The Opportunity for Marketing “Simplification”

Joel Rubinson
The Advertising Research Foundation

It's in our nature to simplify. Social scientists have learned that it's the way people make choices. And marketers can find great opportunities if they learn from the same lessons.

The essential concept: Traditional economic approaches that assume that people make decisions by trading off all features of all alternatives to maximize utility are wrong. Instead, people use simplifying heuristics to get through complex decision making. For example, people naturally classify alternatives into categories and then eliminate broad sets of alternatives. They consider alternatives in succession and take the first one that meets their needs (a process of what Nobelist Herbert Simon called “satisficing” strategies).

People find reference points to help simplify decision making. Store brands appear to be good buys because they sit on a shelf next to national brands at much lower prices. And shoppers tend to navigate a store a certain way. When faced with unfamiliar alternatives, they gravitate to the familiar as a safer starting point. Imagine: You're sick to your stomach in a foreign country. You go to a local pharmacy and what do you find: row after row of unfamiliar brands in unfamiliar packages. You panic. But if you spot one brand that you do recognize, you're likely to buy it—even though it's a product you've rarely used before. Familiarity relaxes the risk/fear response and leads to simplified choice.