Why You Buy, Part Two

More of the findings of the recent studies in behavioral economics:

Webers Law

A change of stimulus is more emotional and motivational, according to the base: Most subjects tested would drive across town to save $10 on a $20 item, for example, but not to save $10 on a $500 item. The lesson for sales people? If you won't lose a sale on a thousand-dollar couch over $10, sell the other benefits of the couch in your sales pitch.

Familiarity Fallacy

Economic choices are often made due to familiarity, even when the choice is clearly worse ("But I always shop there!"). This bit of research shows the need to get a customer used to coming to your business. If they are comfortable, they won't expect or demand the best deal.

Anchoring

In tests, mentioning the year 220 A.D., versus 1600 A.D., resulted in earlier guesses when people were asked for the birth date of Ghengis Khan. This was true even when the comment was in no way related to Khan. This tendency to "anchor" was found in the economic realm as well. Mention $300 as the value of an item, and subsequent negotiation or discussion will revolve around that.

The implications are obvious, and are being studied. It seems an item should be worth a certain amount to a particular customer, but humans are never so logical in valuing things. Why can you get $99 for an e-book online that has roughly the same content as a $10 book in the bookstore? Is it partly due to the "$500 value" thrown out there for the book and "bonuses." It makes $99 seem cheap, doesn't it?

There are reasons people buy that go beyond any of the reasons given. Rationalization seems to rule over rational thought. I'll cover more of the research into behavioral economics in part three.

Steve Gillman has been studying every aspect of money for thirty years. You can find more interesting and useful information on his website; http://www.UnusualWaysToMakeMoney.com

Long-term plan aids marketing of Michael Phelps
The Associated Press - 8 hours ago
Olympian Michael Phelps' record-setting performance in Beijing has led to multimillion-dollar endorsement deals, but his road to marketing gold was paved ...

AdAge.com (subscription)
Are the Army's New Marketing Tactics a Little too Kid-Friendly?
AdAge.com (subscription) - 7 hours ago
The Army Experience Center is the centerpiece of a program to test and evaluate new marketing strategies and is not a recruiting tool, according to an Army ...

Sport Technology's marketing helps its Flowboard turn a profit
Los Angeles Times, CA - 54 minutes ago
Now, looking to profit from the action sports craze, the Long Beach entrepreneur is marketing a product he sees as a crossover for boarders of all kinds. ...

Two UI profs take aim at negative marketing
LocalNews8.com, ID - 7 hours ago
AP - September 7, 2008 3:14 PM ET MOSCOW, Idaho (AP) - A pair of University of Idaho business professors are taking aim at marketing that tries to sell ...

Welcome to Edinburgh festivals plc … the marketing man's dream
Scotsman, United Kingdom - 3 hours ago
The UK's leading marketing, branding and advertising agencies have been invited to pitch for a lucrative £200000-a-year contract. ...

Small IT firms outsource marketing
Economic Times, India - 8 hours ago
BANGALORE: Indian technology firms, which have cracked the software codes, are now ready to learn a few marketing mantras and may actually be practising ...

The Context for Choice: Health Implications of Targeted Food and ...
RedOrbit, TX - 18 hours ago
By Grier, Sonya A Kumanyika, Shiriki K Targeted marketing of high-calorie foods and beverages to ethnic minority populations, relative to more healthful ...

3 News NZ
Expat marketing campaign canned
Stuff.co.nz, New Zealand - 9 hours ago
An evaluation of the expat marketing programme, obtained under the Official Information Act, found the campaign launch in May 2006 received more media ...
Labour gives up on attracting Kiwis home Scoop.co.nz (press release)
all 11 news articles

Top Korean Bank Taps Teradata for Customer Relationship Management
MarketWatch - 8 hours ago
Teradata Relationship Manager combines marketing analytics to explore customer behavior and interests -- with a range of capabilities to engage customers ...

Sydney Morning Herald
US Presidential elections and lessons for Marketers
Daily Mirror, Sri Lanka - 7 hours ago
But from a marketing point of view, it’s an emerging market segment that needs to be addressed. To my mind in such close race between two candidates the 44 ...
Video: McCain: Change Is Coming CBS
Neo-Progressives Sell Out To Democrats Swans
all 1,755 news articles

Wind Chimes and more...

Windchimes for great gifts!

A Look at Color Brochure Printing