When Gut Instinct Meets Big Data
Sometimes you need to ignore your gut.
When it comes to making business decisions, understanding marketing analytics—and not solely following your instinct—is your best bet, Jean-Pierre Dubé explained at Booth Women Connect Conference 2018. Dubé, Sigmund E. Edelstone Professor of Marketing and director of the James M. Kilts Center for Marketing, discussed his findings during a talk called “Using Big Data to Defy Conventional Wisdom.”
Studying the numbers often uncovers that the opposite of conventional wisdom is true, he said. “It’s about motivating the [marketing] industry to start testing and optimizing the way they make decisions,” Dubé said.
Here are three takeaways from his presentation:
Promote a marketing analytics culture.
Many companies still turn to so-called HiPPO (the highest-paid person’s opinion) culture to make decisions, which can backfire, Dubé said. Once the most powerful person in the room shares his or her thinking, it can be difficult for others to go against the grain. Using analytics can even the playing field and allow decision-makers to truly deliberate solutions.
Conventional wisdom is based on perception, not reality.
Oftentimes the general consensus—be it within a company or in popular culture—isn’t backed by data, he explained. As an example, Dubé pointed to his research on consumer altruism, which has implications for “cause marketing,” or when sellers pledge to donate a portion of the price of the purchase to charity. One might think that consumers would be drawn toward offers that result in the biggest donations. Instead, Dubé found that “people want to feel good about themselves by donating to charity,” he said. If something about the offer diminishes that positive feeling, we walk away from the purchase—even if it would benefit a good cause.
It can be difficult to consider the data.
Following the numbers is tougher than it looks, “especially when the heart is in the right place,” he added. In his study on food deserts, Dubé found that opening supermarkets in poor neighborhoods barely changes the nutrition content of what people buy, even though they may start shopping in the new store.
Turning to the data beforehand could have helped to better allocate resources when it came to helping poorer communities eat more nutritiously, he added. “None of these policies quoted a study in a compelling way [showing] that supermarkets cause better eating,” he said. Instead, the data suggested that future research into education and knowledge-oriented policies might be more fruitful, he told the audience. “A combination of theory and market economics combined with data can be used to test conventional wisdom to make better decisions,” he said.
Booth Women Connect Conference is organized by the University of Chicago Booth School of Business. The 2018 event brought together more than 1,100 professionals for an extraordinary day of bold ideas, spirited discussion, practical insights, and impactful networking. Join us for the next annual conference on November 1, 2019.
—By Alina Dizik
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