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behavioral research

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Definition:

Behavioral research refers to the study of the variables that impact the formation of habits and decisions that impact many areas of daily life. In market research, behavioral research is based on "the exhaustive rendering of our conscious and unconscious patterns into data sets and algorithms" (Duhigg, 2010).

The Importance of Robust Market Research

In recent years, scientists working in departments of psychology and neurology in universities and major medical centers have made the study of habit formation a primary objective. Those corporate market research departments with generous budgets have also taken notice of this line of inquiry. Machine learning, which relies on computers to do the heavy lifting involved in the fine-grained data analysis, has become a standard approach to market research. The use of algorithms has turned mathematicians into data mining super stars.

Conventional market research, which utilizes surveys, interviews, and focus groups, has sometimes had to resort to the old fashioned door-to-door research methods instituted by James H. Gamble in the early years of Proctor & Gamble history. Gamble was essentially the father of modern customer satisfaction research and market research at Proctor & Gamble. Many of his strategies are still in use today.

In an article in The New York Times titled Psst, You in Aisle 5, Charles Duhigg tells the story of how Proctor & Gamble's market research scientists visited the home of a customer to try to learn why Frebreze, a new fabric fragrance product, was bombing. The market researchers learned that people tended not to detect unpleasant aromas in their own homes. Thus, the cue (a bad order) that would trigger the use of Frebreze was absent. A new cue had to introduced that would compel people to use Frebreze. In fact, the market researchers learned that they needed to establish a new cleaning habit that would embed the use of Frebreze in a psychologically significant way.

The market researchers presented their consumer insights to the advertising department. Soon, a new set of advertisements were released with the aim of piggybacking a new habit (using Frebreze) onto an established cleaning habit. This new ritual -- spraying Frebreze as a final act of celebration when the act of cleaning a room was completed -- proved to be sticky where trying to establish a new cleaning habit had not been. Tthe Frebreze formula was altered to include perfume, and Frebreze was re-positioned as an air freshener that came at the end of a cleaning ritual.

The Importance of Habit Loops to Marketers

This example from Proctor & Gamble illustrates a number of important market research principles: (1) Consumer insights must be tested -- straight out of the market research lab, they are sometimes dead wrong; (2) Observation of consumers engaging with a product or brand is a high-value activity (which is one of the reasons that ethnographic videos are so useful to market reseaarchers); and it is typically easier to add an action or activity to a habit loop than it is to try to establish an entirely new habit loop or to get people from using or reverting to an older habit.

Source:

Duhigg, Charles (2010) The Power of Habit: Why We Do What We Do in Life and Business. New York, NY: Random House.

Also Known As: behavioral economics
Alternate Spellings: behavior research
Common Misspellings: behavioural
Examples:

In Models of Man, Herbert Simon argues that people are partially rational and partially emotional or irrational in their beliefs and actions. in his words, "boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information" (Simon, as cited in Williamson, p. 553).

Economists view rationality as a way toward optimization, in which decision are made in a fully rational manner that seeks an optimal choice based on information that is available and given. But optimal solutions are difficult to achieve so decision-makers my apply rationality only after they have made the available choices much simpler. From this perspective, then, a decision-maker becomes a satisficer who comes up with a satisfactory solution and gives up on trying to identify an optimal solution.

Sources:

Simon, Herbert (1991). "Bounded Rationality and Organizational Learning". Organization Science 2 (1): 125-134. doi:10.1287/orsc.2.1.125

Williamson, Oliver E. (1981). "The economics of organization: the transaction cost approach". American Journal of Sociology, 87 (3), 548–577.

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