Decoding Decoded: 5 Key Points from Phil Barden’s Decoded Applied to Advertising
Phil Barden, most famous for his work with T-Mobile, left his 15 year career in brand directing to focus on bridging the gap between science and marketing effectiveness. In Decoded, he’s done just that. Using empirical research, Barden dives into decision making psychology and explains how it can inform us on consumer behavior. It’s a great read written specifically for marketers, but if you haven’t had the time yet, here’s what you need to know:
Decision making involves two systems of information processing.
System 1 is efficient, automatic, and unconscious. System 2 is thoughtful, purposeful, and aware. You might think of System 1 as the autopilot, and System 2 as the pilot.
2. System 1 makes 80% of our decisions, including most purchasing decisions.
People are not thinking very deeply about brands when they buy; they rely on System 1 for efficiency. But System 1 makes decisions based on a variety of perceptive factors which can be manipulated.
When people look at a product, their System 1 ‘autopilot’ automatically assesses the value of that product, and the cost of that product, considering both monetary and behavioral factors.
3. People will make a purchase if the perceived gain is greater than the perceived cost.
While that sounds rational, these perceptions are processed automatically, influenced by a variety factors, and are not rational. Therefore, neither are purchases.
When we are considering purchasing something, the benefit of that product activates the basal ganglia, the part of our brain that registers reward. The product’s cost activates the insula, the part of the brain that registers pain. Based on how much pain and reward we experience, an emotional assessment, System 1 automatically determines the product’s net value based. When a product’s perceived net value is great enough, we decide to make a purchase.
4. Advertising can influence a person’s automatic assessment of reward of purchase.
Knowing what we know about automated System 1 perception, we can change how people perceived a brand or product’s costs and benefits to maximize perceived net value. As advertisers, we primarily deal with enhancing perceived reward.
Elevate Perceived Reward:
Framing a product with packaging, descriptors, and other signals can influence how a consumer’s System 1 determines its value. Barden uses Starbucks as an example of how this perceived increase in value allows brands to charge a significant premium. Starbucks advertisers are selling an experience. When you enter a Starbucks, it’s spacious with sophisticated decor. It takes you away from the hussle and bustle of the day-to-day. It’s this emotional response that compels us to get up from our desks and go to Starbucks when we need a break to unwind. The Starbucks brand is not just selling average coffee, it’s selling a short vacation.
5. Potentially, every message a campaign sends can frame a product and influence a consumer’s decision to buy a brand or not.
Every signal from every part of your campaign, including word choice, color, logo, choice of influencers, etc, can influence how a consumer’s System 1 assesses the reward of your product. This is true even if the consumer doesn’t think they are being influenced, and even if they don’t even remember interacting with the brand’s advertising at all. Therefore, every signal we produce can influence a consumer’s system 1.
Understanding how system 1 and system 2 process decision making, and how to influence them, helps us ensure we’re focusing on the right factors and asking the right questions. Barden offers decision making psychology as an empirical and analytic framework to inform marketers on consumer behavior. He details the research, describes how advertising can leverage that research, and demonstrates that doing so drives impactful results for brands. Essentially, if we apply his findings, we’re taking one big step closer to maximizing the effectiveness our creative work. What client doesn’t want that?
