Daniel Kahneman, Nobel Prize winner in economics (2002) popularised the idea of “fast thinking” and “slow thinking” in his book “Thinking fast and slow”. While studying behavioral psychology, I stumbled upon his book and YouTube lectures that taught me two marketing lessons. These peculiar ideas were new to me and it made me think about how I make my decisions.
Last year I was moving into a new apartment and I had to make a few important decisions about buying a new bed and selling my car. Moving into a new apartment wasn’t easy and I had to plan the whole thing carefully. Taking holidays from work, arranging the delivery, going through IKEA catalog and selecting the best option, and on top of everything, finding a customer for my car. Back then, I made myself believe that I am making rational decisions. However, did I really make those decisions rationally?
If I tell this story to my family and friends, they might think that my decisions were rational. In Kahneman’s terms, I used system 2 (rational) to make these decisions. However, after learning Kahneman’s idea of “associative coherence”, I think my brain got tricked into thinking that the decisions I made were perfect. But how? I wanted to buy furniture (bed) and the first thing that popped up into my mind was IKEA. My brain didn’t even give a chance to any other option.
But what about selling the car? Back then, I wasn’t using my car and paying about 200 euros a month in taxes/insurance and parking fees. I could have parked my car in some free parking area and took it off-road to save taxes. However, that would have required effort (planning the whole thing) and once again my fast thinking mode overtook my slow thinking, I just sold my car to get rid of everything. This is a clear dominance of system 1 (fast thinking) over system 2 (slow thinking).
Lesson 1 - Associative coherence
Memories can lead to positive associations that your target audience already makes around a brand. For example, the first thing that popped into my mind by the word “furniture” was IKEA and it made me think that IKEA was an obvious choice.
Lesson 2 - Targeting fast-thinking
This seems like an obvious lesson for anyone who has been following Kahneman. He argues that we have basically two thinking modes, System 1 (fast thinking) and System 2 (slow thinking). Most of our buying decisions are dominated by system 1. We are all capable of using system 2 for our decision-making process, however, that requires effort and “thinking logically”. Therefore, our brain skips this mode of thinking, and system 1 overtakes the decision-making process. System 1 is driven by emotions and is intuitive, automatic, and requires less effort.
I am still exploring new ideas (to me) by Daniel Kahneman and Richard Thaler and I hope to learn more each day.
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