No, You Don’t Have the Next Hit in That Hot Category – But Here’s Why You Think You Do

by Jordan Pine on Jan 16, 2017 3:00:00 PM DRTV, Retail, Trends

In 2002, psychologist Daniel Kahneman won the Nobel Memorial Prize in Economic Sciences. As Michael Lewis writes in his new book, The Undoing Project: A Friendship That Changed Our Minds, this was unprecedented because “how on earth does a psychologist win a Nobel Prize in economics?” The answer is that Kahenman was a pioneer in the field now known as “behavioral economics.” Specifically, his work focused on the psychology of judgment and decision-making.

Kahneman would surely have shared his Nobel with Amos Tversky, his lifelong collaborator, had Tversky not died of cancer in 1996. (The award is not given posthumously.) Kahneman and Tversky spent decades disproving the idea that humans are rational decision-makers. They initially identified three mental shortcuts, or “heuristics,” people use in place of logic and reason. Many more have since been discovered.


In the field, I frequently witness how these heuristics distort DR decisions. In this post, I’ll discuss something called the “availability heuristic,” which Kahneman and Tversky studied in the early 1970s.

“We defined the availability heuristic as the process of judging frequency by ‘the ease with which instances come to mind,’” Kahneman writes in his award-winning book Thinking, Fast and Slow. He uses several examples, including plane crashes and terrorist attacks. Because of the intense media coverage of such events, we think they are far more likely to occur than they actually are.

As an avid skydiver, I am quite familiar with this cognitive bias. Non-skydivers believe skydiving is incredibly risky because it’s easy for them to recall a story about a skydiving fatality. Meanwhile, they have no idea how many safe skydives are performed each year and no sense of how that compares with other potentially fatal activities. As Kahneman would say: “The amount of concern is not adequately sensitive to the probability of harm. You are imagining the numerator ... and not thinking about the denominator.” Or as any seasoned skydiver would say: “Be careful on your drive home as that will be the most dangerous part of your skydiving day.”

So how does this apply to DR? Well, let’s consider something I call the “Siren” effect. If a DR marketer has an unexpected hit in a category, that marketer and the rest of the industry will start to believe they have discovered a “hot” category and follow with a string of failures. The latest example is Telebrands’ Star Shower. I’ve already noted at least five failed attempts to win big with the next holiday-lighting hit, and I expect many more to follow because Star Shower was such a big success. The bigger the hit, the louder the sound of the Siren’s call – i.e. the greater the power of the availability heuristic.

The way to resist is to force your rational brain to answer Kahneman’s denominator question. Every category, and the industry overall, has a roughly calculable ‘hit rate.’ For example, most top players I ask believe their overall odds of success on DRTV are one in 10. Yet when there’s a new hit, they start to act as though that rate has magically changed, forgetting they are still much more likely to be the 9 of 10 than the one.

This bias is even clearer when it comes to specific categories. In the field recently, I was discussing a known ‘bad category’ with a group of DR practitioners. They had personally failed in this category at least 12 times over the last few years. Incredibly, the group wanted to try again. Before I asked why, I knew the answer: That particular company had experienced one big success in the category several years prior. In other words, the ease with which the group could recall one sweet success amid a larger number of harder-to-recall failures continues to guide their decision-making. As the leader of the group jokingly admits: “We’re trying to give back all the money we made on that first success.”

In future posts, I plan to write about other heuristics and cognitive biases as I observe them in the field. Can’t wait to learn more? I highly recommend the two books cited in this post: The Undoing Project by Michael Lewis and Thinking, Fast and Slow by Daniel Kahneman.


Headshot Jordan Pine.jpg

Jordan Pine is a consultant specializing in short-form DRTV and the author of The SciMark Report (, a popular industry blog. His field reports are based on actual conversations with top executives from our industry, many of whom are his clients, partners or vendors.

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