An overview of the type of cognitive biases that can undermine marketing decision-making.

1. GETTING YOUR MARKETING
MIND RIGHT
Beating Cognitive Biases Before they Beat You
William Baker Consulting
Marketing Strategy
Communication Strategy
Branding
Advertising
Award Winning Author, Professor and Consultant
619-402-3990, wbaker@uakron.edu
Google Scholar Page: https://scholar.google.com/citations?
hl=en&user=If0w9hoAAAAJ

2. O They are difficult and sometimes close to impossible to
predict
O They are highly consequential
O Those that aren’t prepared for them either don’t react or
react in a poorly thought out manner.

3. Black Swans to Most or All…….
 We are in the midst of a Black Swan know as
“ISIS.”
 Collapse of mortgage backed securities
market
Black Swans to Many…….
 Rate of shift in retail to digital storefronts
 Collapse of the newspaper and magazine
industries

4. What you think you know or, worse, what you feel you know
-
What you really know
=
Black Swan Vulnerability

5. The only long term competitive advantage a firm
may achieve is the ability to learn faster than the
competition
Living in a World with Unpredictable
Black Swans

6. Decision Biases that Increase Black Swan
Vulnerability

7. Status Quo Bias
‘Rational Reasons for Inertia’
With no immediate reinforcement for
changing, little change is likely
1. Most change is attached to uncertain
outcomes
2. Change takes effort, time and money
Look at our consistent failure in dieting,
exercise, new skill acquisition

8. Status Quo Bias
‘Irrational Reasons for Inertia’
1. Human beings are ‘cognitive
misers’ and status quo is energy
preserving
2. We unconsciously attach more
weight to losses than we do to gains
3. Longevity, signals ability and worth

9. Status Quo Bias
People prefer the aesthetic qualities of whichever galaxy they are told
is most common in the universe
Representative of 15% of
Galaxies
Representative of 40% of
Galaxies

10. Status Quo Bias
In taste tests, people prefer whichever chocolate chip
cookies have been in the market the longest
Since 1907 Since 2006

11. Confirmation Bias
“When men wish to support a theory, how they torture the facts
into their service” Charles Mackay, 1852
Religion: Religious beliefs are an accident of birth
Politics: Whoever won a political debate?
Innovation: Ford executives reject the minivan because it wasn’t
a station wagon

12. “Louis Pasteur’s theory of germs is ridiculous fiction.”
(Pierre Pachet, Professor of Physiology at Toulouse, 1872)

13. “This telephone has too many shortcomings to be
seriously considered as a means of communication. The
device is inherently of no value to us.”
(Western Union memo, 1876)

14. “Guitar music is on the way out.”
(Decca Recording Company rejecting the Beatles, 1962)

15. Confirmation Bias
The ‘Father of Our Country’ was killed by Ambiguous Evidence

16. Forms of Confirmation Bias
1. Your bias unconsciously cues memories in support of the bias
(If you like McDonald’s, your memory skews towards positive traits)
2. Your bias consciously directs information search in support of
the bias
(People seek out positive Amazon reviews for brands the like)
3. Your bias causes you to suppress or counter-argue
contradictory points of view but not supportive points of view
(Mercedes fans will scrutinize BMW facts, but not Mercedes facts)
s

17. Confirmation Bias
O People tend to require much more negative
evidence to disconfirm a belief than positive
evidence to ‘confirm’ it
O People tend to interpret ambiguous information as
support.
O In the case of marketing, it may mean that favored
programs will continue even if there is no hard
evidence of effectiveness

18. 70% of firms featured
in book were in trouble
five years after its
publication
Traits of the ‘Excellent’
1.A bias towards action
2.Obsession with customer satisfaction
3.Supportive of failure
4.Clear corporate values
5.Stay true to core competencies
6.Treat people as partners
7.Simple structure, lean staff
8.Central direction, individual autonomy

19. Apple executives tried to
pull it at the last minute
The ‘greatest ad’ of all time
succeeded because:
1.It created a narrative to hold the message
2.It used emotion to convey benefits
3.It was unique and held attention
4.It leveraged a familiar theme in its favor
5.It repositioned the competition in a negative
manner
6.It clearly differentiated itself from the market
leader

20. Brands which are seen more frequently, for
no other reason than being seen frequently:
 Produce a more positive emotional
response
 Are believed to be higher quality
 Are more likely to be purchased
The Salience Bias

21. The Salience Bias
Can Inadvertently Create Management by “Platitude”
“Every Threat is an Opportunity”
“Our People Make the Difference”
Statements and phrases that are repeated over and over tend to take
on more importance and validity simply because of their salience.

22.  Challenge the premise of status quo – don’t talk yourself into
avoiding change.
 Don’t let confirmation bias prevent you from seeing only one
side of an argument
 Copying the behavior of winners is less productive than seeking
to find the real differences between winners and losers.
 Management by platitude is dangerous…..do what fits your
situation, not by following the herd.
Lessons