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27 Sep 2010

What Consumer Psychology Teaches Us About Problem Solving

We often anticipate and rationalize people’s decisions using a cost-benefit analysis. This perspective frequently leads to erroneous conclusions and restricts problem-solving capabilities. Consumer buying habits provide fertile fields for understanding this truth and the impact intuition has on people’s decisions. Pragmatically, these understandings can dramatically increase our range of low-cost solutions for our businesses.

A typical example of what grows from these fertile fields is a June 2009, Harvard Business Review (HBR) article by Dan Ariely and Michael I. Norton titled How Concepts Affect Consumption (research document). The article explores the emotional aspects of competition, expectations, goal setting and rewards in encouraging people to alter consumptive decisions without experiencing changes in their physical requirements. Of course, this does not mean that people won’t find rationales to support emotionally based decisions, but their intuitions will drive their cognition to produce these rationales.

For example, the HBR article suggests that “keeping up with the Joneses” is an emotion driving a competitively based buying decision; we have a need to buy what everyone else is buying in order to be socially accepted (i.e. peer pressure). Expectations affect people’s product experiences; price is a major setter of expectations. People will tend to like higher-priced beverages over lower-priced alternatives even though the beverages are identical. People will tend to feel better, quicker from higher-priced drugs even though they are the same as lower-priced alternatives. This effect even shows up tangibly as increased activity in the brain’s reward domains.

All of these changes and more were achieved without changing people’s objective requirements. Thus, when we grasp emotional drivers and how they impact people’s decisions via their intuition, we open up a whole new world of solutions for everyday business problems.

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