When it comes to behavioral economics in healthcare, our industry has barely scratched the surface. Tune in for a review of two unconscious biases impacting consumer decisions and how to use them in your marketing practices.
Life is what happens to us when we’re making plans
- Peloton’s stocks plunged after Sex and the City spinoff, “And Just Like That…” killed off the beloved character, Big, by way of Peloton-induced-heart-attack.
- What makes the story notable isn’t the massive dent in shareholder value — it’s Peloton’s witty, lightning-fast response that has left marketers starry-eyed.
- Within two days, Peloton released a video featuring the very undead character himself talking to a Peloton instructor about his next ride. Comedian, Ryan Reynolds, narrates the end of the parody citing the medical benefits of Peloton. Reynolds closes the ad with a quick, ironic “he’s alive.”
- While Peloton could have sued the show’s producers, they took an endearing, comedic approach to correct the perception that Pelotons cause heart attacks.
- The response also included statements issued by a team of physicians on its Health and Wellness Advisory Council stating that Peloton can improve cardiovascular health.
- The Council, announced in September of 2020, shows Peloton’s growing focus on the company’s interest in health beyond just fitness.
- Since the recording of this episode, two women accused actor Chris Noth (Big) of sexual assault. Peloton removed all placements of the ad, making the formal statement that “every single sexual assault allegation must be taken seriously.”
- While there is no way to know what’s to come in Peloton’s “Big” saga, Peloton continues to earn its chops when it comes to its quick, socially-in-tune responses to the viral moment.
- Classic economics state that people act in their own best interest, but behavioral economics asserts that we don’t always act rationally but instead with biases. Priming and anchoring are two biases we cover in this show.
What is priming?
- Priming is when one stimulus changes your reaction to another later stimulus without awareness of the connection.
- Stephanie demonstrated priming through an experiment with Chase in which she sent him a message, “eat.” She then asked chase to fill in the blank to complete the following word: S _ _ P. He responded with “soup” because Stephanie primed him to think about eating.
- In 2016, psychologists performed a priming experiment in which students were asked to assemble sentences using unorganized words. Half of the students were given terms associated with the elderly. Each subject was then asked to walk down the hall to complete another task. Those presented words related to the elderly walked slower down the hall than those who were not.
- Priming can also influence weightier decisions like voting, which raises the question: When is priming unethical?
Priming in practice
- Marketers can prime their audiences by simply asking questions. For example, if you want to encourage someone to floss more, ask them how often they floss. The prompt increases the odds that your participant will think about how often they floss and consequently floss more regularly.
- The same applies to everything from health risk assessments to the emails and quizzes we use as marketers.
What is anchoring?
- The anchoring effect is a cognitive bias whereby an individual’s decisions are influenced by a particular reference point or ‘anchor’. Once the value of the anchor is set, subsequent arguments or estimates made by an individual may change from what they would have otherwise been without the anchor.
- You can test the anchoring effect by having someone write down the last three digits of their phone number, adding “1” to the beginning of that numeric series. After your test subject writes the number down, ask them what year the Taj Mahal was completed.
- Most people guess a year that uses their phone number as an anchor even though the year the Taj Mahal was built has nothing to do with your phone number.
Anchoring in practice
- Anchoring is the most relevant when it comes to price when the value of the good is not easy to estimate.
- For example, a Fortune 500 consultant could quote $500,000 or $750,000 for a project. Without a clear understanding of what the project entails and the target outcomes, there’s no way to know which price represents actual value.
- In negotiations, the first number to be put on the table is the most likely to act as the anchor. For example, in interviews, recruiters commonly ask for salary requirements. The number you give in this conversation anchors pay negotiations down the road to this initial number.
- Over a decade ago, Chris and a team performed an audit of 11 hospitals in the Twin Cities to examine how a patient’s first impression with a hospital impacted perceived brand value. The hospitals did not know the audit was being performed.
- Chris found that most hospitals offered a negative first impression that did not represent the actual value of the hospitals’ offerings. Yet, because patients’ first impression of a hospital is the anchor of their perceived value, the hospitals were losing brand equity from interactions beyond their core competencies.