By now, you should be convinced that many consumer decisions aren't really as straightforward as you might have thought. And they're certainly not necessarily rational in the sense that the person is totally aware of all the reasons that he does what he does. And things get even more interesting when we recognize that your customers decisions often are based on responses to subtle prompts in the purchase environment, and these prompts can be so subtle that the customer actually is not even aware that they're there. We're going to talk a little bit about two issues that have gotten a lot of attention in recent years. And for good reason. These are called priming and nudging.

In one study, when respondents from were exposed to a very brief flash of either an apple or an IBM logo on a screen. Their behavior changed even though they weren't even aware that they had seen the logo. Those who saw the Apple logo subsequently provided more creative and innovative responses on a task than did those who saw the IBM logo. The logo acts as a prime that cues us to act or to think in a certain way, even though we're not necessarily aware that we have even seen the prime. So some Prime's are visual and and others are kinetic or based on movement. In one study respondents attitudes toward an undesirable product.

In this case, curried grasshoppers improved when they were asked to approach it. This business physical movement typically links to liking. So we approach things that we like. This shows that even our own body movements, or other physiological reactions can influence what goes on in our minds. One important element of this process is framing, or how we pose a question in the first place. For example, people hate losing things more than they like getting things.

On one study, teachers were told that they would receive a bonus if they were able to improve the performance of students who didn't score very well on standardized tests. This incentive did not result in improved test scores. However, on the other hand, in another condition, teachers who got the extra money at the beginning of the year and we're told that they would lose the money if their students did not shows sufficient progress, managed to improve the test scores. Think about this scenario. Imagine that you've scored a free ticket to a sold out football game. at the last minute, a sudden snowstorm makes it somewhat dangerous to get to the stadium.

Would you still go to the game? now assume the same game and the same snowstorm except this time you paid a small fortune to get that ticket. Would you head out in the storm in this case? This is a nice example of mental accounting, where we consider external issues that shouldn't influence our choices, but they do anyway. So in this scenario, researchers find that people are more likely to risk their personal safety in the storm. If they paid for the football ticket rather than If it's a freebie, this is an example of the sunk cost fallacy, which states that if we've paid for something, we're more reluctant to waste it.

The field of behavioral economics, which is really exploding in popularity over the last few years, focuses on the effects of psychological and social factors on the economic decisions we make. And it's clear that many of these choices are anything but rational. So let's get back to priming, to looking at how subtle cues in the environment can influence our choices. In a study. A group of undergraduates was primed to think about money. They saw phrases like she spends money liberally or pictures that would make them think of money.

Then this group and a control group that wasn't focused on money answering Questions about moral choices that they would make in different scenarios. The students who had been primed to think of money consistently exhibited weaker ethics, they were more likely to say that they would steal a ream of paper from the university's copying room. And they were more likely to say that they would lie for financial gain. Here's another great example of priming that has a lot of ramifications for people who are in retailing. In a field study in a wine store, researchers played either stereotypically French or German music on alternate days. On the days when French music was playing in the background, people bought more French versus German wine, and the reverse happened on German music days.

Follow up questionnaires indicated that customers were not aware of the impact of the music on their choices. So the takeaway is obvious for retailers, subtle cues in a sales environment can prime your customers to be more aware of product attributes that you want to emphasize. Another important process here is called nudging. And nudging refers to a deliberate change by an organization that intends to modify behavior. And this can result in very dramatic effects. So one simple nudge that changes how people act is to switch from asking consumers to opt into a program to asking them to opt out of a program if they don't want to participate.

In Europe, countries that asked drivers to indicate if they want to be an organ donor, convinced less than 20% of drivers to do so. In contrast, those that require drivers to opt out if they don't Want to be donors get more than 95% participation. This huge difference illustrates what researchers call the default bias. And this means that we're more likely to comply with a requirement than to make the effort not to comply. As another example, people are more likely to save for retirement if their employers automatically deduct a set amount from their paychecks rather than if they have to set up this process themselves. Who time for a pop quiz?

You didn't think I'd forgot? Did you? Even though this is the last module and we're getting toward the end? Let's see if you've been paying attention to this discussion about decision making. Here's the question a bakery vents its exhaust onto the sidewalk so that passers by can smell what is cooking. This is an example of an a nudge B prime, C heuristic D evoked set.

If you selected B prime, you are the winner very good. The takeaway, consumers often are not as invested in brand choices as our brand managers. You need to determine how much cognitive processing your customers are likely to do and strategize accordingly. And in particular, pay more attention to subtle cues in the environment. Because these may have a bigger impact on what your customers do then you are aware of now