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Don’t Let Smart People Manipulate You With Behavioral Economics Kung Foo
Asking someone to explain why they made a decision often evokes a rational, reasoned reply. The person may completely believe their answer – but they might be completely wrong. Dan Ariely, professor of Behavioral Economics at Duke University (and author of Predictably Irrational), says otherwise: “People often think that they’re making decisions, but in reality their decisions are very much determined by their environment.”
But behavior does follow trends, Ariely was asked to share some of his most interesting behavioral insights, and what they mean for marketers. You might be surprised how simple changes in your approach can improve results.
Expectations modify experience (This is why people who to take a placebo instead of an actual painkiller might report less discomfort after taking the pill — they were expecting the pill to work.)
People are uncertain of a product’s monetary worth (it’s the reason why someone would pay $10.00 for a cheeseburger at a sporting event, but only pay $1.00 for the same burger at a fast-food restaurant while driving to the game. )
People place increased value on their own items (“Kids are a good example of this,” Ariely says. “We all think our kids are wonderful because they’re ours.”)
People hate losing things (Marketers can apply this concept to bundling. When trying to sell customers a bundle of products, don’t let customer assemble products on their own. First, present a complete bundle and ask customers to remove the items they don’t want. )
Don’t put too much value in focus groups (“One of the things marketers do is get a group of 12 people who know very little about their business and ask them deep questions about it. And that, I think, is a recipe for disaster.”)
Reach consumers at the right time (coupons handed to consumers before they entered the store had a dramatically improved response rate.)
Look at customer communication areas (The key places to test behavioral concepts are in areas where consumers interact and trade information with your company, Ariely says. These will be areas where you will have the most impact on consumer behavior.)