is in strategic planning and he has lived and worked in Europe, Asia and North America.

Matthew is a regular contributor on the subjects of human behavior and creativity in both the marketing and mainstream media. He speaks frequently at event on these topics, including at the Cannes Lions in 2010, 2011 and 2013.  Follow him @matthewwwillcox.

Tune in next Friday where we’ll feature part 2 of our 3 part series from Matthew Willcox on ‘Why challengers appeal to human nature’.

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