Understanding Behavioural Economics in Marketing Communication

Behavioural Economics (BE) holds great promise to practitioners of Public Relations and Marketing as it provides them with an understanding of human behaviour and decision making – it can eliminate the guesswork and help create campaigns with measurable impact. BE takes an interdisciplinary approach by incorporating multiple facets of behaviour with thorough empirical methods to elaborate on why we make decisions the way we do. This discipline involves the examination of psychological foundations of behaviour such as neuroscience, cognition and social psychology, and their intersection with various fields such as policy, economics and communication. 

Insights from behavioural economics and in particular, the concept of ‘nudge’ is being applied widely among private and public organisations since publication of the seminal book ‘Nudge’ by Thaler and Sunstein in 2008. It propagated the idea of ‘Choice architecture’, where our decisions can be formed by the context in which alternatives are presented to us. Subtle differences in the environment around us or the design of the decision-making context can have a significant effect on what decisions we make. The appeal of the choice architecture or nudge lies in the idea of influencing human decision making with least amount of effort to achieve behaviour change.

The application of behavioural psychology is not new to public relations and as early as in the 1920s, Edward Bernays, nephew of Sigmund Freud, used it to increase sales of bacon produced by the Beech-Nut Packing Company. In addition, the book Influence: The Psychology of Persuasion, first published in 1984 has made a significant impact on Public Relations professionals, across generations.

To influence behaviour, nudge interventions use many well documented heuristics, often in combination with one another. A well-spoken about campaign in India that used principals of nudge is the ‘Swacchh Bharat Mission’ (SBM), that employed ‘Prospect Theory’ to create behaviour change. This is an example of ‘framing’ where the way choices are framed have a quantifiable impact on people’s preferences. As humans are considered to be loss averse – people will put in greater effort to avoid a perceived loss as compared to obtaining a perceived benefit. 

A well-coordinated communications strategy put together by SBM highlighted the ill-effects of poor sanitation and the resultant disease and deaths. This had a measurable impact of changing people’s habits, especially in rural India. This campaign was lauded by Cass Sunstein, who pioneered ‘Nudge Theory’ along with Nobel Prize winning economist, Richard Thaler. He was lavish in his praise for India’s efforts at incorporating behavioural insights into its public policy. 

As our understanding of human behaviour deepens, the list of nudges keeps expanding. The simplicity of this method, to the point that the ideas seem obvious, provide us with great insights to people’s thought process. The understanding of this method is now both a requisite for communications professionals and also vastly useful.  Few heuristics that can be used for a PR campaign:

Mood – When people are enthusiastic about something, they are more receptive. A mood that can inspire, intrigue or generate a positive emotion will compel people to engage with it, increasing attention to a seemingly mundane, yet significant behaviour changing choice.

Positioning – In the theory of nudge, this explains the physical location or position of a message, experience or intervention. The way a room/location is laid out directs the way people move through interacting with the content of the intervention. Supermarket designers (think IKEA) or merchandisers are examples of how they influence a customer’s purchase behaviour.

Framing – Information presented to accentuate the positives and provide a realistic impression of the meaning/implications of the choice. Here the nudge focuses on communications design (words, settings and situations) that clearly conveys how the choice will impact the audience (both for brand messaging as well as that of safety). The principals of mood heuristic like creating positive emotion, along with clarity and relevance makes this specifically powerful. The choices are explained in terms of loss and gain. Examples of framing are – proposing a risk of losing 10 out of 100 lives vs the chance to save 90 out of 100 lives or advertising yoghurt that is 20 percent fat vs 80 percent fat free.

Mindlessness – people are often compelled to make decisions when distracted. The key, here, is to cut through distractions by simplifying complex messages. However, this should not aim to mislead or nudge people into making bad decisions by taking advantage of situations where people may be mindless and make decisions in a hurry or carelessly.

The principals of behavioural economics are based on the premise that human beings are irrational as opposed to classical economics that relies on the assumption that human beings are rational. Nudges make use of human heuristics such as cognitive shortcuts and biases for intended and favourable results.  Nudges happen to us in everyday life a lot more than we would expect. While being a very powerful tool in the hands of communicators and marketing professionals, it should be used with caution and in keeping with ethical guidelines of external influence.

The views and opinions published here belong to the author and do not necessarily reflect the views and opinions of the publisher.

Vasudha Jha
Vasudha is Head of Corporate Affairs at Mars Pet Nutrition. She has more than two decades of experience in Corporate Affairs & Communications with Reliance Jio and Monsanto Holdings India Limited. She led Corporate Communications for Star India Pvt. Ltd. and Glenmark Pharmaceuticals Limited, besides having worked with leading PR firms like Clea PR, Genesis Burson Marsteller and her entrepreneurial venture, 24th June Public Relations.

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