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Systems 1,2, and 3: The Paradigm of Consumer Decision-Making

Businesses rise and fall based on consumer decision. When clients decide to buy, businesses thrive. They also stagnate or crash accordingly when sales begin to slow. These truths are known and have been a fact of doing business since the modern concept of the industry was conceived.

The question behind why customers decide to make a purchase and when that decision happens, however, has been considered something of an unknown variable that made determining the best strategy to use when building a brand difficult. This is especially true when evaluating consumer behavior using “system 1” and “system 2” as the only two means through which analysis occurs. There is another system of decision-making that plays an even more important role in decision-making – system 3.

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In order to understand how system 3 impacts business, it’s important to first understand the fundamentals of each of the three systems and how they fit into this systemic paradigm of consumer behavior. The diagram above illustrates where each system begins and ends. System 1 influences decisions that are made automatically. A consumer who has been buying the same brand of coffee for a decade, for example, will pick up that same brand when they’re running low. The decision is more an automatic and instinctive response that is made without much conscious consideration because it’s become a habit than it is a carefully considered transaction.

System 2 encompasses decisions that are more deliberate. Consumers operating in this mode consider objective facts about a product or service and determine which option best suits their needs. Someone who needs a new brand of coffee to help control acid reflux, for example, will likely be forced to eschew the coffee they’ve been drinking for years in favor of a new option. They do research about different brands on the market and make a decision based on which one fits their budgetary and dietary needs.

Both system 1 and system 2 are clearly defined in the paradigm and the model above. System 3, however, seems to be a bit more of an outlier. It doesn’t have any specific attributes that are ascribed to it, at least in the diagram. Where exactly does system 3 fit into the paradigm? It turns out that this particular system is both inherently connected to systems 1 and 2 while being distinctly separate from either. It’s a bit of an enigma, but one that plays a big role in consumer behavior and brand-building strategies.

What is system 3? 

System 3 is a relatively new discovery in the world of decision-making that uses different parts of the brain than systems 1 and 2 while incorporating elements of both. Instead of focusing solely on familiarity and habit (system 1) or objective facts and how they relate to a consumer’s needs (system 2), system 3 utilizes the imagination to make decisions.

When customers make decisions about purchases, they oftentimes think about how the product in question will fit into their lives. How will the particular vacuum make life easier? Potential customers will think about the information they’ve gathered about the product in question and consider how it would help them. If they have mobility issues and the machine is lightweight and has plenty of extendable attachments to avoid the need to bend over, for example, they might very well imagine themselves cleaning their living room with the cleaner.

That thought – that combination of system 1 thinking and system 2 thinking into a cohesive imaginary situation that enables customers to relate to different products and ultimately make a decision – occurs in system 3. The customer considered the choices at hand and picked the option they imagined would fit their needs the best. That’s a system 3 decision, but it’s one made using information derived from both system 1 and system 2 considerations. But what does this mean for business?

The System 1, 2, and 3 Paradigm and Business 

System 3 becomes especially important to business when the time to build a brand or launch a new product arrives. If a brand or product is new, then system 1 thinking will be of little help to professionals trying to make a sale. System 2 thinking can help as long as the information disseminated is easy to understand, but it likely won’t create the emotional confidence many consumers need to make a purchase. That’s where system 3 comes in. Target customers’ imaginations and make it easy for them to imagine themselves using your product, and they’ll have an easier time choosing you over the competition. Brands designed to make customers think the products in question will make them happier than other options are bound for success.

The bottom line? Businesses should appeal to systems 1, 2, and 3 when building their brands and product lines. Communicate in system 1, think in system 2, and build a brand using system 3.

Thomas George1About the Author: Thomas Georgeis the Director ofDoWell Research GmbH, the leading provider of innovation and User experience research, which specialises in “ True moments Living Lab” organized globally to collect exclusive user research information. He can be reached at thomas@dowellresearch.de.