The one-sentence summary
Emotion lies at the heart of consumer behaviour, so it is important to understand exactly how people decide what to buy.
- For too long emotions have been ignored in favour of rationality and efficiency, but breakthroughs in brain science have revealed that people are primarily emotional decision-makers.
- Companies need to catch up with this new thinking. Facial coding is the single best viable means of measuring and managing the emotional response of customers and employees.
- Science, psychology and economics now combines to move us forward: discovery of the brain’s hot button (1986), articulation of emotional intelligence (1995), positive psychology movement (98), and behavioural economics (2002).
- Neurogenesis shows that new neurons are created during life, so we are not set in our ways. Mirror neurons make us mimic and empathise.
- Behavioural economics mainly covers categorisation and loss aversion:
Framing: makes a choice more attractive by deliberately comparing it with inferior options
Mental accounting: places artificial limits on what we’re willing to spend
Prospect theory: judges pleasure on condition change, not how happy we are
Anchoring: evaluates new information from a base of what we already know
Recency: gives undue weight to recent experience
- Aspects of loss aversion include:
Familiarity: has a bias towards the status quo
New risk premium: inflates the cost of new risks and discounts familiar ones
Fear of regret: suffers from having to admit a mistake
Decision paralysis: fails to make one when faced with too many choices
WHAT’S GOOD ABOUT IT
- The Facial Action Coding System categorises the activity of 43 facial muscles. These betray four core motivations: defend, acquire, bond, and learn, which dovetail with core emotions: anger, happiness, sadness, fear, disgust and surprise.
- Brand equity is emotional and is hard to measure using rational attributes. Neurons that fire together wire together – branding occurs only in the mind
- Wundt’s curve shows that maximum appeal occurs when a simple idea is presented in a novel way, or a complex idea is introduced in a familiar manner
- Empathetic salespeople are upbeat, resilient, and, crucially, caring.
- Less than 15% of US men are 6 foot or taller, but 58% of CEOs are.
WHAT YOU HAVE TO WATCH
- It is a brilliant review of behavioural economics, but only a fraction of it is to do with facial coding