Interesting Facts You Didn’t Know About Consumer Psychology – Ogilvy

Tyler Hayzlett
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mad men

Where Did the Term “Mad Men” Come From?

Long before the infamous AMC show, the term “mad men” was originally coined in the late 1950’s to describe the advertising executives of Madison Avenue.

They studied consumer behavioral psychology and were masters selling products by associating them to things customers cared about.

And they still exist. And they have some fascinating stories.

Meet Rory Sutherland.

Introducing Rory Sutherland

If you haven’t heard of Rory Sutherland yet, you have heard of his agency.

Sutherland serves as the Vice Chairman of Ogilvy, the historically infamous ad agency founded by the original King of Madison Ave, David Ogilvy.

Sutherland became Internet famous a few years back after his Ted talk video went viral criticizing Europe decision to spend £6 billion to construct a high speed rail in order to increase consumer satisfaction.

Because of his knowledge of consumer behavior, he could have achieve the goal in and sixth of the cost.


Perspective is Everything

So a few years ago the UK greenlit a massive engineering project to improve the journey of the Eurostar rail line.


In order to increase commuter satisfaction, the UK decided the best way to increase the journey was to spend an enormous £6 billion to construct a high-speed rail track from London’s St. Pancras station to the coast of Kent.

This train would shorten the commute from Paris to London by a grand total of…40 minutes on an overall three and a half-hour trip.

Sutherland’s cheeky critique on the project was that the UK made a fundamental mistake (like most businesses do).

His argument was that consumer satisfaction could have been achieved much cheaper by altering consumer perception. Heres the argument:

Consumer Satisfaction. I Don’t Think That Means What You Think it Means…

The UK assumed customer satisfaction would be achieve to shorten the length of the commute and the quality of the experience was not relevant or even an option given for them to consider.

Rory suggested rather than write a £6 billion check to make the experience shorter (the proposed brand promise), the capital investment would have been better spent using a fraction of the budget to simply make the journey 10 times more enjoyable (his proposed brand promise).

Considering the budget they were consider, for a fraction of the cost (£1 billion), they could have hired  male and female supermodels and pay to them serve free Chateau Petrus at $4,000 a bottle to every adult passenger on board

Effectively salvaging billions from the original budget, and in turn, passengers would have demanded the train to be slowed down, rather than save an extra 40 minutes of travel time.

There’s a War on Marketing?

Sutherland suggests that the war we face in marketing and advertising today, is that every operational role today believes that what they do is a rational science.

When human behavior economics proves we are anything but rational.

Sutherland has spent his career studying behavioral economics, a field that attempts to explain why people do what they do or more importantly why people purchase one product over another.

Advertising adds value to a product by changing our perception, rather than the product itself. Rory makes the assertion that a change in perceived value can be just as satisfying as what we consider real value.

For marketing to be effective, we must become as irrational as our customers perception. In a rather odd unassuming parallel, Sutherland compares this marketing mindset to military strategy. Here’s why…

What You Didn’t Know About Military Strategy

If you follow military strategy, the first thing you can’t be, is logical and efficient.

Wtf? Because that’s exactly what your enemy will expect you to do, making you susceptible to walk head-on into every trap the enemy sets for you in anticipation of your most obvious attempts to win the war.

Today’s consumers, while far from the enemy, are waiting for our much anticipated and obvious marketing tactics. They see right through them.

The strangest element which marketers face is the psychological one.

Rather than focus on rational improvements, we must make an effort to look at the far less obvious psychological innovation.

Don’t make the following mistake.

The Modern And Wrong Assumption of Consumer Behavior:

Sutherland states that the modern business assumption of the economics of a consumer purchase is as follows:

“Every purchase or exchange arrives as a standalone, individual, utility optimizing transaction between two people in a state of perfect information and trust. The conditions of which don’t exist and never happen.

The current business model sees marketing as an inefficiency, an added hard cost in the value chain because the current business framework assumes every consumer knows exactly what they want to buy and exactly what they want to pay to acquire it.”

Economics Don’t Care About Your Feelings

The economics doesn’t calibrate for human experience of emotions, feeling and instincts like trust and perspective.

The weirdness of human perception is that you can create high levels of satisfaction without high levels of expenditure if you really know what floats the customers emotional triggers.

This is Why Mirrors Are on Every Elevator

Ogilvy worked with a Midwest company that received a high level of complaints that their elevator was too slow.

So, naturally they went to Otis, (one of only 14 elevator companies in the US) who said for a few million dollars, they could replace and update the current elevator infrastructure decrease the time it took people to wait for the elevator.

Makes sense… but just before investing $2,000,000 on the project, someone said no.

Instead, they suggested, installing floor to ceiling mirrors on the walls outside the elevator. While people waited for the elevator, they participated in small acts of voyeurism and would pass the time looking at themselves in the mirror.

And that’s when they discovered something weird.

What they discovered was that people were complaining about the speed of the elevators. But what they meant was they were just getting really bored waiting for the elevator to arrive.

Once the mirrors were installed,  all complaints about the elevators completely vanished. Proving again psychological insight is just, as if not more powerful, then high-cost physical advancements.

Advertisers have become masters at creating intangible or “perceived value.” But intangible value gets a bad rap in business operations because it’s much more difficult to quantify.

When Marketing Fails. Take It From GoPro

Most marketing goes wrong when we focus on solving external conflict resolutions to solutions that are really internal.

For example, GoPro didn’t reinvent the video camera.

They changed the experience we had with every camera prior to GoPro. Before GoPro, it was difficult to simultaneously capture and experience life’s greatest moments while others participated with us as we captured our adventures through our own lens in a way that was never before possible.

One of GoPro’s greatest features is its easy-to-use video editing software that users access for free.

In addition to sharing life experiences, GoPro simplified producing and distributing videos with ease.

Conclusion: Marketing is, oftentimes, seen as creating a form of “fake” value…

But the truth is, all value is perceived.

Businesses that better understand consumers and what goes into their purchase decisions have the advantage.

When addressing innovation, it is critically important to know consumer psychological behavior.

Average Score: 95%

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