More Ways to Tap Your Audience's Predictable Peculiarities
by Adele Sommers
This article continues the discussion of one of the most insightful business books of 2008: "Predictably Irrational: The Hidden Forces that Shape Our Decisions," by MIT researcher and professor of behavioral economics, Dan Ariely.
 In Ariely's twenty years of study on how we engage in a wide range of consumer interactions, he has discovered an intriguing collection of human idiosyncrasies. A deep understanding of these peculiarities could significantly influence the way we conduct our business and marketing activities to cater to the "irrational," but predictable, aspects of consumer behavior.
A previous newsletter summarized the findings in four of about a dozen topics of Ariely's book. This article reviews four additional areas, with findings that you could potentially apply to your own business or professional life.
We Peg Our Buying Expectations to Initial Reference Points
Through a series of clever experiments, Ariely observed an intriguing pattern that occurs whenever numbers of any kind are mentioned to buyers before asking them to consider purchasing an item at a certain price.
Regardless of which number is mentioned -- it could be the outside temperature, an identification number, or a quantity of something -- that number acts as an "anchor" and gives buyers a relative point of comparison for the very next purchase price they consider.
Examples of the anchoring effect:
 Artificially induced anchors (such as asking people to consider the last two digits of an identification number as the price for an item that they will next be asked to consider buying) can strongly influence the highest prices that people would be willing to pay for those items.
Bottom line:
The lower the anchor number, the lower the relative ceiling on what the buyers said they would be willing to pay. The higher the anchor number, the higher the relative ceiling on what buyers are willing to pay.
- Anchors take effect with new behaviors, and persist as reference points as long as people can recall their first purchase. Buying Starbucks coffee at $4 a cup may seem like an extravagance at first, but once someone begins buying it at that price, that price becomes an anchor for that type of purchase. In any case, those anchor points endure not only during the current purchase, but well into the future.
- Price tags can be anchors, too, but only if we contemplate buying at that particular price, not simply when we see a price tag.
Our Love Affair with Ownership and Possessions
 Ariely observed a phenomenon that most of us are already familiar with -- we seem to have an innate tendency to become extremely attached to what we have, even if it's currently of minimal value to us and costs us dearly to hang onto it!
A related aspect that Ariely noted is that we tend to focus more on what we stand to lose (such as our precious junk) rather than what we stand to gain (such as the compensation we'll receive from selling it), based on the very strong aversion we have to loss.
We also begin to feel partial ownership of something even before we actually buy or take possession of it. Examples include situations when we look at a catalog and imagine ourselves already owning and wearing the clothing or using the products.
We further assume that others will view a transaction from our perspective -- including the feelings and memories we associate with an item we are selling. It means, for example, that we might expect buyers to overlook a cracked window in our home that is for sale because of all of our warm associations with living there.
The Problem with Too Many Options
Ingenious experiments showed that when offered a range of options, people try to maximize every option available to them. They also try to keep all options open perpetually -- even if they pay heavily in terms of time, energy, and resources.
Ariely found that people don't seem to sample the possibilities and then settle fairly quickly for the best possible choices. Instead, they try to engage in far too many activities or overspend on overly complex products (often experiencing "analysis paralysis" in the process) -- just so they can have access to something they "might want or need" in the future.
Examples:
 Parents who shuffle kids around to too many extracurricular activities, hoping that one of those activities will spark their child's interest.
- Buying a gizmo with far more features than one would ever use, just in case one of those features would come in handy "someday."
- People who buy an annual gym membership but don't use it more than a couple of times. (It would be cheaper overall to pay by the visit -- but that would reduce the perceived number of options!)
How Expectations Color Our Perceptions
Ariely succinctly explains: "When we believe beforehand that something will be good . . . it generally will be good -- and when we think it will be bad, it will be bad." His research in the arena of foods and beverages suggests using these approaches:
- Offer an in-depth, mouth-watering description, such as when a caterer portrays an elaborate menu of exotic and fashionable flavors and foods to be served. Potential customers can then imagine the tastes in exquisite detail, and are more likely to select the more descriptive caterer over one with more generic-sounding fare.
- Deliver and serve the items with attractive presentations and packaging, so that they look far more appealing than they would on ordinary tableware.
Expectations also can develop subconsciously, such as through a phenomenon called "priming." This technique initially exposes people to words and phrases that suggest a certain theme, which causes a subtle shift in their behavior.
For example, when subjects were "primed" by being exposed to word puzzles that subtly portrayed a retirement theme -- "Florida, bingo, ancient" -- they walked much more slowly down the hall afterward than those who received different priming or no priming. When subjects were primed with words like "aggressive, annoying, intrude," they interrupted their testers much more readily than those who were primed with "honor, considerate, polite."
In conclusion, Ariely's brilliantly designed experiments expose our "predictably irrational" expectations, perceptions, possessions, and obsession with options.
Each revelation suggests novel ways to use the findings when designing our business and marketing strategies.
Copyright 2008 Adele Sommers
|
I received such positive feedback from savvy subscribers on 
Researchers have been probing whether one-sided presentations (only telling the good things about a product) or two-sided presentations (telling both the pros and cons) are the most effective in persuading consumers to buy a product. 
