Management Perspectives

I don’t think that India’s beloved rum, Old Monk, would win any blind taste tests against the fine rums from Barbados and Jamaica. And yet, for many of us, it is the rum that is alive with rich memories of the days when we were younger and carefree.

Many years ago, when I was an engineering student at Birla Institute of Technology and Science in Pilani, I was among the many minions that suffered through two gruelling test series every semester. It used to feel like the exams were designed to make everyone fail, and then, whosoever failed the least scored an ‘A’ grade. After the tests were over, we would be indescribably relieved and ready to celebrate. We would pour a bottle of Old Monk rum into a large bucket (otherwise used for bathing) and make a punch with orange juice and lemon and transport ourselves into a state of happiness.

Now, whenever I see a bottle of Old Monk, it stirs up those memories of wonderful times with some of my closest friends. The brand is not just about the unique spicy flavour of the rum, but the entire experience associated with how we consumed it—and for me it stands for those special moments of friendship that I enjoyed as a young college student.

So, now, years later, when I see Old Monk, sitting in between some of the world’s finest rums on the shelves of Binny’s in Chicago, it makes so much sense to me to pass right by them and turn to my old favourite. There is this rule in my brain that says- “Old Monk – the best!” But what other rules are there? After all, I have consumed so many different brands in my life.

In my book, Right Between the Ears, I argue for a new definition of brands positing, which I have dubbed- ‘cognitive brands’ are actually keys to unlocking our cherished past experiences or harboured fantasies. Thus, every great brand becomes not only the product and its benefits, but also inseparably the aura of those memories and aspirations.

How brand choices are made
We are learning that most brand choices are made instinctively, without much thought. Scientists have discovered that 95 per cent of all choices we make are instantaneous, requiring little or no deliberation. Daniel Kahneman, the famous Princeton psychologist who won a Nobel Prize for his work on the Prospect Theory, calls this the brain’s System 1 process.

System 1 choices are made quickly and effortlessly by comparing them with our past experiences. Some call that gut feeling. This revelation may be painful for marketers schooled to believe otherwise. They were told that consumers first rationally evaluate competitive product differences, then that process triggers certain feeling within them and finally, they make a choice through a combination of functional and emotional factors. Kahneman’s discoveries imply that the game of choice is over within microseconds, long before that train of thought leaves the station.

Here’s what happens. Throughout our lives we go through a range of experiences and our brain sits there not only choosing, but also watching and learning. It knows which experiences it liked and disliked or which ones worked out well and which ones did not. Those learnings come in handy when in the future similar (not necessarily identical) choices must be made.

These rules are of the variety, ‘keep things simple’ or ‘be happy with what you have’. These two specific rules, which many believe adhere to, are respectively referred to as the ‘Occam’s Razor bias’ and ‘loss-aversion bias’. Behavioural economists call learnings like these ‘cognitive biases’ because in certain circumstances they result in us making sub-optimal decisions.

But most of the time, in other situations, these rules serve us well and we use them extensively to make instant choices. They are thus part of our cognitive wisdom or belief system gleaned from a lifetime of experiences. These beliefs are hard to change. Marketers are well advised to go with the flow and design their brand positioning around these beliefs and not against them. Thus, when a brand like Staples, which sells office supplies, comes and tells us that it is the big red ‘easy button’, we get it. They are the simple and snap answer, the Occam’s Razor solution, to office supplies. It certainly beats doing a comparative spreadsheet on the tax and delivery fee adjusted prices of hanging file folders.

Building brands around beliefs and biases
So, what kind of beliefs and biases should marketers build their brands around? Simple! Use the following four vectors of what is called ‘cognitive ease’ in designing your brand message:

• 1. Make your brand feel familiar: Brands that are aligned to things that we know well, feel familiar, and thus preferable. ACT II became the leading popcorn brand by claiming its microwaved kernels were just like their movie theatre cousin. Everybody already knows and loves that experience, don’t they? So, by anchoring their product to the familiar theatre experience, ConAgra used the well-known Anchoring Bias to make their product a superstar.
  
  
• 2. Make your brand feel true: When a brand feels authentic to us, we prefer it. RxBar, an energy bar, used what I called the Transparency Effect to make its breakfast bar feel exactly that. Look at the label for their Chocolate Sea Salt bar, for instance. It says right there - 3 Egg Whites, 6 Almonds, 4 Cashews, 2 Dates and … ‘No B.S.’ In this age of know what you eat, doesn’t that tiny list tell you all there is to know about what’s in there? That is why the company went from the kitchen counter of a fledgling entrepreneur to a $600 million sale to Kellogg’s in just four years!
  
  
• 3. Make your brand feel good to me: Brands that make you feel good about the choices you make, in turn, come to be preferred by you. Call it positive reinforcement if you will. Economists give this type of a cognitive bias the term Choice Supportive Bias. When Humira, Abbvie’s $20 billion blockbuster drug for rheumatoid arthritis, was first launched, it took care to emphasise not what the drug could do (despite being a miracle drug), but what the physician could do with it in its line “Look What You Can Do with Humira!” After all it was more important to support the great choice the doctor was making by prescribing Humira.
  
  
• 4. Make your brand the easy choice: Making decisions is stressful. So, this brand strategy is not about arguing that your brand is convenient, which you can do, say, by having a faster product or easier (one-click) buying process. Rather, it is about taking the stress out of choice. StitchFix recognised that for many people figuring out what kind of clothes they will look good in is anxiety laden. So, using a combination of an AI model and actual humans, they pick the clothes that will look great on you. You will get a new box of fashions at a frequency and style that suits you and if you don’t like it, send it back. Why sweat it? StichFix is the favoured Occams Razor choice.
  
  
Luckily, psychologists and behavioural economists have already catalogued well over a hundred cognitive biases that are commonly seen in populations across the world. That treasure trove is a good place for brand marketers to go and try on ideas for size when designing or repositioning brands.

After all, why reinvent the wheel. In closing, I note that brands are not just built around beliefs and biases of the past. About 5 per cent of the time, we use a process of deliberation to make choices where we use spreadsheets to look at the cost benefits and logic to evaluate the pros and cons of choices. This is particularly the case when we face choices that are new and cannot be resolved with past learnings. It is also true when we face high risk decisions where the cost of a small mistake could be high. In those instances, marketers must work with consumers to help them view their choices carefully and form new learnings.