In 2023, Costco in the US sold 137 million rotisserie chickens, which was a 20 million increase from 2022. That’s approaching half a whole chicken per person in the whole of the United States. What’s more, Costco’s former CFO, Richard Galanti, said that the company was willing to lose $30–$40 million a year on gross margin to keep the price of rotisserie chickens at $4.99. This is an extraordinary business decision, but it gives us a fascinating insight into the way marketing executives use behavioural psychology to manipulate our buying habits.
What’s going on here? Well, it’s simple really. Costco place their chickens, with that enticing smell, at the back of their stores. This means you have to walk through aisle after aisle of other items to get there and back. And it’s as simple as that. They know that the products they place along these aisles will sell more, so they can make up for the loss on the chickens by increasing the margins on these shelves. Really easy.
Put simply, they use psychology to manipulate us. It’s nothing new. Salesmen have been doing that forever. Society has accepted it without question, and Christmas has allowed this manipulation to become mainstream. Our behaviours are controlled every day; through television adverts, social media, or the videos the ‘algorithm’ sends you on Instagram or TikTok, and we all fall victim to it. Think about how behavioural psychology is involved in the following:
- The scarcity effect
Scarcity theory tells us that if we think something is scarce or only available for a short time, our mind will give it more weight. Christmas is a hard deadline, so we are limited in our freedom to delay the purchase decision. Every Black Friday uses this – “If you don’t get it today, it will never be this cheap again”, or ‘Pumpkin-Spiced Latte – only available until January 31st”. We have all fallen foul of this.
- Overwhelming stimuli
By surrounding us with stimuli designed to overwhelm our cognitive processing, we are less likely to think through our decisions in any complete way. When we walk into a shopping centre filled with Christmas tinsel, Christmas music, lights and sounds, we are going to experience some form of ego depletion, preventing us from making our usual considered, informed decision.
- Our inability to forecast
Psychological research tells us humans aren’t very good at predicting the future. Or perhaps we just have an over-inflated sense of our accuracy in predicting the future – we rely on how we feel right now to predict how we might feel about something later. Psychologists call this affective forecasting. So, in the moment, and just in that moment, we buy things we think we will need. But we discount all the other things that we have bought, and also discount how having all that stuff didn’t necessarily make things great last time.
- We can’t resist temptation
Despite our belief that we are all individuals, making independent decisions and choosing what we want and when we want it, humans are social, conforming and compliant creatures. If we see ‘our people’ are doing something, we tend to assume this is something we should also do.
If we’re looking around and our environment is signalling this is what we do at Christmas time, then it’s easier to comply than to resist.
I am sure that none of this surprises you and that none of this is new to you.
So why, despite knowing how precisely our behaviours can be controlled to affect our buying habits, and despite how we all read about how Cambridge Analytica was able to use big data to influence elections, do I still hear from business leaders that understanding workplace culture ‘is all a bit wooly’.
A recent conversation with a Private Equity firm felt that due diligence around culture was not an important factor because it wasn’t something tangible or real in the sense that it can be used to change outcomes.
And yet we see how understanding behaviours to affect outcomes is used every day in the examples above.
Our actions in the work place are built on a set of values each of us brings to work, but it can be changed by what we see going on around us there too. The combination of these two factors influences how we behave which, in turn, when you consider every employee, has an enormous impact on the outcomes for the business.
If you can influence people to buy a chicken, you can influence how they perform at work.
Let’s start using behavioural science to help people and to help businesses thrive. It’s not wooly, it’s based on solid, empirical, repeatable fact.
At Willow Ethos we use tools grounded in data analytics and behavioural psychology to help leaders understand their work place, and to bring about change to improve outcomes.
Behavioural science is for life…not just for Christmas.
