A secret to good marketing: How you think

9/6/2018

Many of the decisions you make on the farm – and in life – are influenced by what you already know and adjusted by whatever new information you can obtain.

Assume for a moment you need to decide between one of two cows to add to your herd. One possesses a balanced frame with ideal chest width, foot angle and udder symmetry. The other ranks well only on udder proportion.

A natural reaction would be to choose the cow with more quality attributes.

Now, if you were given additional information about genetics and milking history on each cow, you might make a different decision. That is simply because you have more relevant information with which to work. Usually, the more you know, the better able you are to make a good decision.

However, when it comes to marketing, sometimes the more information a marketer has, the harder it is to make good decisions – or any decision at all.

Let’s explore why this may be, and what you can do about it, first by peeking in on a game of poker.

How you think vs. what you think

It’s near the closing round of a high-stakes championship poker game. The next move belongs to an up-and-coming player who finds herself unsure of what to do. Pressure mounts as she takes longer than usual to decide.

She’s the type of person who usually prefers to make decisions based on past experiences, and she’s convinced of a few things about her opponent. But in this moment, her opponent has placed a bet she hadn’t previously considered. His bet has created a new scenario, and she’s panicking.

I borrowed this anecdote from the best-selling book Smarter Faster Better: The Transformative Power of Real Productivity. The book explores the notion that when making decisions in an uncertain environment, how you think is more important than what you think.

Through the lens of poker, author Charles Duhigg reminds us we never know for sure what hand we’ll be dealt in life, but it does not mean we can’t have a good idea of what’s coming.

Eventually the panicked poker player recognized her opponent had become a student of her behavior. This new information changed her decision-making process. She began making moves based on her opponent’s most likely responses rather than on what she knew about him or his cards. As a result, she eventually won the tournament.

The ability to manage how you think, and to deal with uncertainties in a productive way, is a skill anyone can acquire. There are techniques you can learn for assessing what’s most likely going to happen, and you can apply them to your marketing.

Math, not intuition

Thomas Bayes lived during the 18th century. He is known for formulating Bayes’ theorem, a mathematical formula for determining conditional probability. Bayesian thinking has to do with estimating the likelihood of something when new or additional data is added to existing understanding.

This is what the poker player was doing. She was factoring new information into existing facts and then updating her understanding. By using additional relevant data in this way, she gained a clearer picture of her opponent’s most likely moves.

Great marketing demands a similar approach. You start with what you know about the markets. Use math to envision a range of probable commodity price scenarios. As new information comes along, factor it into existing thinking and narrow down the range of most likely scenarios.

A marketer who thinks “probabilistically” has to consider multiple conflicting pieces of information and estimate likely outcomes. For instance, there are times when factors influencing the price of milk are at odds with each other. Rising exports might suggest higher prices, while ample supply suggests the opposite. When this occurs, the marketer has to prioritize what is most likely to occur and make decisions accordingly.

Our brains are wired in such a way the simultaneous assessment of conflicting possibilities doesn’t come naturally. This is one reason having a lot of information about the markets can increase the difficulty of making decisions. Faced with an abundance of data, some marketers feel overwhelmed and end up doing nothing at all.

Duhigg could just as easily have been referring to farm marketing when he wrote, “No one can predict tomorrow with absolute confidence. But the mistake some people make is trying to avoid making any predictions because their thirst for certainty is so strong and their fear of doubt too overwhelming.”

You can train yourself to think in terms of probabilities. The reward is: You end up focusing more on what is likely to occur and less on what you hope will happen. You don’t end up following your gut. Along the way, marketing becomes far less of an emotional endeavor.

A trap to watch out for

If you’re going to try making marketing decisions this way, be careful to avoid a common mental mistake called base rate fallacy.

It’s a cognitive bias defined as the tendency to mistakenly judge the likelihood of something by not taking into consideration all relevant information.

A marketer falling into this trap might inadvertently give more attention to a new USDA report without acknowledging how it might influence original assumptions about price direction. For instance, a few months of record-setting dairy exports followed by a one- or two-month reversal may or may not be justification for changing your understanding about future price direction.

A summer forecast for ideal crop-growing weather sounds favorable to a feed buyer. But you would still want to take into account what you know to be true about early season crop growth and other pertinent information before making a purchasing decision.

Marketing is fraught with cognitive traps. That’s why it’s so important to consider how you think before jumping to what you think.

If you’re the type of marketer who feels overwhelmed by the volume of information and opinion on milk and feed prices, I encourage you to think probabilistically.

Embrace information and use math to visualize a range of the most likely commodity price scenarios. Learn how to discern the most probable outcomes and prepare for them. It’s the best path to becoming a better-than-average marketer.  end mark

By: Beth Rousseau

Tags: Business, Decisions, Marketing