Being a successful Creative you need to have a deep understanding of the business and behavioral economics. Because creativity hasn’t any value if it dosn’t have a positive impact on the ROI and makes customers buy your products, change behaviour or take action.
Written by Pernille Vaaben Nielsen
-Working as a creative isn’t just about finding good ideas. Ultimately, you must solve problems that’s resulting in solutions selling products to the customers. Therefore, it’s crucial that you, as Creative, have a strong commercial understanding – for both business and consumers – when you’re working with creativity, ideation and concept development. That was one of the main points from Jacob Holst Mouritzen, Business Partner at Mindshare, when he visited the prestigious Advertising School in Denmark.
In this article I’ll try some share some of my high lights and learnings from the session with Holst Mouritzen, who has been awarded as one of Denmark’s top business talents in 2015, by Berlingske Business and Talent 100.
How to understand the business of a brand?
First of all Holst Mouritzen listened a number of questions that can help you understand how brands make money, so you can create a fundamental understanding of their business:
– What do you earn per sales?
– How long will your customers stay on average?
– How much money do they spend on average?
– Do they buy for others or just for themselves?
– Who is the primary buyer of your products?
– Who is influencing them?
– Where do they buy your products?
– Who are the competitors?
– And what is the price of the competitors?
– How big is your brand knowledge today? And what do customers think of you?
How to understand the consumers?
Next, Holst Mouritzen talked about the psychological and behavioral mechanisms that affect the choice of the consumers.
“As humans, we rarely not make optimal decisions in relation to our own wishes and needs. We buy what’s at the front and not the one that’s healthiest. In the office we sit down for a long time instead of standing up once in a while. And at home we still haven’t thrown out the television or the cigarette, even though we have thought of it hundreds of times. But why?” asked Jacob Holst Mouritzen.
The reason is that most of our choices are automated and based on emotions and intuitions. Therefore, Holst Mouritzen explained 7 behavioral mechanisms that have a big influence on the decisions we make and important to remember in the creative process:
1. Loss Aversion:
People are more afraid of losing what they’ve than they’re willing to risk getting something that has the same value. This applies both when you’re choosing a new computer, changing the mark on your baby’s diapers, or changing the way you handle your mails. The option must be at least twice as good. And that’s rare.
2. The Power of Now
It’s about the messages which if focusing on how the moment affects you. Therefore, it’s difficult to stop young people from smoking or make savings for retirement savings. But it also explains why training machines at the TV shop are succesful products.
Campaigns with limited number of items so it seems even more valuable to you.
4. Goal Solution
Sharp and simple messages in communication are effective. “FREE SHIPPING” or “50 % DISCOUNT” are good examples. We understand them immediately.
In the communication you need to limit yourself and break things up so it dosn’t seems overwhelming to the consumers. Just ask for a few things in campaigns such as name, email and phone, so you’re not also asking for address, age and civil status.
6. Price Perception
People evaluate the product based on the price. So if you want to be perceived as exclusive, you must be more expensive than the others.
7. Choice Architecture
The more choices you give the consumers, the bigger is the risk, that you will lose them. Therefore, make it easy for the consumers to choose. “Perfect for students”, “Perfect for singles”, or “Perfect for families” are good examples.
If you are curious about learning more about behavioral economics, I recommend that you read: “Nudge: Improving Decisions About Health, Wealth, and Happiness” by Cass Sunstein and Richard Thaler.