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Dangers Of Inductive Thinking

This week I have a word of caution — and a big dose of optimism — but you’ve got to keep reading for the full-powered benefit.

Just because you had a particular experience doesn’t mean that everyone is going to have the same experience. This is very important to remember anytime, but particularly in more challenging economic times. Be very careful when someone stands up and claims they deployed a certain marketing technique and it succeeded (or failed) for them. That is interesting. However, the scientific approach is to be disciplined and examine a wider range of results. Real discipline requires seeing a bigger picture. Be leery of the 1 person who is either overly optimistic or overly pessimistic because of his or her own personal experience.

For instance, some have claimed voraciously that raising prices will sell more. They look to Mercedes and have said in the past that raising prices always generates more sales. Sometimes that does work as consumers have a greater perceived value from higher-priced items. However, today, things have changed. Even luxury goods have seen a decline in purchases. Wal-Mart makes more money than Neiman-Marcus.

The key is in knowing your market. You can’t say that lowering prices will always result in more profit (not just sales). Today, most people are more price-conscious. You have to find a price point that satisfies your costs (at least your marginal costs) and provides serious value for the consumer to remain profitable in the long-term.

Often add-on packaging and pricing — according to the value perceived by buyers — results in more sales. If someone sees a combination of air, lodging and rental car all together as a package deal then it becomes more compelling than breaking the components into individual pieces.

Dangers of inductive thinking mean that you see one or two examples of something and determine (often erroneously) that it will apply to everything. I had a friend recently tell me that she felt nothing made in China was good. Her reason? She and her husband had two nails that broke when they were doing some repair at home. Her husband checked the box and found they were made in China. Their conclusion? All products made in China are poor quality.

When I submitted that Lenovo, Chinese cars and other products are good quality, she balked. When I cited many of the high-quality, breakthrough technologies I’ve personally seen from Chinese manufacturers at the Consumer Electronics Show she dismissed it out of hand. She knew that Chinese products were inferior because she and her husband had experienced two nails that broke and were made in China.

Be Careful.

You can run into problems in business when you embrace inductive thinking. You see one or two examples and then project that onto all. A better way of thinking is deductive. Study the group and then decide from there how individuals will act. However, even that can be wrong. Most Americans speak English. To conclude that all Americans speak English would be wrong. There are some who do not.

This is important for our thinking when we hear bad news. I was listening to National Public Radio the other day and they gave a vivid example of ill-founded inductive thinking. You must know that I enjoy listening to many of the programs on NPR. All Things Considered, Wait, Wait! Don’t Tell Me, and Morning Edition remain some of my favorites. However, when All Things Considered focused on two people who had lost their jobs and followed them around citing how bad things were, they were guilty of inductive thinking. Not only would our philosophy and logic professors but also psychologists would rail at my dearly-loved NPR for citing only negative cases. Now, perhaps NPR has offered stories about people who are doing very well (there are many even in today’s marketplace). I haven’t heard those stories in my personal experience. But NPR erred on that judgment to talk only about the negative and not give the full picture.

Good marketers today shield their mind by learning about inductive and deductive thinking. When we see flawed logic, we realize that we have to be cautious before accepting everything at face value.

Yes, close to 10% of the workforce is out of work. Well, I grabbed a calculator the other day. If 10% are out of work that would mean that 90% ARE employed! Yes, times are tough. But we are not ready to throw in the towel.

And that’s the whole point for you and me. Succeeding today means that you embrace deductive thinking to be disciplined and see the full picture. You focus on more than your own personal experience. Put on an extra layer of Be Careful when someone only talks about their own experience. If you hear the words, I, Me, or My more than is healthy coming from their mouths, let a warning light go off inside your head.

I think we have to be realistically optimistic.  We see what is happening. Yes, we recognize the two people who are out of work cited by my dearly-loved friends at NPR. However, we also need to recognize others who are doing well. A doggedly-determined optimist is hard to beat. This approach works psychologically. It works in business Most importantly, it works in life.

For you and me, it not only works, but is essential for success in today’s economy.

Copyright © 2009, Terry Brock and Achievement Systems, Inc. Terry Brock is an international marketing coach and professional speaker who helps businesses generate profitable results. He can be reached at 407-363-0505, by e-mail at terry@terrybrock.com or through his website at www.terrybrock.com. Join the Twitter adventure with Terry through his Twitter address: TerryBrock.

3 Responses

  1. Terry,

    Thanks for reminding us that we need to be careful about making decisions based on a limited amount of anecdotal evidence. I have always listened cautiously when people say “everyone says the price is too high/low, etc.” Frequently people hear the comments of one or two people and want to change their entire business strategy.

    Great points as always.

    Gina Carr
    http://www.GinaCarr.com

  2. Bruce Scoggin

    To date, I have heard no exceptions to the NPR story. 9 out of 10 folks are employed. Maybe not where they want to be, but still bringing home a pay check. You tell folks anything long enough and often enough and they will believe it. Lets invest at least as much time in being positive about our economy as we spend on putting it down.

  3. Terry,

    I’m wondering how many people are using the wrong form of thinking, (inductive or deductive). My guess is that most are more deductive than inductive.

    At the same time, I’m wondering how many are simply NOT thinking? How many are simply obeying someone else, blindly following an individual who has found success or who demands their way is right. I know we all do it to save time and energy at times on lesser issues and many in our society don’t want us to think for ourselves.

    Thanks for this thought provoking piece.

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