We live in a world where advertising is omnipresent. It has pervaded every corner of our lives and made it impossible stepping out of our houses without seeing billboards advertising phones, shoes, burgers or something else.
I prefer reading books than watching TV, but whatever little sports (cricket and tennis) I watch on the TV, mindless commercials never cease annoying me. My predicament is not unique, and I am sure a lot of you relate to it. I wrote a LinkedIn post on advertising last month, and one marketer criticised it and said advertisers are doing a duty by selling us (untenable) lifestyles, creating (false) aspirations, and claimed that people who ignore advertised products are laggards. I love his chutzpah.
What infuriates me is the misuse of heuristics and cognitive biases by companies and ad agencies in shovelling down their worthless products down our throats. An excellent example is the use of "fake authority" by FMCG companies in selling us toothpaste. Have you ever wondered why the actors who play doctors and dentists in toothpaste commercials wear white lab coats? They are actors selling products but by wearing white lab coats, they cheat us by influencing our unconscious selves. They cunningly leverage a cognitive error known as "Authority Bias". White lab coats affect our unconscious minds because they represent authority (Doctors or Dentists) and convince us into believing that the toothpaste advertised has some medical benefits. I am both astounded and troubled that such deceitful practices are allowed under marketing regulations.
My point is ads dominate our world, and we can't escape their nefarious influence. Then how do we not get swayed by advertising and buy things we need? I am a minimalist, I buy fewer things than most people, and I analyse all my purchases. Even then, I keep falling for marketing gimmicks and salesmanship. My feelings after every impulsive buy fluctuate between regret, guilt, and anger.
I made some unwanted purchases a few years ago and bought things I didn’t need. After my shopping spree, I realised my folly. I got fooled into buying stuff I didn't need because advertising made me believe I needed it. I cursed myself and promised myself that I will never let advertisers deceive me again. But the problem was, I had bought these things because I was convinced of their utility. I thought over it and concluded that assessing the utility of things beforehand is difficult. So I asked myself, "How do I learn from my mistakes and improve my shopping experiences?". I am sure most of us have had similar thoughts at some stage of our lives.
After some more thinking, an idea dawned on me. I made a small tool for improving my buying decisions. I named it Effort vs Utility Matrix. I love matrix frameworks for understanding complex ideas because of their intuitive appeal and underlying simplicity. Since matrices can compare decisions/things on 2 different parameters, they have huge explanatory powers. Humans are instinctively better at understanding images than words or equations, and a matrix uses that strength to our advantage. In short, matrices make our lives easy.
We evaluate factors such as utility, price, effort etc., before buying anything. Utility and price are self-explanatory, but how do we quantify "Effort". "Effort" is a combination of time and intangibles like comfort, convenience, etc. Let me give an example. Suppose you want a pair of boat shoes. You live in a tropical, sunny country like India where you can wear boat shoes throughout the year. You don’t own similar shoes, and boat shoes complement your existing wardrobe. In a nutshell, your utility from owning a pair of boat shoes is high. Unfortunately, the price of your favourite pair is more than you're willing to pay. Then one fine Saturday, you read about a sale in a different part of your town. A men’s fashion store is selling excellent boat shoes in your budget, but buying them requires some tradeoffs. Driving halfway across the town on a weekend is not your idea of leisure. That you will have to brave the crowd and experience pathetic service quality that accompanies all sales adds to the misery. All of us who have been to a sale know it’s traumatic experience. This is what I call “Effort”. "Effort" means trading our leisure time and going through inconveniences for things we desire. The question is: How do we decide whether it's worth it or not?
Although there is no simple answer, I can tell you what I do in such situations. Then you can decide whether it makes sense or not. When faced with such a dilemma, I rank things I am considering buying using this simple Effort vs Utility Matrix. It helps me in making better decisions and saves time, stress, and money.
The things in the top right quadrant are no-brainers. They are useful and demand low effort. For example, I order my regular cologne on the internet.
I stay away from everything that lies in the bottom left quadrant. I convince myself that they are useless and don't let advertisements, fads, and peer pressure fool me into buying them. A good example could be the latest shoes launched by Nike or Puma or any of their competitors. They are not better than my existing trainers and buying them is inconvenient because it requires visiting stores.
Things in the bottom right quadrant are tempting and difficult to resist because they require minimal effort. Although these things don't have much utility, buying them is easy. Buying ties online is a good example. Since I own several ties, additional utility from one more is minimal. But buying online is tempting because it is convenient, inexpensive, and a 2-minute affair. My strategy is avoiding such products unless there are some compelling reasons such as bargain prices for buying them.
The challenge lies in the top left quadrant. The boat shoes from the above example fit in this quadrant. They are useful but buying them require substantial effort. What should we do? A clever answer is to “try and measure” the utility from it against the effort it demands. Another good solution is exploring alternatives. Since there is a sale in one store, we might soon get a sale in our part of the town. There might be some equally good offers with online retailers. The possibilities are endless, but we can’t think and analyse all of them. Nevertheless, thinking and searching alternatives is a useful approach.
This matrix is not a one-stop solution for our shopping woes because it doesn’t give us a recipe for comparing utility and effort. Unless you are a microeconomist who specialises is decision theory, chances are you don’t use a quadratic function to measure your utility. This makes utility subjective. But I think the strength of this tool is it forces us to think and evaluate our purchases and stops us from making impulsive purchases. Less impulsive decisions mean less regret, anger, and stress.
Pushkar has an extensive experience in Management Consulting and Financial Services. He has a strong background in financial modeling, quantitative analysis and critical thinking. He has a proven record in successful sales strategies and marketing initiatives designed to increase revenue. Thanks to his refined relationship-building skills, he can work collaboratively with both clients and colleagues from different teams. Pushkar holds a Bachelor’s Degree in Engineering and Management from Manipal University and a Master’s Degree in Business and Management from the Indian Institute of Management, Indore. He also holds a Master’s Degree in Economics from the Norwegian School of Economics (NHH).