Risk aversion or Brand Promiscuousness?

How willing are you to take a risk when it comes to the purchase decision?

Let’s take a situation I have come across so many times in my last job.

Say I am an average customer in the market for a brand new TV. I know little about technology and the merits of LCD or Plasma. I have heard about HD TV but I don’t really understand it. I do know that I will be watching DVDs, that I watch Satellite TV, and that I would like it to fit in my existing cabinet. Considering the average price ticket of the item I want, I want to make an educated purchase.

What are the means of information available to me?

• My own knowledge & experience: I already have in my mind a series of conceptions about TVs and TV brands. This is an eclectic mix of what I have been exposed to recently and through past experiences. Advertisements, sponsors, signage, etc have familiarized me with a bunch of brands I am more or less attracted to for various reasons.


• New media and the web: I can google HD TV or LCD TV or PLASMA TV; I can read blogs and forums posts from consumers; I can visit manufacturers’ websites; I can read the blogs and website of Technology specialists (CNET, etc.)


• Magazines, TV, brochures, retailer catalogues and other traditional media: I will probably end up buying a couple of consumer technology magazines with reviews in them and watch some technological TV shows in my quest.


• Friends and relations: I will talk to people around me, particularly to those who have recently changed their TV and get their opinions.


• Stores: I will browse stores, look at designs, deals, ask the sales persons what is good and why, and I will begin to short list what I like.

In fact there are only three categories of souces to making a decision. Personal Beliefs / Trusted circle Beliefs / External insights and perceptions. These are key touchpoints a marketer will have to make sure are covered.

Presented with choices, the brain will start filtering all of this information and will push me towards what feels like the right balance or satisfactory state for me. The left and right brain will interplay to reach a conclusion I am comfortable with. The conclusion that is finally reached will ultimately depend on risk aversion – this to me is the real criteria.

How risk averse are we in a given situation? Early adopters for example are clearly less risk averse to technological innovations than consumers whose attitude towards technology is more traditional.

Buying a new brand is a bit like sleeping with a stranger (!) Sorry for the metaphor, but getting a new brand home is a bit like starting a new relationship.

Otherwise buyers turn to known brands for the reassurance of a continued happiness and the comfort of an existing relationship.

How “promiscuous” are we with a new brand?

That depends on risk aversion. Which is to use another metaphor a bit like finding out how many boxes you need to tick on the rational decision making side vs. the emotional decision making side. The more emotions involved... the more pleasure involved, the higher the risk. If you are willing to surrender to your emotions then you are less risk averse.

Instinctively our brain knows. “Where we have strong emotions, we're liable to fool ourselves.” Carl Sagan, Cosmos (Blues for a Red Planet), US astronomer & popularizer of astronomy (1934 - 1996).

“The degree of one's emotions varies inversely with one's knowledge of the facts.” Bertrand Russell

Brand marketing academics often refer to the brand pyramid.

I have used this myself in Brand research surveys. It is a very common way to measure Loyalty levels and attitude vs a given brand.

The Brand pyramid gathers at it’s base “Aware” customers and at the top “Loyal” customers (indicating a higher emotional relationship) with different steps like “familiar” or “most preferred”.

But on those aspects not all customers are born equal.
Some “fall in love” faster than others. They are simply more promiscuous.

Pic Credits from Flickr Creative commons: in order Zach Manchester UK, Fusion 2005 and cbcastro.

Feels true, sounds true, looks true, and heard it was true? Must be true!

Our world is crowded with information. How do we actually come to believe?

So much information that our brain could not process everything that is around us unless it applied some filters. I recently came across research showing how our brain decides what to believe and how it processes information. There is a clear pattern that emerges, one I am sure is consistent with our individual experiences.

We are more likely to believe when we are able to double check the information across different sources.

Cristiano Castelfranchi from the Institute for Cognitive Sciences and Technologies, in Roma, Italy gives us some key elements that corroborate my intuition on this in a essay titled “Reasons to Believe: Cognitive Models of Beliefs Change” - 2004.

We only believe if we have reasons to believe.

In doing so, our brain reassures itself with the logic of comparing sources and information. Compare this to the phenomena of false beliefs and rumours getting started. If two or three unrelated people give you the same information, suddenly a doubt is born that the information may actually be true. Why so? Simply because you were told so by a small number of people that seemed to believe in it...

Important steps in believing are:

• Source Reliability (perception of independence, trustworthiness)
  
• Belief Credibility (importance and plausibility = how much it matters to you and how you feel about it from the inside)
  
• Existence of a convergent source confirming.
  

Castelfranchi also talks about what the belief brings to you in terms of achieving your goals. Does it make you feel good, satisfied, does it solve a problem etc... Naturally the brain has a tendency to take the shortest path to satisfaction and if believing is “simpler” than doubting, one may be inclined to avoid challenging the belief further.

The absence of internal contradiction is a key success

 factor to believing

If the information contradicts other existing beliefs it will either be purely and simply rejected, or submitted to a much more intense scrutinizing process.

Morality ? in trying to convince someone, going with the flow is easier than contradicting them. Leading them to analyse and realize their own belief is false is key in getting them to change their mind.

Give them reasons to believe. Get the same information to come to them from various sources they will deem reliable. Deliver the message in a way credible to them.

And remember convergent sources of information contribute to making the information credible.

Pics Credit: Truth and Falsehood by Dulhunk and Megaphone drawing by PSD

Thank You !

This post is about all of you.

I have now been more regular at posting on this blog in the last month or so. There has been more and more of you to actually read, bookmark and track my posts.

I am very grateful. I hope what you are reading is helpful and might even get you thinking about your own business and your own brand.


Hopefully, I am not taking myself too seriously and I don't pretend to know it all. Don't be afraid to challenge me and post comments. Most of these posts are the continuation of my own state of mind and can very much be qualified as work in progress.

Once again, thanks. And I hope to continue to deserve your attention.

How you define your business changes everything – the Google example

I recently came across an interesting post on BrandSimple, which triggered this one.

Is Google stretching the limits of brand credibility with the launch of its phone?

The article is well written and makes a very valid point about businesses who go and cross the line of what is really their core business model to adventure themselves in side activities that can later fireback and damage their brand.

But I am thinking a business model and a brand is something that can evolve with time, and it is not uncommon to see a business centre its activity differently by redefining itself and it’s brand or brands. Therefore it really depends on how you are looking at a business. To go back to the Google example if you think Google is purely in the content business, then you may agree with Allen Adamson who posted this article on BrandSimple.
I don’t agree with him. Nothing personal. I think looking at Google and saying they are in the content business is an incorrect and a very short view of what the Google business and brand is about.
What is Google’s core business or at least was when they started is Search. So they are about

 indexing, searching, and bringing the result of your search to you. That led them quickly into indexing the planet (Maps are giant indexes in a way), and is leading them into the publishing side and naturally in the advertising side (which is no doubt their major source of revenue). Then you need to stay on top of the content generation game, and with Cloud Computing growing, Google launched Google Apps, facilitating online computing.
So Google is not really in the content business. Google does not really “make” content although it sometimes does.

Google is about searching, organising, facilitating, presenting and delivering content. Google is in the content delivery business.

So does it make sense to partner with mobile manufacturers and give your name to a phone software? Yes, absolutely. 

A phone is a mobile terminal. By doing that Google is securing THE ultimate delivery platform. A great way to ensure content is delivered all the way to mobile users. It is mission critical for Google and Google Apps to secure the mobile base.

There is more than one manufacturer working on the Android platform so one cannot say that Google is tied up with a particular hardware manufacturer.

As an aside HTC has done a really good job with the first Android phone (featured pics)

Check the Android T-Mobile page on HTC’s Website.

And the following Press Release on T-Mobile's Launch

Android is an OS similarly to Symbian or Windows mobile. Open Source it is based on a Linux and Java core and will rely heavily on developers bringing new applications to market. Calling it the Google phone is a good stretch that will provide the device with instant awareness and a fast adoption curve.

I can only applaud. The future will tell us how successful this strategy was.

For more technical resources check an independent fan site.

Lifestyle brand or not, marketing is about adding value.

Would you argue that it is easier to talk about branding when you are working with consumer goods or lifestyle brands? Surely it is easier to think brand when you are an icon like NIKE, APPLE, SONY.

Marketers have to answer to the CEO and the board about ROI and how much value they add to the business and that is where my point is. Marketing must add value whatever product or service you are bringing to market.

"A commodity is anything for which there is demand, but which is supplied without qualitative differentiation across a market. In other words, copper is copper. Rice is rice. Stereos, on the other hand, have many levels of quality. And, the better a stereo is, the more it will cost. The price of copper is universal, and fluctuates daily based on global supply and demand..

One of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, salt, sugar, coffee beans, soybeans, aluminum, rice, wheat, gold and silver.
Commoditization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips." Source Wikipedia

Fighting commoditization is what marketing is all about.
Find a meaningful point of difference for your target market, whether the difference lies in the manufacturing process or the quality of the materials, ingredients, the history around it etc.... It is around difference that you can articulate a brand strategy. And if your target market does not care, find a way to make them care. Educate them to choose better. Educate them to choose your brand.

Advert recall even in fast forward !

Interesting research is showing that TV viewers that are using PVR/DVR functions and are fast forwarding adverts are actually still paying attention to what they are forwarding through. Ad recalls are still high even if they are lower. Subjects are so anxious not to miss the beginning of their show that they are still registering images. Read the full article

The difference between Advertising & PR

I have just read a funny post from Chris Brown in the US.

Here are pics from it - I think it is self explanatory !

Just one comment I would add though. Something I have been beating on constantly in this blog. It's the power of repetition from different sources. Joke apart the subject is more likely to believe the statement to be true if he hears the same info from at least 3 different types of sources. So Branding / PR and Advertising should be used together to consolidate the brand message... one really can't achieve the same results alone.

Seeing is believing ?

I came across an interesting article about a paradigm in the way we choose to believe information.
According to researchers M.B. Welsh & D.J. Navarro from the University of Adelaide in Australia, we are subject to a phenomenon called "Base Rate Neglect" which means we tend to give a stronger weight to information gathered depending on whether it is recent or not (age), geographically relevant (location), and depending on the source and the sample size.
Beyond the very technical content of the article, I found enlightening the way that we discount information and what we choose to believe.

One particular example is a research about Swans, where 999 swans observed around the world are white and one found in Australia is black. Although the probability that the next swan encountered will be white is very high (as per the base rate), research shows that the subject after observing a regional variation is suddenly more prone in believing that the next swan encountered in the same region could actually be black. 

This phenomenon can explain, for example, how negative consumer experiences can ruin brand image quickly. 

But it also opens an interesting door on how to reverse negative brand image. And how one can manage information and marketing activities to reverse consumer beliefs. 

Showing a radical change (something as different as finding a black swan), concentrating on creating positive consumer experiences in stores as well as using word of mouth and PR tactics to spread the word can help reverse previous perceptions. 

Brands: Show them love and get loved back !

Great post, I have just read today on:

http://tinyurl.com/3tetdy

Looks like the human brain may have neurons called the "mirror neurons".

Mirror neurons play a great role in imitation behaviours.

Watch someone experiencing strong emotions (excitement, laugh, love, tears, etc...) and suddenly our innerself seems to resonate along? 

Mirror  neurons are playing an important role in the learning process for example.

Read more about mirror neurons on : http://tinyurl.com/5hm6dy

Shall we derive from this that a good way for a brand to be loved is to show love ?

I feel smarter now.