On Sale!

October 1, 2015

balloonsFew things catch our attention more than discounts. The notion of getting a “good deal” drives a large fraction of consumer purchasing, and as a result, the world’s economy. Just the perception of getting a great price can in fact entice even the most discriminating shopper into buying things for which they have absolutely no need nor real interest. That’s powerful.

But why? What is it about the perception of price that drives us; sometimes so irrationally? New clues from neurology and the study of habit formation are providing some hints.

Our brains rely on a vast network of interacting neurons. Each region, generally speaking, is the home to organized neuronal arrays that are collectively supporting distinct responsibilities. We can see regions of the brain “light up” in fMRI when particular tasks are required. The story gets much more interesting, however, if we take things down to the single neuron level.

Using electrical probes that are fitted into single neurons within specific regions of the brain, researchers can now “listen into the conversations” between cellular networks. Among other things, this technique has rapidly taken our understanding of memory formation and neural encoding to new levels. Moreover, studying the striatum region of the brain has allowed us to witness the neuronal rituals that are followed to record, refine and then store information that creates habits.

Habit formation is a foundational, mental process with which we free up our mental resources to allow conscious, creative, social and other dynamic uses of our brain. Ann Graybiel, an Institute Professor at MIT, and one of the world’s leading authorities on habit formation, has called habits, “the iceberg of intelligence,” the massive but subconscious fraction of neurologic activity that supports our behaviors (for better or worse). Thus we are reminded that the vast majority of what we do every day – how we brush our teeth, put on our clothes, or get to work – is heavily driven by habit circuits. These are critical efficiencies that provide computational freedom to allow us to also engage in other mental routines.

More recently, the question has moved to whether habits are optimized during the encoding process, and how or whether they get “better” over time. The answer appears to be yes. Using these same tools in settings in which habits are naturally learned has revealed a surprising new component – cost.

Retailers have known for a long time the importance and difficulty of building a brand. The very first brand and thus the origin of the word (to burn) were fire-branded marks on products in Ancient times. From the beginning, brands were visual clues that connected a specific mark to a given product.

The best brands are synonymous with trust. This trust can be based on attributes such as quality, reliability, workmanship, or safety, among many others. But the centrality of a brand is the confidence of knowing what you are getting, and moving to a purchasing decision from one that is highly conscious to one that relies more on habit. Essentially, the power of branding is making it “easier” for us to decide.

But to buy something you’ve got to see it. The fiercest competition in retail is the war for shelf space – on what aisle, at what height – and how to hold your location and ensure that your product is always simple to find. And once the customer finds it, how do you make sure they make the rapid mental connection? Is our logo or trademark name clearly visible? Are our colors and fonts exactly right? Do we make the connection and trigger the habit to purchase?

As it turns out, our eyes are both the gateway to and contributor in habit formation. Beginning in the late 1800s, studies of rapid eye motion, so called, “saccades” began to reveal the intimate link between vision and the mind. Fast forward to today, eye tracking systems are used in remarkably diverse ways – to detect early evidence of disease, enhance human machine interfaces and improve the safety features in cars/airplanes and not surprisingly, also in market research!

Some of the most interesting recent uses of eye tracking technologies have been when they are incorporated into studies that concurrently employ single cell neuron arrays. When used together, researchers have been able to watch how habits are built into our eye movements, as well. From the recent Graybiel publication, we’ve learned that to begin, our eyes seek to understand the options available to achieve a given outcome or personal reward. Upon successive encounters, the eyes rapidly optimize the scanning of an image. The subsequent interactions (chatter) between neurons concordantly drops, and the resulting “habit” is recorded as the optimized saccade (the shortest length needed to scan the details, or i.e., the cheapest) is finalized. The time and thus “mental cost” is dropped to a minimum, and a habit is formed.

Our habits rule us. In our lives today we are presented with an increasingly dense stream of conflicting information. Some of it directly intended to change our choices – perhaps a new route to minimize traffic, a suggestion to swap purchases – or behaviors that could be beneficial to us. And in each instance, these “recommendations” face a truly formidable challenge – they must entice us to change who we are. The sheer magnitude of our habit-self defines us in a way far more reaching than we intend to admit. Yet new habits are built and refined every day. The efficiency with which we embrace and encode them will in turn prove to be the efficacy of these new life changing data sources.

From listening to the brain banter, we’ve learned that we need to “see it,” “believe it” and expect a reward. Even in building habits we are always looking for a good deal!