Welcome to Influence, Psychology and Persuasion
This is session number 022 of Influence Psychology and Persuasion. And this show is all about Behavioural Economics Principles. Well not all about, but certainly 3 tips to help you understand what this amazing study has to offer.
So, Behavioural economics are sets of psychological studies all around economic decision making. So, if you buy or sell things, this podcast and blog post is for you. And if you are involved in marketing, sales or run your own business, this is most definitely for you. Here’s a little more about behavioural economics background
As you’re listening/reading/watching this you will already have a clear understanding that we, humans, are anything but clear or easy to understand. We’re odd, we make irrational choices, decisions and statements all of the time.
I remember a few years back and my wife came home one Saturday in January. She walked through the door, beaming with pride, came into the living room where I was reading a book, hands at breaking point with carrier bags with red sale logos splattered all over and held them to my face. She then blurted out “You wouldn’t believe how much money I’ve saved“. Interesting, I thought. She would have bought anything if it wasn’t the January sales and the fact she had 25+% off. She felt like she’d saved money. Lol.
My wife isn’t the only reason for these studies. We all make irrational choices at times. Here are 3 studies to arm you going forward.
Tip Number 1 – FREE!
Now most of us get this. FREE is like a drug which pulls us in for a closer inspection. FREE has a magnetic pull that us mortals can’t resist. But is this logical?
Forget for a moment that nowadays we may have been abused by the power of FREE. Most of us now think, “but what do you what in return if not money?” We’re getting a little wiser!
The science shows we have an unreasonable connection to FREE!
An interesting study was carried out. Researchers offered participants a choice of 2 chocolates. The choice was either a 1 cent Hershey’s Kisses or a 15 cent Lindor chocolate truffle. Most of the participants opted to pay for a 15 cent Lindor Truffle because they could see the amazing value when compared to the Hershey’s Kiss.
Here is the interesting part though, when the researchers dropped the price by 1 cent, the vast majority then opted for Hershey Kiss. All because it made it FREE!
The word FREE makes us unreasonable. Watch out, or use it to your advantage.
Tip Number 2 – Perceived Value
We all know what we like right? We’re not persuaded by price, at all. We simply understand what’s good and what’s not!
Here are 2 more examples of how price effects your decision making.
Prozac the antidepressant, was tested against a placebo. In this study, they sold the placebo at a price of $2.50 per pill and the real Prozac pill at $2.00.
Tip Number 3 – Priming
Simply talking about a particular attribute will cause people to make a decision based on how they are primed.
A very simple study was done in a computer store where people who were looking at Laptops were asked 2 things. The first group were asked how much memory they were looking for, and the second group were asked what processor they wanted.
So what happened? You guessed it, those who were asked about processor purchased a laptop with a high spec processor, and the buyers who were asked about memory chose a new machine based on its high level of memory.
A similar study was done in supermarkets. People who were walking down an aisle with yoghurts and fruit were stopped and asked
A: What’s your favourite fruit?
and the other group
B: What’s your favourite yoghurt?
You can guess what happened by now for sure. Those who were browsing the aisles ended up buying those products they were asked about. They had been primed and then the seed was sowen and they ended up purchasing this items they had been asked about.