The Case for Nudging Marketing into the Future

The Short Read –

As marketing heads into an increasingly dystopian reality of all the four P’s being taken over by other functions within the organization, it needs to reinvent itself for the next revolution that focuses on behavioural strategies that actively contribute to the top-line revenue of the organization. Welcome to ‘behavioural marketing’.

The Long Read –

Good Morning. But, some pragmatists among us will ask whether it is truly a good morning for brand marketers?

In an increasingly dystopian (for some) reality, product is being innovated by R&D, pricing is decided by finance, place is negotiated by trade, and promotion is driven by procurement. With all the four P’s of marketing being taken over by other functions within the organization, brand management seems to be increasingly sitting in the back seat.

It is also equally true that, in uncertain market conditions, with organizations and stock markets obsessed about growth, brand management still seems to be in a time warp, worried about how much awareness our communications have achieved, about how consumers perceive our brand, and worse, that soft fuzzy thing called intangible equity.

Now, allow me to make it clear that I am not against these measures, but this article is a wake-up call to acknowledge that most of these are fast growing outside brand management’s sphere of influence.

This may not look like a good morning, but I believe that this new era heralds the third revolution in marketing.

The first of the three revolutions was the _shift, where the marketing center of gravity moved away from local markets to regional and global headquarters, while the sales function also divorced itself, being seen as too important to be left to marketers in a competitive world.

We reluctantly agreed to this change since we could still hop over to the second revolution. We jumped on the digital transformation bandwagon starting from the job of creating a brand ‘website’. However, this too has been quickly taken over by the in-house I.T. department, led by the growing ambitions of the Chief Technology Officer.

And now, we are seeing a third wave where the role of marketing itself is getting redefined. I call this the ‘post-Kotler’ era as almost all levers of conventional marketing are driven elsewhere in the organization.

So, where does that take us? Are we consigned to be extinct like the ‘Personal Digital Assistant’ (remember Palm Pilot)? Or will sheer survival instinct drive us to change the foundations of what we do and language of how we work?

Here is one possible way of to reinvent marketing.

Forget the past, forget the fuzzy, forget managing the intangible. Instead focus on influencing people’s behaviour. Do the nudges that motivate them to behave in a way that favours our organization. More from being a money-sinking, margin-reducing cost center to becoming a revenue-generating friend of the Chief Financial Officer.

I call this thing ‘behavioural marketing’.

Marketing has always struggled between two alternating views. The first being the Homo Economicus, the dominantly economist view of the rational man maximizing his self interest & utility. And the second being the Homo Sociologicus, the opposite view of man as a function of his culture and sociology, not necessarily driven by personal selfish rational improvement alone.

But, now it is time to recognize the Homo Behaviouralis, man as guided by his ‘behavior plasticity’, driven to behave differently from expected stereotypes with over 104 documented biases across social, memory, beliefs and decision making.

At its heart, behavioural marketing is driven by this behaviour plasticity.

Given this new foundation, we marketers need a new method, a new approach and a new language. Thankfully, there is a lot we can learn and use from government organizations have studied consumer behavior for policy reasons in areas as diverse as healthcare, taxation and transportation.

And, for those impatient among us, this is what it drills down to – all behavioural strategy is a function of three levers. Involvement, Commitment and Action.

The first of the three, ‘Involvement’ understands that any behaviour vacillates between two modes of thought: The fast, auto-pilot, instinctive, emotional Low Involvement mode and the deliberative, reflective logical, slow, High Involvement mode. Daniel Kahneman articulates this much more comprehensively as ‘System 1’ and ‘System 2’ in his award winning book, ‘Thinking. Fast and Slow’. What level of involvement do consumers show in your category? 

‘Commitment’ says that all behaviours can be immediate or postponed. Behavioural scientists articulate this as hot or cold conditions. And the gap between them is defined as the empathy gap. A classical illustration of the empathy gap is, when in love (hot condition), it is difficult to see how it is to not be in love. What commitment state is your consumer/shopper in?

Lastly, ‘Action’ recognizes that the marketer may wish to reinforce existing behaviour norms or challenge them to create new norms that are favorable to the marketer.

These three behavioural levers of involvement, commitment and action are the new 4P’s of behavioural marketing. They are the strategic decisions to maximize every revenue generating activity, basis the marketer’s objectives and shopper focus along the path to purchase.

I have been  putting this framework through its paces over the last twelve months with varying degrees of success. And now, I would urge you to share your own learning and join me in this third revolution for a truly Good Morning.