What drives our choices?

How do we make our decisions? What drives the trade-off of one thing against another? How can a public scandal affect that choice, and why should we care? Text100 Regional Director Rod Cartwright explains.

How do we make our decisions? What drives the trade-off of one thing against another? How can a public scandal affect that choice, and why should we care? Text100 Regional Director Rod Cartwright explains.

Understanding Opportunity Cost and Reputation

I was recently inspired by the most unlikely of concepts while helping my daughter with her economics homework. The concept of opportunity cost.

Opportunity cost is defined as “an alternative given up when a decision is made”. As consumers, we make these trade-offs on an almost daily basis in the products, services and brands we choose.

For example, we trade off the value of flying economy against the relative discomfort compared with choosing business class. We accept, to some extent, the ceding of personal data when using social networks as an acceptable trade-off for being able to chat with friends and post pictures of our breakfast.

We know that fried chicken isn’t great for us, but still enjoy the indulgence. Ditto for an ice-cold, sugary soft drink rather than plain old water.

These choices are largely functional and are driven by basic human needs and wants. We might substitute one brand for another within these choices, but the choices themselves are essentially utilitarian.

The same cannot be said for the way in which those trade-offs – and what we view as acceptable – can radically change when the brand we normally choose is involved in a reputational crisis.

The crisis trade-off

All of a sudden, a clumsy foray into social activism causes us to question our love for that soft drink.

The testing of vehicle emissions on monkeys compounds our concerns regarding a car manufacturer already in the reputational dock.

The inhumane treatment of an innocent airline passenger leads us threaten an eternal boycott of that carrier.

Our trust in a global social network plummets when we’re told our data have been shared far more broadly than we’d imagined.

We express our disgust in far greater numbers, and with infinitely more passion, than we would provide a positive review.

Why? Because those reputational crises tap into our most fundamental human values. Concepts of fairness, decency and “doing the right thing” are far more powerful than any functional human need or want. This is why KFC’s deft, profoundly human, handling of a supply chain crisis is likely, if anything, to enhance the brand.

The implications for brands are profound. Marketers should, of course, strive to understand the functional human needs and wants that drive positive engagement. However, unless they understand the far more powerful human values that can derail those trade-offs, the reputational and commercial downside can be immense.

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