The Inflation Reduction Act promises billions of dollars for green energy investments, but how can marketers and advertising professionals encourage consumers to adopt more sustainable behaviors? In this encore episode, applied consumer neuroscience expert Michael Smith joins us to discuss his book, Inspiring Green Consumer Choices: Leverage neuroscience to reshape marketplace behavior. Michael offers insights and practical tips for communicating the benefits of greener choices.
Adrian Tennant: Coming up in this episode of IN CLEAR FOCUS:
Michael E. Smith: There’s a great need for brand advertisers to educate consumers about the real personal and societal benefits of sustainable products and environmental behavior.
Adrian Tennant: You’re listening to IN CLEAR FOCUS, fresh perspectives on the business of advertising produced weekly by Bigeye: a strategy-led, full-service creative agency, growing brands for clients globally. Hello. I’m your host, Adrian Tennant, Chief Strategy Officer. Thank you for joining us today.
Extreme weather events have affected many parts of the United States, and most Americans who have experienced one in the past year see at least some link to climate change. That’s according to a May survey of over 10 thousand US adults conducted by Pew Research Center. Among those who have experienced extreme weather, more than eight-in-ten say climate change is a contributing factor.
The recently passed Inflation Reduction Act allots billions of dollars toward green energy initiatives. That includes a 30% tax credit for building or repairing renewable energy plants, tax credits on green energy generation, and production-related credits for manufacturers of solar and wind power equipment. This week’s podcast is an Encore episode, featuring the author of a book entitled, Inspiring Green Consumer Choices: Leverage neuroscience to reshape marketplace behavior. Its author, Michael E. Smith is an applied cognitive neuroscientist and management professional experienced in consumer research, neurotechnology research, development, and commercialization. Michael was Vice-President of Nielsen’s consumer neuroscience practice, and is the founder and currently Principal Scientist of Adaptation Research. To discuss some of the challenges faced by marketers and practical ways we can encourage consumers to adopt more environmentally sustainable products and services, Michael joined us for this interview from his home in La Jolla, California.
Adrian Tennant: Michael, welcome to IN CLEAR FOCUS.
Michael E. Smith: Adrian, it’s a pleasure to be with you.
Adrian Tennant: So, Michael, what prompted you to write Inspiring Green Consumer Choices?
Michael E. Smith: Well, several things. First, it integrates two topics I’ve had a long interest in. One of those is the emergence of the discipline of consumer neuroscience over the last decade or so. That discipline attempts to better understand consumer decision-making through advances in neuroscience, experimental psychology, behavioral economics, and other disciplines. As you noted in the introduction, I had been working in this field for many years and watched it grow from a niche discipline to something that’s become much more mainstream. The second topic was a growing interest in the expanding effort of marketers to both reduce the environmental footprints of the products and services they are creating and to promote those efforts and their marketing communications, there didn’t seem to be much overlap and the related literatures on these two issues. So I recognize that gap in the discussion and identified a need to introduce the fields to each other. Of course, another proximal backdrop that motivated me, was the growing impacts of extreme weather across the globe and evidence that increasing numbers of consumers were voicing both greater recognition of environmental problems and greater desire to adopt more sustainable ways of existing in the world.
Adrian Tennant: Well, the first chapter of Inspiring Green Consumer Choices includes some eye-popping stats reflecting American consumerism. You write that the average individual living in a modern home now has over 200% more personal space in which to stretch out, consume media and store their personal collections of stuff than someone would have done just a few generations previously. And yet, even with all this extra room, often including one or two car garage is filled to the brim with more stuff, almost one in every 11 Americans pay for storage facilities outside their home, fueling the $40 billion a year self storage industry. Michael, how did we get here?
Michael E. Smith: Well, slowly and then much faster. following world war two and more developed nations and especially in the US which suffered much less than the Homeland from the war, consumer behavior grew to become an increasingly large component of GDP. this mainly reflected the growth of the middle class in the U S with increasing prosperity and increasing availability of consumer goods. After a slow and relatively steady growth and demand for consumer products, essentially from the beginning of the industrial revolution onwards, beginning in the 1950s demands for such goods, enter a period of essentially exponential growth. that has put unsustainable impacts on the resources available to meet such demand and on the ability of planets, physical systems to absorb the polluting byproducts of meeting those demands. The period from around 1950 to the present is sometimes referred to by resource management experts and economists as the great acceleration. And while one might assume that much of this increase in environmental impact simply reflects population growth, in fact, most of the growth of the consumer economy has occurred in developed nations, which haven’t witnessed that much population growth. Whereas much of the population growth instead has occurred in less developed nations that are least responsible for the growth and consult.
Adrian Tennant: What are the psychological factors behind our seemingly irrational consumption and hoarding behaviors?
Michael E. Smith: Well, this is not fully understood. So let me just be clear on that. But we have inklings of what’s driving it. It is clear that the same reward systems in the brain that are involved in more extreme and pathological psychiatric aberrations, such as compulsive shopping, gambling addiction, extreme hoarding behavior, and also physical addictions to substances. Those same mechanisms are also engaged when clinically normal people buy things. the process of shopping for and purchasing attractive products, engages deep brain structures involved with reward anticipation. Which provides a bit of a dopamine rush to the shopper, you know, when they select the purchase and decide to buy it. This is a very transient effect and our emotions regressed to a kind of equilibrium after a purchase. And, you know, in a pretty, rapid fashion. As a result, the last shiny new thing we purchased is no longer quite as exciting anymore. And we step back on what is sometimes referred to as a hedonic treadmill and pursuit of other goals and desires and in a largely unconscious effort to reinstate the positive feelings we experienced on previous shopping occasions. Over time, based on that reinforcement, we develop automatic habits that drive purchasing of preferred products in a relatively autonomous fashion. We don’t give it much thought once it’s become a habit. And because we live in a social world, we tend to model our own behavior around what we see others doing and those others are also busily out there shopping. And because of that it becomes a societal norm to do exactly that behavior. and to some degree, because people are concerned about how they are perceived by others, some purchasing relates directly to an effort to convey taste and status to our peers, you know, to look good in the eyes of others.
Adrian Tennant: This is the concept of self where what we choose to buy is really an expression of how we want others to perceive us?
Michael E. Smith: Very much so.
Adrian Tennant: Michael, in Inspiring Green Consumer Choices, you describe mental models of the relationship consumers have with the environment and the history of earth day, which has been celebrated in April every year since 1970. Could you just briefly explain the roots of the circular economy movement?
Michael E. Smith: Sure. So it’s this acceleration beginning in the 1950s, by the early 1960s, people were becoming more aware of the growing problem than many forms of environmental pollution. And by 1970, as you note, there emerged widespread concern about the impacts we were having on the planet and hence the emergence of the earth day phenomenon. Accompanying this concern was a growing realization that planetary resources were not unlimited. If we are to have a long-term future on the planet, we would need to move beyond the traditional. What sometimes referred to as a linear take use, dispose of view of consumption to end, that was less wasteful and that better mimics what happens in nature and in nature, nothing is really wasted or use it up, but rather materials are cycled through ecosystems, such that the outputs from one use becomes the inputs to another process. Since this period, was also the dawn of the space age, late in the 1960s, the sociologist and economists Kenneth Boulding characterize this the emerging difference in worldview, as essentially on the old perspective, he is the metaphor of a cowboy exploring and exploiting a limitless frontier versus the emerging relatively closed system of a spaceship astronaut dependent on life support systems that minimize environmental contaminants and that recycles limited resources in more recent decades, this notion has evolved to a discussion of a circular economy, largely building on those metaphors one where waste is minimized, and the end of life of one product cycle provides resources for the next or for some new upcycled phenomenon.
Adrian Tennant: All of us engaged in quantitative and qualitative research know that pro-social biases often result in marked differences between what survey respondents and the focus group participants say they’ll do and what they actually do in real life. Environmentally conscious behaviors are no different. The problem which you lay out in your book is the gap between what consumers say about the importance of sustainability considerations in the purchase decisions and their actual choices and post-purchase, pro-environmental behaviors they engage in. Can you explain this intention action gap?
Michael E. Smith: Pro-social response biases undoubtedly play some role in explaining the gap. Additional influences may be at work as well and some of those influences may be inherent in the psychology of the consumer, while others may reflect a market failure of one form or another. On the consumer side, people just aren’t very good accountants of their own behavior. They may lack insight into how often they actually engage in pro environmental behaviors. And because they’re well-known to rely on a variety of mental heuristics, one such being the availability bias, or how easy something comes to mind when you try to think of it, they may overweight the frequency by which they engage in such behaviors, especially if it is easy to remember instances where environmental concerns weighed on their decision-making, if that comes easily to mind, it’s easy to assume that you do that more often than you actually, frankly, do. People also tend to discount some benefits such as environmental benefits if they promise to pay off only in the future, we discount future rewards to a great degree, whereas when they are trying to satisfy some immediate need, state hunger, thirst, a need for a new pair of shoes, they may be more attuned to immediate functional benefits rather than sustainability claims of more environmentally friendly products. And generally consciously considering the pros and cons of environmental benefits typically require more mental effort on their part. They might not fully understand a potential benefit and they may be skeptical of brands emphasizing such claims, and they may not really be willing to spend the extra mental effort to think through that problem. I’m reminded of a frequently cited quote, usually attributed to the Nobel Laureate, Daniel Kahneman: ” thinking is to humans as swimming as to cats, we can do it, but absolutely hate it!”. So part of the gap may be intrinsic to human psychology. but another part of that gap may be attributable to problems brought on by marketers themselves. They have made claims that are difficult to understand in the first place. And those claims may in some cases, be rightly viewed with suspicion as there is a long history of brands engaging in greenwashing and purpose, washing, activities of that nature. And it’s well documented, so it’s not really controversial for me to say that, and I should be obvious. marketers tend to price more sustainable products at a premium to more traditional products. Yeah, many consumers may not be able to afford that differential. And a third part that might contribute to this is that some barriers that are more institutional and structural in nature, a pro-environmental consumer may sincerely want to engage in a behavior such as say, purchasing organic foods are recycling packaging, but if they live in a place where organic foods aren’t widely available or where recycling infrastructure is underdeveloped or undeveloped, they may not have the opportunity to engage in the behavior despite their desire to. So while the intention action gap is real, I think there are many things that contribute to it.
Adrian Tennant: Hmm, that’s interesting. Because the limitations of research instruments that rely upon respondents and participants self-reporting are generally well understood within the industry, there are also researchers and suppliers that offer implicit methods, including biometrics, like eye tracking, facial expression analysis, galvanic, skin response, and electroencephalography, or EEG that aim to decode consumers non-conscious thoughts. Michael, you’ve gone a lot further than most in understanding the shopping brain. Could you tell us a little about your experience as a leader in Nielsen’s consumer neuroscience practice and how the learnings could inspire brands to make it easier for consumers to make green choices?
Michael E. Smith: Happy to, and, I will say that of all the types of tools you described, it is the case that much of the applied research I’ve been involved with, and commercial endeavors I have relied heavily on those tools. my experience in the domain actually precedes my being a direct, employee of Nielsen because I previously worked for many years, and a startup that Nielsen, subsequently acquired much of that work focused on traditional, market research associated with evaluating, commercial communications about brands and their benefits and, their, attempts at persuasion in the marketplace. But such tools can serve the same purpose for the sustainability market as they do for traditional marketing. In fact, the portion of the research agenda I was directly responsible for at Nielsen examined how the brain measurement tools frequently employed in the field for optimizing commercial marketing in general could also be used to optimize communications, promoting different types of prosocial behavior. Some of the tools are really good for identifying what grabs your attention and what fails to. Others are good for estimating whether communication imposes too high of the mental workload to be effectively processed and which in turn can lead to negative emotional response. And still others could help identify whether a communication promotes a positive emotional response, and whether it’s memorable. And the commercial world, these tools can be used to pre-test communications in order to evaluate what is working well and what requires some creative optimization before it’s unleashed into the media sphere of one form or another. I’m sure you’re well acquainted with that process. Yeah, for example, for an application in this domain, I’m reminded of one project that we did on behalf of a non-governmental organization that was developing public service advertisements to promote recycling behavior. We were able to identify parts of, you know, a 30-second ad or a 60-second ad under development, that was either eliciting confusion as to what the point was or failed to elicit an emotional connection. And in turn, the feedback from that measurement exercise provided information to the creative team, working on the spot that they were able to use to increase the degree by relatively minor edits and the advertising copy to increase the degree to which viewers engaged with the advertisement. So applying these tools to sustainability marketing really are not intrinsically different than marketing in general.
Adrian Tennant: And the other title by which some of these tools go, of course, is neuro marketing. I’m wondering how you feel about that term.
Michael E. Smith: Well, I have mixed feelings about it. neuro-marketing is really in my mind, the difference between consumer neuroscience and the use of the term neuro-marketing is I think of the, term consumer neuroscience applying more specifically to evaluating brain responses in response to marketing materials, whereas neuro-marketing, and my mind is more. Well, it sounds scarier to some people, rightly so in some instances, but it’s also really the application of the insights that come from consumer neuroscience to marketing strategy. So it really, those insights may help a brand marketer or an advertising team construct effective communications. And if you rely on neuroscience inputs to construct those communications, and you’re the person putting those communications out into the wild, well, that’s more of what I conceive of as neuro-marketing per se. Many other people would just equate the terms.
Adrian Tennant: Let’s take a short break. We’ll be right back after these messages.
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Adrian Tennant: Welcome back. You’re listening to an Encore episode, featuring Michael Smith, author of the book, Inspiring Green Consumer Choices: Leverage Neuroscience To Reshape Marketplace Behavior.
Adrian Tennant: Michael, you cite a McKinsey and Company study that found that consumers feel that it’s largely the responsibility of companies and governments to reduce barriers to green consumption. What do brand marketers need to do to adjust to consumers’ growing intentions to shop more green?
Michael E. Smith: Brand marketers need to make their sustainability claims more trustworthy and transparent if people are going to be more accepting of those claims. They also need to focus more on highlighting the immediate and concrete, functional benefits of their products. And then, more as a secondary consideration, focus on the more long-term and abstract environment, mental benefits, because at the end of the day, if we’re not getting our needs satisfied, by a particular product or service, we will explore other ones. So, shoppers need to be convinced that whatever their primary need is be it taste or health or identifying something aesthetically pleasing. They’re not going to go after the secondary needs. They also need to ensure that their offering has some degree of mental and physical availability. Byron Sharp, in his book, How Brands Grow, emphasizes that having something top of mind as a brand, and having it physically available where you’re shopping, are the keys to increasing sales and growth of your brand within the broader category. And this is as true for sustainable brands, as it is for any other brand. And then I think marketers really need to get comfortable with letting go of the notion that just because somebody filling out a survey says they’re willing to pay more for more sustainable products. Doesn’t mean when the rubber hits the road, that that’s true. Some people can be distracted by a discount on a neighboring product that they find at the shelf. And many people, the majority of the population, really, especially these days don’t have the resources to spend more money on fulfilling their product needs. And so I think there needs to be a greater emphasis for marketers marketing, more sustainable products to do everything they can to achieve price parity with the competition if they want to have more success in this sphere.
Adrian Tennant: Hmm, that’s a great point. What are the kinds of adjustments that those of us working in the advertising industry will need to make to support green consumption and adoption of a post consumerism mindset?
Michael E. Smith: There’s a great need for brand advertisers to educate consumers about the real personal and societal benefits of sustainable products and environmental behavior. More generally, there’s a growing body of evidence that more informed consumers tend to be more receptive to sustainable marketing efforts. Whereas less informed consumers tend to be more skeptical. so advertising and creative development teams really need to work with marketers to convey, where we’re headed and, fashion that is informative, without eliciting so much despair that people just give up and try not to be more sustainably thoughtful. Beyond that, I think the advertising community needs to help marketers to build more trust with their consumers. They need to rely more on things like trusted third party verifications of claims. especially on topics such as sustainable sourced and fair trade bonafides rather than promoting claims that lack such certification, or that may seem otherwise self-serving, You know, the creative agencies need to be conscious to avoid communications that smack of greenwashing. Consumers will be quick to detect it and will be turned off by it. And we’ll be more likely to engage in negative word of mouth to disparage it. and finally, I think one thing that’s really critical and that’s missing and a lot of sustainability marketing, is a failure to highlight the immediate, personal benefits that a product might convey, rather than focusing on abstract environmental benefits that might be remote and in space, because if you’re not helping people to, satisfy their immediate needs, they’re not going to have the bandwidth, to try to aspire to help to satisfy a future generation’s needs.
Adrian Tennant: You have a wonderful illustration of how some of these ideas play out in practice. In the book, one of your personal anecdotes relates to a decision you made as a consumer to have solar panels installed on the roof of your home. Could you tell us what happened after you had your array installed?
Michael E. Smith: Ah, yeah, that is interesting. That is there appears to be geospatial clustering of home solar panel installations that indicates that they’re not randomly distributed. and just as the example that I shared, when I moved into my current neighborhood, no one had solar panels. and this wasn’t that long ago, it was eight or 10 years ago, but after a few months and moving into the neighborhood and I met some of my neighbors. And then I noticed that one of the houses across the street from me was having some solar panels installed, which same call and, you know, I respected my neighbor and thought he had thought this through his bright guy, but I didn’t know very much about the risks and benefits myself. Then a year later I was having some work done on my roof. So I investigated in more detail, whether it would be a worthwhile investment to get my own solar array and did some more investigation. And despite some initial anxiety about it, it has proven to be a very good investment. I’ve already earned, you know, my costs back and, you know, it’s not giving me free electricity, so all great. and we live in one of the cities in the country with the highest electricity, electricity rates, so all the better. but the interesting thing is, apart from my own purchase, uh, within two years, two of my other knee, nearest neighbors had also got their own solar arrays. So now we have this special cluster of solar rays amongst my nearest neighbors and no one else in the broader neighborhood has yet adopted the technology. So it certainly seemed to grow. You know, it’s like put a mold in a Petri dish and a lot more mold grows around it. It seems like people are that way too. And you know, to some degree that may reflect the old adage of the need to keep up with the Joneses. that is you don’t, you want to impress your neighbors, that you’re just as good as they are in terms of your purchase behavior. That’s certainly one type of phenomenon, but apart from incorporating some degree of virtue signaling, it may just serve to communicate that it is increasingly normal to make this type of decision to go solar and doesn’t seem excessively complex and risky if all your neighbors are doing it too. and now it’s interesting we’re going through this same cycle with electric cars. you know, so maybe five years ago we got our first electric vehicle and then probably a year later, my next door neighbor got an electric vehicle, which, you know, we’re, fueling with sunshine so, you know, what could be better than that? And an increasingly greater number of people in this neighborhood are doing the same thing. and a lot of people have noted that this is frequently the product adoption cycle. So, the literature on the adoption of innovations usually shows that there’s a Vanguard of early adopters who provide a model for other people, to base their behavior on. And that adoption then tends to spread from those early adopters to the rest of the population.
Adrian Tennant: So interesting. You think that’s where we are with electric vehicles? Hertz has apparently ordered 100,000 Teslas. So we’ll be seeing even more Teslas on the road as rental vehicles
Yeah. And you know, the great thing about the Hertz move. I’m sure Elon Musk thinks a great thing about it is it’s made him billions of more dollars overnight, at least on paper. But by having these available as rental vehicles, if you feel like you’re uncomfortable with the situation, you can just go rent one, instead of putting down the money to buy one. And many of the things that people are concerned about, like the difficulty of recharging or that the vehicles may not have enough range for, your concern and they have some things for your needs. And they have anxiety about that. This ability to try before buying, really allows you to get past those initial anxieties and find that it’s not all that difficult or that much of a barrier to most day-to-day driving.
Adrian Tennant: So referencing your neuroscience research, you indicate that there may be some challenging emotional barriers that we’ll need to overcome in the transition to a more circular consumer economy. Could you just explain what you mean by that?
Uh, yeah, and I think what you’re referring to is a discussion I provided around some of the barriers to adoption of used, repurposed products, and recycled, upcycled consumables of one type or another. One important primary emotion that can come into play and those sorts of situations is the danger of inadvertently eliciting a disgust reaction. And disgust was identified by Darwin to be one of the primary emotions we experience. And it generally is thought to have evolved, to protect us from contagions, and pathogens that might be in the environment. And where this might be an issue – there’s a growing trend to do things like upcycling food waste into new consumable products of one form or another. And you know, at least in one instance, feeding food waste to insects as feedstock that you can then convert those insects into protein powder. And then you can incorporate that protein powder into any number of products. That’s really low environmental impact, high-quality protein. Some people just aren’t down with that. And so you need to communicate what you’re doing very delicately or you can essentially distance what you’re doing from the product’s awareness altogether. so there’s a trend to essentially feed food scraps, to maggots, feed the maggots to like salmon in a fish farm, or chicken in a poultry operation. And then create forms of protein that are much more acceptable to humans, and they’re much more useful. And you lose some of the sustainability advantage there, but you’re able to use sustainably developed resources in those operations, whereas they might be using other things entirely that are more impactful on the environment. I think I discuss a similar problem with respect to recycling and purifying wastewater, to make it more suitable for human consumption. We have pilot projects here where I live, which is heavily impacted by drought, and we have to import all of our drinking water from elsewhere. And so there’s a big need to figure out ways to recycle the water that we’ve already used. And there similarly, marketers are trying to kind of distance the end consumer, both psychologically and spatially, from that purification process. So it was less disgusting. And lastly, the thing I’ll say about this, is there’s growing evidence in the psychological literature that the brain incorporates something like a behavioral immune system. Just like our biological immune system fights off germs, our behavioral immune system on an almost automatic basis causes us to be concerned about situations that might expose us to pathogens in the first place and really drives people to avoid situations where that exposure could occur. And this is also important in the reusable space, because you don’t know who’s previously been using those products. You know, also even if you go into a retail environment and it’s disorderly, the clothes are strewn all over, or the shelf of CPG products are half empty and in disarray. People don’t know who’s been there, who’s been touching that stuff, whether they were someone that they would mind touching the stuff or that they would feel, you know, offended. People are funny that way. So retailers, the smart ones anyway, spend an inordinate amount of time keeping their stores neat, just to avoid eliciting that type of implicit disgust response. You know, similarly, even product adjacencies can cause this response. So if a product that would be rated relatively high in some circumstances is displayed adjacent to a product that is noxious in some fashion, say a candy bar versus a can of insect spray, a toxin, people would be highly likely to rate that candy bar as less desirable if it had been, you know, displayed adjacent to another type of product that also is more desirable. So, you know, smart retailers know these things already because it’s been understood for quite a while in the consumer research space. You know, it’s important to continue to focus on that going forward. Particularly as we emerge from this pandemic where people are in a heightened state of awareness of the potential for inadvertent pathogen exposure.
Adrian Tennant: Michael, if IN CLEAR FOCUS listeners would like to learn more about you, your work in consumer neuroscience and psychology, or your book, Inspiring Green Consumer Choices, where can they find you?
Michael E. Smith: If they want to have direct communications, the best thing is just email me at email@example.com, or connect with me on LinkedIn. And if you’re interested in the book, it’s available for order either on major e-commerce platforms like Amazon or Walmart, or from my publisher, Kogan Page, just Google Inspiring Green Consumer Choices, and you’ll get lots of hits on the topic.
Adrian Tennant: Michael, thank you very much for being our guest today on, IN CLEAR FOCUS.
Michael E. Smith: Thank you, Adrian. It’s been a real pleasure to be with you.
Adrian Tennant: Thanks to our guest on this week’s Encore episode, Michael Smith, applied cognitive neuroscientist and the principal scientist of Adaptation Research. If you’d like to obtain a copy of Michael’s book, Inspiring Green Consumer Choices, as an IN CLEAR FOCUS listener, you’ll receive a 20% discount when you purchase online at KoganPage.com. Just enter the promo code BIGEYE20 at the checkout. As always, you’ll find a transcript with links to the resources we discussed today on the IN CLEAR FOCUS page at Bigeyeagency.com under insights, just select podcast. And if you enjoyed this episode, please consider following us wherever you listen to podcasts. Thank you for listening to IN CLEAR FOCUS produced by Bigeye. I’ve been your host, Adrian Tennant. Until next week. Goodbye.