For as long as we can remember, there have been marketing consultants who have pitched their work against the straw man of the ‘homo economicus’, i.e. the assumption that consumers are rational agents who make rational decisions. In these pitches, it is implied that recent discoveries in psychology or Behavioral Economics have refuted this rational model and, as a result, that marketing, advertising and market research up to now has all been wrong. By implication, billions of dollars spent over many decades have evidently been wasted…and this has only just now been discovered. (So, ‘Hire me instead!’)
This pseudo intellectual argument is complete nonsense, and not much different from claiming that geographers assume the world is flat and thus should not be believed. It is merely a sales pitch, plain and simple, and here are some reasons why:
- First, let’s not forget that economists define ‘rational’ in many ways!
- Historically, branding has frequently targeted emotions and involves much more than communicating functional benefits of products and services to consumers. This would not be necessary if marketers and advertisers believed consumers are rational agents who make rational decisions.
- How many advertising creatives believe in this mythical homo economicus? That sex sells is a recent discovery?
- Psychologists have been at least as influential as economists in the development of marketing, advertising and marketing research, and it’s not easy to find psychologists who believe that humans are rational!
- Owing to the influence of psychology, for decades, measuring psychographics (e.g., VALS) has been a core part of marketing research. Compendiums of marketing scales have been published that catalog hundreds of psychographic and attitudinal instruments. See Marketing Scales Handbook (Bruner) and Handbook of Marketing Scales (Bearden et al.) for two examples.
- Several brand equity measurement systems were developed (at considerable expense) by marketing research companies in the 1980s and 1990s. They include emotional as well as functional brand attributes. Many of them are still in use.
- Both survey-based attitudes and online behavioral data add to explaining sales across 15 consumer categories. In fact, survey-based attitudes beat online behavior in predicting brand sales in the long run: http://www.msi.org/articles/which-metrics-matter-most-for-brand-sales/
Don’t be fooled by folks beating the dead horse of consumer rationality. This nonsense has most recently been recycled in exaggerated fashion under the guise of Behavioral Economics (to the disservice of many actual Behavioral Economists). While it is true that economists must make assumptions for mathematical and pedagogical reasons, the blackboard economics of the classroom has almost no connection with the business world marketers, advertisers and marketing researchers have lived in for generations.
The myth of the rational consumer was already shopworn when we entered marketing in the 1980s! Time to get back to the future….
Kevin Gray is president of Cannon Gray LLC, a marketing science and analytics consultancy.
Koen Pauwels is professor of marketing at Ozyegin University, Istanbul