Posted by Eric Lomax
Have you ever driven somewhere but forgotten how you arrived? Struggled to overcome a bad habit or make impulse purchases? Most people believe their actions are the result of conscious effort but if that was true, none of these would exist. All personal choices and customer selections would be driven by empirical information but they’re not.
“We believe that when we choose a laptop or a laundry detergent, plan a vacation, pick a stock, take a job, assess a sports star, make a friend, judge a stranger, and even fall in love, we understand the principal factors that influenced us. Very often nothing could be further from the truth. As a result, many of our basic assumptions about ourselves, and society, are false.” — Mlodinow
One striking example of counter-intuitive behavior occurred in the 1980s with Coca-Cola. Most consumers prefer Pepsi over Coke when they don’t know what they are drinking. In a multibillion-dollar market, that could translate to hundreds of millions of dollars of lost revenue. Although the company never divulged its rationale, Coca-Cola discontinued its original cola and launched New Coke, a sweeter alternative that was similar to Pepsi. In spite of empirical data to the contrary, New Coke failed miserably. Consumers rejected the product and forced it from the shelves.
Decades later psychological and neurological studies offered some insight for the perplexing response. When tasters evaluated the two sodas without knowing the brands, the majority preferred Pepsi. When the participants knew — or believe they did — their preferences changed. Oddly though, brain imaging scans revealed that some of the participants showed increased memory activity when they thought they were drinking Coke. The region that activated is tied to deep memories and researchers asserted that these drinkers didn’t just experience the soda with their taste buds, they unconsciously thought of it nostalgically. In short, memories unconsciously improved how they experienced Coke.
Leonard Mlodinow’s “Subliminal” combines psychological research with neurological studies to examine the decision-making process. It guides the reader through a series of revelations that explain what influences the mates we choose, the friends we select, and the products we buy. It explains how our brains need to categorize things for efficiency which includes people. We see the others as members of one of our groups or not. They are older, younger, hipster, foreigner, democrat, republican, working-class, entitled, Millennial, Boomer, etc. And we signal — sometimes through purchases — which groups we belong to. “Subliminal” shows how expectations affect outcomes and labeling children as gifted is often a self-fulfilling prophecy — even when their IQ is not above average. And why a $50 bottle of wine tastes better than a $5 one — even if it is the same wine.
Mlodinow explains two overarching factors that cause this behavior. The human brain can only process about 5% of the information it receives, so the subconscious attacks and often creates the rest. This is why two people who see the same event can remember it differently. The second is that the vast majority of brain activity is unconscious, which shapes what we recall and see the world. It allows us to operate on auto-pilot when driving, picking friends, tasting, choosing a mate, and buying products. Products that represent one of our groups are desirable, while others are not. Hence, some people drive an American-made, working-class pickup — even when they’ve never hauled anything bigger than a few bags of groceries — or pay extra for free-trade, coffee-shop coffee rather than one from the local diner.
Mlodinow’s insight sheds light on the reasons people buy, marry, or prefer one object over another. It is not a marketing book or a business text; it is a precursor to both. It conveys the reasoning behind consumer choice and the many counterintuitive decisions they make.
Average entrepreneurs listen to their consumers, but wise ones know when to ignore them. Empirical data will insist you create a New Coke. Focus groups, tests, and studies will provide the same guidance — right before the customers reject it. Consumers are unaware of the things that influence their choices. You cannot be.