Author: Gary Z. Bizzo
Originally published on Equities.com
For the past 60 or so years marketers have consistently tried to find the ultimate way to entice consumers to buy the products they are flogging.
The traditional marketing industry believed that people made buying decisions based on rational, conscious thought processes.
Science turned that fundamental belief on its head and has proven most decision-making happens at the subconscious level. The subliminal mind makes people decide one way or another. Neuroscience continues to research how to change our buying decisions.
What does this mean to the young marketing executive hired by the startup founder to have his product on the mind of everyone and to make his company successful?
It means an understanding of consumer behavior must take into account everything from the psychological reasons to purchase as well as the sociological and anthropological, and a lot more – phew!
So, what types of consumer behavior affect buyers in the shopping mall?
Programmed or routine purchases probably are at the top of a marketers mind. You know the product that you pick up as you speed through the drug store after a tough day at work. You needed toothpaste and grabbed the closest to the cart in the aisle. It doesn’t matter; toothpaste is all the same, right? It could also mean that the toothpaste you chose is always in that same spot on the shelf and it’s a no-brainer decision. You’ve had past experience with purchasing it and automatically make the decision to purchase again. Brand recognition, whether it’s just a familiar color or shape) plays a large part in routine response behavior.
Occasional purchases are limited decision-making ones. You need ice for the BBQ, you find it at the front of the store where you’d expect and the decision is made.
Complex decision-making product purchases are where marketers show their magic. What part of purchasing that car or a new laptop will be affected by emotion and/or rational thinking? Here’s where the psychological nuances, the belief systems and the attitudes come into play.
And then there’s most dangerous buying decision for the consumer – impulse buying. Impulse buying disrupts the normal decision making models in consumers' brains. Research suggests that emotions and feelings play a decisive role in purchasing, triggered by seeing the product or upon exposure to a well-crafted promotional message. Marketers and retailers tend to exploit these impulses that are tied to the basic want for instant gratification.
Impulse buying is based on emotion not reason and relies more on the merchandising of the product by the store rather than the manufacturer. They are the products on the end of an aisle in the store with 10% off or those inexpensive ‘stocking stuffers’ people seem to find everywhere running up to Christmas. Retailers rely on your unchecked impulses to spur sales.
Ok, so now that I’ve explained the types of behavior that go into buying a product let’s talk about the decisions and actions that complete the transaction. There’s about four of them:
How do marketing campaigns work? They know by consumer behavior how to motivate the buyer into putting money in your pocket. Blue suggests honesty, red is power, and positioning a product mid height on a shelf is more conducive to purchasing it (it also helps that it is at the average height for most people to easily reach). Marketers need to know how to motivate.
Perception is based on a feeling the product is exclusive; worth the money or not worth the effort. Evoking a feeling or emotion will sell every time. American Express has the most famous modern example of exclusivity in advertising with the tagline: “Membership has its privileges.” Rolls Royce has the dibs on most prestigious auto.
Learning to buy in a marketing campaign comes from Pavlov’s experiments. Consumers "learn" their buyer behavior through drives, cues, responses, and reinforcement. Drives are strong internal stimuli that create calls for action and the response to the drive is the action – to purchase.
A simple example is when people hear the ice cream truck music they run to the street to buy an icy treat. Just like Pavlov’s dog we learn to respond to a stimuli.
A campaign that offers an experiential feel to it will sell product. It is often called engagement marketing. I remember watching Felix Baumgartner‘s jump from a balloon in 2012 from an altitude of 128,000 ft. Called the ‘Stratos’ jump, it was sponsored by Red Bull. For a few seconds I felt that man’s plummet to earth and images of drinking Red Bull giving a person the power to do it rang in my head.
Through our daily activities, we build beliefs and attitudes that influence our buying behavior. A consumer's beliefs are descriptive thoughts that they have about something, while attitudes are a consumer's "relatively" consistent evaluations, feelings, and tendencies toward an object or idea. Changing a consumer's attitudes and beliefs usually will require us try to change many other perceptions and attitudes in other areas of the consumer's mind. Often it is easier to position a product into an existing attitude, than to fight against them and try to change them.
Marketers need to understand these beliefs and attitudes in order to best position their messaging in front of the target consumer. With this understanding they can understand how to launch focused messaging campaigns to change beliefs about our products and brands.
Economic conditions obviously affect consumer behavior. In 2008, in Vancouver, the lower end restaurants (sorry McDonalds) and the luxury restaurants seemed unaffected by the recession. Poorer people and rich people still ate at their usual haunts while the middle class tightened belts. I almost bought a beer distribution company in 2008 because while people were keeping investments close to their chest people still wanted to ‘drown their sorrows’ with beer. Deciding not to purchase it was probably good for my waistline.
Ok, personal preferences must come into the mix and there is often no accounting for taste but it is based on our preferences. Do you prefer toothpaste with a red label or a blue one? Do you like the white branding of Apple products in the Apple Store? Marketers are watching, listening and responding to what they perceive is your preference to a certain color, sound, feeling and more.
The biggest influence on consumer behavior is cultural and group influences. The latest shoe, dress, trend is based on others close to us promoting it. Ethnicity, cultural mores, geography also determine the buying patterns of consumers. Selecting the perfect spokesperson hinges on the culture that the campaign is targeting. India has cricket stars and America has basketball icons.
So, you’ve developed a product, hired great staff, you consider your startup ready for business then someone tells you about how consumer behavior is influenced by psychological, sociological and anthropological issues – what?
CAN A MALE BOSS MENTOR YOU?
Since #MeToo, senior men are more reluctant to mentor junior women — a lose-lose situation for everyone. How can we stop this disturbing trend?
Fleur Britten - The Sunday Times
Finding a mentor is often about finding the right moment. One female lawyer found hers during the drive to court, where she got to travel by car with a senior colleague and discuss cases with him. But post #MeToo, the movement that finally gave women the permission to speak out about sexual harassment and assault, the invitations came to an abrupt halt — as did the mentorship.
This, sadly, is no exception, according to new research has found that 40% of male managers in the UK are uncomfortable participating in a common work activity with a woman, such as mentoring, working alone or socialising together (a 33% jump from how they felt before #MeToo). What’s more, senior-level men are twice as hesitant to spend time with junior women than with junior men in work activities such as one-on-one meetings, business dinners and travelling for work. Of the men surveyed, 25% admitted that it was because they felt nervous about how it would look.
The findings add insult to injury for women in the workplace. “It’s clear that sexual harassment needs to be addressed in our workplaces, but it’s not enough to not harass us,” says Sheryl Sandberg, chief operating officer of Facebook and founder of LeanIn.org. She commissioned the research after hearing anecdotally that male leaders were concerned about being alone with younger women. “Sexual harassment is about power structures,” she continues, “and to make our organisations safer for everyone, we need more women in leadership. That can’t happen if men — who are the majority of senior leaders — are pulling back from mentoring and supporting women.”
Like it or not, a male leader can accelerate a woman’s success at work. “The research shows that if you have a male mentor, you make more money and have more promotions,” says W Brad Johnson, an American psychology professor and co-author of Athena Rising: How and Why Men Should Mentor Women. Before you hurl this article across the room, Johnson explains: “It’s not because men are better mentors.” The workplace was created by and for men, he says, “and that continues, so there are often not enough women in senior positions. In male-dominated professions, if you don’t have a male mentor, you’re not going to get mentored.”
So, can it be that #MeToo has actually undermined women’s progress? No, insists Stephen Woodford, chief executive of the Advertising Association and founder member of TimeTo, an initiative to stamp out sexual harassment in advertising. “Sunlight is the best disinfectant. This needs to be put into the public domain to get people talking about it.” #MeToo, he adds, has been “unequivocally good in surfacing these issues that have been there for ever. I’ve not heard from a single woman who says, ‘Let’s turn back the clock.’ ”
But #MeToo has had unintended consequence, namely that “a lot of really good guys are shying away from women”, says Rachel Thomas, co-founder and president of LeanIn.org (who adds that the movement is “very net positive”). “It’s not because they’re harassers or difficult people, but because it’s a knee-jerk response for them. By choosing to spend less time with women, they’re sidelining them, but they’re probably not internalising the impact of that.” It’s why releasing the data is so important, she adds.
In fact, these consequences come back to bite men, too, because everyone stands to benefit from female leadership. LeanIn.org cites research that shows when more women are in leadership, organisations tend to offer employees more generous policies and produce better business results. What’s more, Johnson adds, “when men have women in their networks, those men develop better communication skills, emotional intelligence and stronger networks. It’s good for guys, too — they just don’t realise it.”
Reluctant male syndrome is a recognisable phenomenon, according to Johnson, who identified it with his co-author David Smith. So the reluctant male is afraid of how a mentoring relationship with a young woman might be perceived: “They fear it might initiate gossip,” he says, “or that the woman might think that he was coming on to her. Or they might be concerned about what their partners would say.” Perhaps most disturbing is the “implicit biases” that men hold: “They question how much time they spend with a junior woman because they see her as a ticking time bomb” — it wouldn’t be deemed a good investment of their time if their mentee had children. Have they not heard of mother-of-two Sheryl Sandberg?
Feel free to be cynical about the reluctant male. “#MeToo provides a convenient excuse,” says the feminist writer Clementine Ford, whose latest book, Boys Will Be Boys: Power, Patriarchy and Toxic Masculinity, is out at the end of this month. “It’s basically saying, ‘It’s not because I’m sexist, it’s just too risky for me.’ ” The implication is that it’s women causing the problem; that “a young woman is either going to lie or overreact to something totally normal such as a man complimenting her or just touching her around the shoulder”. If these men genuinely don’t believe themselves to be a risk to young women, she adds, “then they shouldn’t be concerned about mentoring them”. As Sandberg puts it: “We need to raise the bar on what’s expected from men at work. Don’t harass us — but don’t ignore us either.”
So, how to navigate the bumpy path towards progress? “#MeToo has triggered a seismic and rapid shift of how society operates, and that causes uncertainty,” says Woodford, who this year featured in Management Today’s Agents of Change power list. What’s needed here is for men to be educated in modern masculinity, says Daniele Fiandaca, co-founder of Utopia, a culture change business for clients such as Coca-Cola and Universal Music. “Thanks to feminism, women have a much clearer sense of identity,” he says. “Men are lagging behind, and are confused. They’re scared of the change; they don’t know what it looks like and where it leaves them, so they are often resistant.”
The consensus is that communication is key. “We need to be open to discussing these uncomfortable issues,” says LeanIn.org’s Thomas. “We need men to be leaning in and spending more time with women, not less.” Fiandaca advises creating “safe spaces” for men to build confidence and knowledge in order to address their fears, so they can “understand that they’re not rational”. Fiandaca believes that inclusion needs to be a workplace’s overarching philosophy, which means ditching excluding behaviours. So long, then, to the slippery nipples (or indeed any kind of alcohol), footie “bantz” or a day on the golf course. Thank heavens for that.
Of course, progress will be slow and, says Woodford, “has to be part of a wider societal shift to equality”. How companies create inclusive and respectful cultures will be hard work, agrees Thomas, and “will require a lot of consistency and fortitude”. It is incumbent on all of us, she says, “to make sure we are getting more women into senior leadership, because that is a big part of the solution”. Ready when you are, boys.
How to mentor in the modern world
● Give equal access to men and women.
● Don’t create double standards — choose similar locations and timings for all.
● Choose breakfast over lunch or dinner, and avoid alcohol.
● Have several mentees for shorter times, not just one, and consider group mentoring.
● Be a good listener — listen for 80% of the time, talk for 20%. DOn’t bore them with your heroic tales. It’s not about you.
● Give concrete, achievable feedback that’s based on skills, not personal style.
● Check your intentions and don’t be a dick, as they say!
by Gihan Perera
What if I told you of a new technology that could improve the lives of millions of people, but would kill 1,000 people a year. Would you support it?
Most people would say No, because a thousand deaths a year is unacceptable, regardless of the benefits. But we do already have this technology: Driving!
A few years ago, when a Uber self-driving car killed a pedestrian, it caused world-wide outrage and brought a halt to their self-driving car program. Of course, the death of even one person is tragic. But in Australia, our road toll is 1,200 people a year – about 100 a month.
So why don’t we call for a total ban on cars?
Because most people aren’t very good at thinking about change.
It’s much easier to do what you’ve always done than to change.
We trick ourselves by ignoring or diminishing the downside of what we have now (1,200 deaths per year) and magnifying the downside of the change.
Or we set impossibly high standards for the change (“Even one death from a self-driving car is one too many!”), so we can claim to have acted responsibly and with due diligence.
This is a natural way of thinking, because we have never had to deal with change as as fast as we do now. We had to deal with immediate, high-impact, single-incident change (glimpsing a sabre-tooth tiger out of the corner of our eyes), so we evolved to deal with that kind of change. But that wasn’t the massive, relentless, constant change we face in our lives now.
As a result, most people are not very good at creating change. They wait for change to happen to them, and then decide what to do.
But this is dangerous in a fast-changing world.
If you’re a leader – of an organisation, a community, a country, a team, or even just yourself – start thinking differently about change.
There are plenty of people who can tell you why change is bad! But the people who will be most valuable in the future are those who are comfortable with change. They consider it openly, assess it fairly, and act decisively.
Argue for the opposite.
To open up your thinking, try this simple exercise whenever you’re considering some change in your personal life, professional life, team, or organisation.
Instead of considering a change to whatever you have now, imagine the change has already occurred and you now have to argue for a change in the other direction. In other words, instead of changing from A to B, you consider the change from B to A.
For example …
Matt Moulding is delighted that The Hut Group has kept under the radar.
Interview by Peter Evans The Times
The Hut Group’s headquarters next to Manchester airport could easily be mistaken for a cocktail bar in nearby Wilmslow, the mansion-heavy Cheshire town favoured by Premier League footballers. The decor is cream, the staff are almost all under 30 and there is a DJ playing a minimalist cover version of Paul Simon’s You Can Call Me Al. It wouldn’t be a surprise if Coleen Rooney walked in.
Yet it is 11am and this is a place of work. The Hut Group (THG) has stealthily become a global retail success story, selling more than £900m of health and beauty products last year through its 166 websites. The company is said to be valued at about £4bn — similar to Marks & Spencer — but is far from a household name. How is it possible to have flown under the radar for so long?
“I quite like people not knowing what we do,” says Matt Moulding, the taciturn co-founder and chief executive, sitting in THG’s boardroom last week. He speaks quietly with a Lancashire accent.
“The number of people who say it’s just a collection of hotchpotch stuff . . . they really don’t know what we’re doing and I’m all right with that.”
It is going to be difficult to keep the secret for much longer. THG owns brands such as Myprotein, Espa and Mankind and has developed technology that allows its customers to shop on their phones and receive orders the next day. Growth has been rapid — it sells in 164 countries, and the 5,500 staff will soon move into a purpose-built campus next door that will have room for 10,000 people. It is part of an £800m development project over two sites; THG also has a 1m sq ft warehouse in nearby Warrington.
An even greater threat to the company’s low profile comes from the decline of the high street. As shops shut and jobs are lost, big online retailers are coming under fire. That puts Moulding, 47, front and centre — which is not somewhere he wants to be.
“I’d just rather deliver the numbers,” he shrugs. “I enjoy what we’re doing, I don’t need other people to see it.”
At first, Moulding does nothing to dispel the impression of THG’s office as a high-end Cheshire nightspot. He wears a tight-fitting T-shirt and skinny jeans, and tells me he has been to the gym for nearly 300 days in succession. It is hard to decide which is more sculpted — his biceps or his eyebrows.
However, the manicured look is at odds with Moulding’s unfussy personality. His business is the same. THG may appear to be an online retailer, but it is really a technology business, the chief executive insists.
The trick has been to build its infrastructure from the ground up. Other companies have a “colossal mixed bag of everyone else’s tech”, Moulding says, but THG has developed its own warehouse management systems, web services and logistics software. Owning the technology allows him to stay in control of everything else: production, marketing and distribution. Last year, THG earned about £40m from licensing its technology to other businesses. Ocado, the online grocer, does something similar.
Control is vital for Moulding. Most of the THG empire is marshalled from his phone, where he has a dashboard that keeps him up to date with the business in real time. “With this I can develop a strategy on an immense scale,” he says, sounding like a Bond villain as he holds up his iPhone. “I’ve got a knowledge base that is unparalleled.” If it sounds obsessive, that’s because it is.
On the rare occasions THG makes the news, it is usually for completing an acquisition. It recently bought the French haircare brand Christophe Robin for about £50m. Moulding claims the deals are just a way of making better use of the technology. “It’s irrelevant [when we buy something]. What we’re then doing is putting it onto our escalator that zips it wherever it needs to be in the world.”
He started THG 15 years ago after working for Caudwell Group, the mobile phone and technology conglomerate founded by the Phones4U entrepreneur John Caudwell. Moulding repeatedly suggested that the company should move into online retailing, but was rebuffed.
Did he fall out with the boss? “There’s elements of the Caudwell Group I probably haven’t brought with me,” Moulding says. There was certainly an upside to his decade there, which saw him rise to finance director of the distribution division: he made “a couple of million” when Caudwell sold up, using the cash to start THG with John Gallemore.
In 2009, THG bought Zavvi — formerly Virgin Megastores — out of administration, but Moulding decided there was no future in selling music and entertainment online with Amazon “becoming a beast”. So he set his sights on health and beauty, partly because owning the brands made the margins “phenomenal”.
THG’s success has attracted big-name investors. The private equity giant KKR owns 15%, while the tech specialist Balderton Capital holds 14%. Moulding and THG’s management still own more than a quarter of the company.
“Matt is one of the most phenomenal tech chief executives in Europe,” says Bernard Liautaud, Balderton’s managing partner and a board director at THG. “He combines an extremely ambitious vision with a relentless drive for execution.”
It has been some journey to get to this point. Moulding grew up in Colne, a market town north of Burnley. His father was a road worker, laying tarmac, and his mother was a homemaker, or “whatever the PC term for it is at the moment”. He went to a state school, where he was in the year above Matt Riley, who went on to found the telecoms giant Daisy. Two tech multimillionaires in successive years. How many private schools can say that?
At the time, though, Colne did not feel like a breeding ground for entrepreneurs. “It’s just like everyone else’s story, typical working class. You go to university, you get away and you’re not going back.”
Except it is not like everyone else’s story. The Sunday Times Rich List puts the Moulding family fortune at £600m, level with the property magnate Gerald Ronson and his family.
As if to show how far he has come, during our conversation a call flashes up from Sir Terry Leahy, one of THG’s early investors. “That’s bizarre, he never calls me,” Moulding says as he ignores his phone. He posits a theory as to why the former Tesco boss is trying to reach him, but makes me promise not to reveal it.
The call almost feels staged, but Moulding is no name-dropper and abhors schmoozing. Unlike most bosses of global firms, he almost never travels. He has been to London once this year (twice last year) and insists that investors come to Manchester — where he started his career as an accountant with Arthur Andersen — if they want to see him.
However, there are signs that Moulding is ready to take on a more public role. He has been outspoken on the potential imposition of an online sales tax, a prospect that gets him uncharacteristically worked up. “I’m going to raise the flag if I think something is pretty stupid, and that’s as stupid as it gets,” he says.
Why, he asks, should online retailers be penalised for traditional stores’ failure to invest? He blames the parlous state of the high street on the fixation of some of these retailers on paying huge dividends instead of investing in their future. Online platforms, from Amazon down, have no such compulsion: “No one pays dividends because it’s reinvest, reinvest, reinvest.”
Moulding is not afraid to spend big. He says the cash generated by THG and bank borrowing gives him a potential war chest of £1bn to spend over the next three years. The money will go on acquisitions, warehouse space and investing in new technology. He will soon launch THG Air, a fleet of planes to speed up deliveries.
Brexit planning has eaten up some cash. THG spent £100m on a Polish warehouse soon after the vote to leave the EU and is hoarding £90m of additional stock. Being able to make quick investment decisions is one of the reasons why Moulding says he has no plans to float the business.
There is another, more personal reason for refusing to go public: “If I do that, I lose control.”