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Epiphany's Little Book of Ideas: How Do People Make Choices?

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By The Drum, Editorial

March 5, 2014 | 4 min read

Today leading search marketing firm Epiphany publishes a new book called The Little Book of Ideas, a collection of 20 of the most powerful ideas on marketing and strategic thinking. In this excerpt from the book, which is published in association with The Drum and hits the desks of marketers across the UK today, Dr David Mihell considers how people make choices.

Epiphany's Little Book of Ideas

People are strange, well irrational at least. They do things that logic says they shouldn’t, like place too much value on the things they already own, or rely too heavily on the most memorable information when making choices.

The academic discipline of Behavioural Economics has grown in recent years as a way to understand this irrationality, and to build strategies that influence how people behave. Behavioural Economics has also yielded a number of best-selling books aimed at the mainstream, such as ‘Freakonomics’ (Levitt & Dubner) and ‘Thinking, Fast and Slow’ (Kahneman).

One concept at the core of Behavioural Economics is Cognitive Bias. A Cognitive Bias is a mental shortcut - a way that people simplify their decision making by drawing selectively on information, or using only the most prominent reference points.

Academic study has identified a host of Cognitive Biases that have been shown to influence a wide range of decisions - from choosing what to order from the menu through to deciding who to date.

The Cognitive Biases listed below are amongst the most relevant to digital marketers and the behaviour we need to understand and influence.

Anchoring

We anchor our thinking to an initial reference point (such as an asking price), even when we know that the anchor only has “arbitrary coherence” (i.e. shouldn’t be used in this way)

Availability Heuristic

When making decisions, we rely on the information that we easily remember, rather than potentially more relevant inputs. This supports the idea of remaining prominent - or available - to decision makers

Decoy Effect

People like to make decisions based on comparisons; using a decoy (an “asymmetrically dominated option”), which shows that there is a clear winner, helps direct people to making that choice

Peak-end Rule

How we feel about our experiences is skewed by the peaks (or extremes) and the end of the experience; to optimise how people feel about your processes, get the end right and ensure the peaks are remembered favourably

Familiarity Principle

We prefer the familiar and so favour people, ideas and even routes to work that are known; going local, showing shared values and supporting consumer communities all appeal to this preference

#littleorangebook

The Little Book of Ideas is a collection of 20 of the most powerful ideas on marketing and strategic thinking, published by Epiphany in association with The Drum on 5th March 2014. Each idea was handpicked by Epiphany’s Tom Salmon and Dr David Mihell because of its potential to produce better marketing. To shape strategy. To create change. To build more successful brands. Complete with models, exercises and tips, it’s designed as a practical companion for marketers and strategists to use whenever they need inspiration or help addressing their most fundamental marketing challenges. Subscribers of The Drum received the book on 5th March. It is also available from www.epiphanysearch.co.uk.

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