More Marketers to Deploy Campaigns Aligned with Behavioral Economics
The ultimate goal of any marketing campaign is to get the customer to buy. The practice of studying consumer behavior and attempting to sway the decision making process has given rise to the field known as behavioral economics. Writing for McKinsey Quarterly, Ned Welch sums up several behavioral techniques marketers can employ in their campaigns to increase sales.
- Minimize the pain of payment – Consumers don’t like to part with their cash. This simple fact allowed marketers to successfully employ the buy now-pay later strategy in the easy credit economy of the recent past. But now that consumers have tightened their purse strings, they’re paying more attention to the type of money they’re spending. According to Welch, it’s easier to part with pocket money and most difficult to let go of savings. To succeed with consumers, marketers would do well to position their products as affordable in terms of pocket money.
- Use a default option – When consumers are confused or conflicted, marketers should suggest an option that seems natural or a ‘best choice’ for most.
- Limit choices – It’s no secret that most of us are overwhelmed when faced with too many choices, whether we’re purchasing laptop PCs or a chocolate dessert. Welch references a study published in the Journal of Personality and Social Psychology that showed how too many choices (24) of jam stalled consumer purchases and generated negative feelings about displayed products while a display of 6 options generated higher sales.
- Appeal to “context-specific willingness to pay” – When consumers are presented with various options, whether on a shelf or in an ad, they’ll decide which product they’ll purchase based on its relative value to others in the group. In this context, they may spend more than originally planned.
Marketers who consider these behavioral concepts and remove barriers to purchase in their ad campaigns and buying environments will generate higher sales. As Welch indicates, “[u]nderstanding exactly how small changes to the details of an offer can influence the way people react to it is crucial to unlocking significant value—often at very low cost.”
[Source: Welch, Ned. A marketer’s guide to behavioral economics. McKinsey Quarterly. February 2010. Web. 15 March 2010.]