What is Nudge Marketing, and When Does Persuasion Become Coercion?

Nudge Theory, as articulated by Richard Thaler in his celebrated work, has spawned a universe of real-world applications. In particular, the principle of engineering the Choice Architecture facing consumers has promised powerful applications for marketers.

However, using cognitive biases to shape consumer behaviour provokes important questions about free will and personal choice. The most obvious one is also the most urgent: when does persuasion become coercion?

What is Nudge Marketing?

Nudge marketing allows businesses to influence their customers’ decisions indirectly, through suggestion and reinforcement. Experiments have shown that non-conscious biases and guesswork are responsible for the majority of everyday decisions, and these can be easily manipulated.

Environmental cues designed to alter the “Choice Architecture” facing an individual can push people towards particular decisions. Nudge marketing applies these principles to marketing scenarios. The architecture being shaped by nudge marketers is simply the consumer’s purchase decision.

Plague or Panacea: Nudging in the Media

Media coverage of Nudge Theory and Nudge Marketing has been predictably dramatic. Some journalists have presented it as a miraculous way to improve public life and health, whilst others have dismissed the practice as quackery or sinister manipulation.

A Guardian article published in 2017 highlighted the work of the UK Government’s Behavioural Insights Team (BIT). Whilst the department innovated by David Halpern was first viewed with a mixture of skepticism and concern, the results of the BIT have been impressive.

By changing the messaging used in government communications, the team produced a tenfold return on the government’s initial investment. In the first years of its operation, the BIT:

• Secured an extra £200m in tax receipts
• Cut the reoffending rate for drink-drivers
• Reduced inappropriate 999 calls
• Helped convert large numbers of smokers to e-cigarettes.

Corporate Nudging

Many large businesses have also used behaviour specialists to save money and improve the welfare of their employees. An article published by abc News in 2013 documented the way Google was using nudges to help its employees make healthier choices at work.

To start with, the company made the sweets containers in their canteens opaque. Simply reducing the visibility of the snack foods reduced their consumption by a reported 9%. They then rearranged the items in their canteen. Salad was moved to the front and sugar-free drinks were positioned at eye-level in their fridges. Because of this, calorie intake was reduced by 7%.

Finally, Google had a fool-proof plan to persuade employees to manage their portion sizes more carefully. Having adjusted the arrangement of food options in the canteen, they made their plates smaller.

Perhaps the most famous example of nudging in action took place at Schipol Airport, Amsterdam. Here, the airport’s designers used a simple technique to improve bathroom cleanliness. By printing the image of a fly on the inside of a urinal, the airport significantly improved user “accuracy.”

So, is Nudging Playing Fair?

The reality is that Nudge Marketing is very difficult, often clumsy, and people almost always know exactly what is going on. Rather than circumventing an individual’s free will, nudging alters the circumstances organically to make some decisions easier than others.

However, when individual preferences are aligned with favourable “Choice Architecture,” the results can be impressive. As with any means of persuasion, the most important ethical question is: what is it being used for?