why we choose?

Dan Ariely the author of Predictably Irrational uses interesting optical illusions to demonstrate our thought process (and decision making). Our intuition fools us in to thinking things in a certain way. Like an optical illusion even when we know what the right answer is we still don’t see it.

Which is longer?
(They're both the same)

The idea of illusions is that our senses feed us information however it is not a true reflection of reality. Information is provided to us courtesy of our brain, which has a set of rules for dealing with situations so that what we see is actually very different from reality in specific, repeatable, predictable ways.

The same thing applies to consumer behavior. For example, when something costs more and people expect it to be better, they actually end up seeing and experiencing it as being better. One of my favourite (and equally frustrating) product examples of this is Tiffany. Oh the weakness. But why? Well a brand is considered premium when we believe it is worth the price. And to feel that good with a shining Tiffany bracelet on is oh so worth it. Remember 'perceived quality' is one of the key brand associations that has proven to drive financial performance.

It’s like an illusion, the way that we process the information is not a function of what is out there, it’s a function of what is happening in our brain. Most of our understanding of the world comes from our brain not from our senses. We think we see with our eyes but much of what we see is happening within our brain even the way we feel about it.

Ariely uses a great example; when you lie on your back and look at the sky, you believe you’re seeing blue however the reality is that only a small part of your eye can detect that colour. If you extend your arm out in front of your face and hold your hand in a fist, that’s the only portion of your eye that can detect blue. The rest of your eye isn’t supposed to see blue. We don’t see blue because of our eyes, we see it in spite of our eyes. It’s our brain that is doing all the work to help us detect blue. The same thing happens when we process other information: Price, quality, etc. In all those cases, it is our brain that drives our expectations and determines much of our final experience.

Ariely believe that we have two types of rules for our behavior. One type concerns market norms which involve how much you pay for things, how much people charge you and so on (a banking rate for example). The other type is social exchanges that have to do with fairness and warm fuzzy feelings (the 'why', the connectiveness we feel, the empowerment etc). Both of these relationships are perfectly reasonable and have advantages and disadvantages. Marketers need to understand the particular advantages and disadvantages that come with both of these relationships and perhaps more importantly the failure that can occur when the relationship is in the middle and not compelling enough in either direction.