With Consumer Decisions, Context is Everything

When marketers conduct consumer research, they often ask their customers what they “think” about an idea or advertisement and how they’ll act in the future. There’s a problem with that approach:

Most people can’t explain why they do the things they do and are really bad at predicting how they will act in the future.

People are great at creating rationalizations that explain why they believe they do what they do, but in reality, most don’t really understand why they act in a certain way.

As marketers, we’re often more capable of understanding the why behind our customers behaviors because we can remove ourselves from our own biases and focus on the most important driver of human behavior - decision context.

Behaviors are highly influenced by the context surrounding our decisions, so there are four contextual factors that marketers can use to understand and affect consumer decision making.

In this article, we’ll look at those four contextual factors and see an example of how this all works.

The Four Factors of Context

The first factor is location: where we are when we make a decision. The way we behave inside a church is different than the way we behave in a bar. Social norms guide much of our behavior, and a lot of that is based on where we are at a given moment.

The second factor, people, is who we’re with when we’re making a decision.

When I’m with my son, Nicholas, I eat differently than I do when I’m out with my friends, eating bar food and drinking beer. We often change our purchasing behavior based on whom we’re with. For example, most of us wouldn’t order crab legs on a first date, because they’re messy, and you don’t want to spray crab juice all over your date.

The third factor is how we’re feeling both physiologically and psychologically.

Physiologically, if we’re hungry or sleep deprived, we’re going to behave very differently than we would if we were well-fed and well-rested. That’s why we shouldn’t go grocery shopping when we’re hungry—we’ll have little control over our purchasing decisions.

Psychologically, our opinions, beliefs, and actions will be different if we’re in love, compared to when we’re down in the dumps. We might buy flowers and chocolates when we’re in love, or SpaghettiOs and Lucky Charms when we’re depressed.

Choice architecture, or framing, is the fourth and most important contextual factor.

Architecting choice refers to how choices are presented or delivered to people in the moment of decision.

As a marketer, you can’t control someone’s location, the people they’re around, or the mood they’re in when they engage with your brand, but you can control how you frame your message. You can control the architecture of the words you put in your message, as well as the visuals you include, just like we did with a behavioral experiments at a place called Earl’s.

Choice Architecture in Action

Earl’s is a small, independently owned convenience store in Aubrey, Texas where we were able to run PepsiCo research experiments in exchange for a new hot dog roller.

In one experiment, my partner Julie and I looked for ways to get more people to buy multiple PepsiCo brands in the same purchase. PepsiCo, which owns Frito-Lay, decided to invest in barrel cooler displays—the types of coolers you fill with ice and load up with soft drinks and chips, then place near the checkout in convenience stores. This was a way to reach the people who were skipping the soda or chip aisle.

The goal was to deploy these barrel coolers to drive purchases of soda and chips in the same purchase. To do that, the chips and sodas were bundled together for $2.22, and we made signs to place on top of the cooler to promote this discount. Buy a soda and bag of chips from this cooler, and you can get them both for a discounted price.

But when the promotion was launched, shoppers weren’t buying enough of these bundles to make up for the costs of buying and delivering the barrel coolers to the stores.

At that point, the sales team was asking us, “What can we do to make these barrel coolers pay off?” The coolers and refrigeration units had been a big investment.

In the traditional concept of bundling, consumers typically get a discount off the total bundle of products. However, we decided to try something different.

Instead of applying the discount evenly across two items, what if the total discount was applied to only the item that they felt a bit guilty about buying?

This is a concept of hedonic bundling.

Shoppers get the same discount overall, yet they feel like they’re getting a better value than if you discounted both items, because you’re also reducing their guilt.

Suddenly, shoppers make a rationalization for behavior driven by their nonconscious needs. They say, “You know what? It’s not so bad for me to buy both the chips and the soda, because I’m getting a huge discount on the soda, which is what I really want.”

Changing the Framing

In the original display, Pepsi used signage above the barrel cooler with an image of a Pepsi can and Lay’s chips, along with the phrase, Better Together, which reinforced the idea that we were selling two items together for a discounted total price of $2.22.

Traditional wasn’t working.

So I worked with Julie and her local creative agency to redesign Pepsi’s original signage offer in a way that would increase its effectiveness psychologically.

First, we showed a race car crossing a finish line. The race car crew chief had his hands open and arms up in victory, surrounded by a checkered flag.

The marketing said, “Fuel up, thirst down, and drive away a winner.”

We wanted to tap into more of an action-oriented, achievement-focused motivation. These guys wanted to feel like they were winning the battle every day.

So how did we apply the concept of hedonic bundling?

Instead of buying the soda and chips together for $2.22, this offer would allow the customer to buy the chips for full price and save $0.55 on the soda. It was the same total discount but now placed entirely on the soda, because our research showed that shoppers felt worse about buying soda than they did about buying chips.

It was that simple, and it worked.

When we made those subtle changes, there were weeks we experienced a double-digit lift in cross-purchases in some weeks. In the world of behavioral design, small nudges can make a big change. What nudges have you tried?