Behavioural Economics Principles for Digital Marketers

WHAT IS BEHAVIOURAL ECONOMY FOR DIGITAL MARKETERS?

The behavioural economy is the psychological study of consumers and their behaviour in the digital market. It deals with how we think and react. The behavioural economy is directly concerned with the science of decision making. It is based on various time to time experiments to discover how human behaviour reacts and influence in the digital market world. We, as customers always try to make a rational decision. We always aim at choosing the best from the group of product and services offered. Perhaps there are many other factors that influence our decision. The Behavioural economy(BE) is a wide concept. It studies the psychological, emotional, cultural and social factors that directly and indirectly affect a human decision.

WHY DIGITAL MARKETERS SHOULD STUDY BEHAVIOURAL ECONOMY?

What kind of social media post would be potential enough to convert likes to sales? What should be included in a pitching email to get a positive response? These are certain types of question which constantly hit in the digital marketer's mind. These kinds of questions depict the need for studying the behavioural economy for digital marketers. Digital marketing is a crucial branch of marketing. It uses various tools such as social media marketing, emails marketing, content marketing, youtube marketing etc., to promote their good and services among the targeted customers. It is a powerful tool because of the growing number of internet users worldwide. This study will help us to predict how a consumer behaves on digital marketing strategies. It will assist in improving and future planning for efficient and effective results. Suppose, a customer wants to purchase a travelling package to abroad. So, he reaches a travelling agency portal and starts navigating the websites and offers available. Beside offers and packages, what should a marketer add to the website to keep a targeted customer for a longer duration and eventually converted it into sales? The study will reveal the behavioural pattern of visitors. It can help digital marketers to optimize their website for better result.

5 PRINCIPLES OF BEHAVIOURAL ECONOMY

Ignoring the consumer psyche is not at all an optimal decision for a serious digital marketer. If he wants to make his/her campaigns effective, he/she has to pay concentration to consumer behaviour pattern. Here are the five key principles of behavioural economics in relation to digital marketing.

1.Free!! Free!! Free!!- One should never underestimate the power of free. A research was conducted to test the behavioural economy. Some consumers were asked to choose between two products. One product cost 1 cent and another cost 15 cents (10% less than the market price). So, the majority of consumers decided to go for the second option. But, when the researchers reduce the price of both commodities by 1%, perhaps making the second option almost free, the consumers change their preference to the first option i.e 1 cent product. This is the human psyche. Therefore, Digital marketers should focus on including information about free stuff in their campaigns.

2.Introducing the third alternative- Let's understand this by an example that how introducing the third alternative would affect human decision behaviour. A group of people offered to choose between two boxes of chocolate. The first option includes one box for ¹ 50 and, the second option includes two boxes for ¹120. The majority of people opt for the first option. Further, a third option introduced which consists of three boxes for ¹195. Surprisingly, a small group of people changes there preference from the first option to the second option. Therefore, making them irrational. So, the digital marketer should plan their campaigns keeping in mind the positions of alternatives offered.

3.PRICE MATTERS A LOT- In an experiment, a group of students was offered sugar-rich drinks to buckle up their attentiveness and focus. The first cup was offered for 35% less cost than the second cup, although the quality and quantity are the same in both the cups. After that, everyone asked to solve a simple puzzle and the researchers were recording their time. When the result came out, it was observed that students who drink the cheaper cup took more time than other students. This is the case where inferiority affects their mind. There are various cases where we can observe that the consumers believe the expensive product has better quality than cheaper products.

4.ELIMINATING THE ALTERNATIVES- So, it generally happens, if people are offered too many alternatives, they might end up buying too little or nothing. That is because they get confused and their mind can not reach any decision. Following this, let's take the example of a study. Two stalls were set up outside a mall. The first stall offered twenty varieties of coffee and the other ten variety. It was observed that maximum people are reaching out to the first stall, but they didn't or purchase very less coffee as compared to the other stall. Offering too may variety may confuse and irritate the buyer's mind, and they might end up by not purchasing anything.

5.CONVINCING THE CUSTOMERS: A marketer can convince their customers by talking about a certain attributes of the product. A group of people are standing ina queue to purchase mango and strawberry yogurt. Half of them were asked about the taste of mango and the other half about the strawberry. Later it was found that the group which was asked about mango yogurt ended up buying yogurt of mango flavour and the group which was asked about strawberry yogurt ended up buying yogurt of strawberry flavour. In this case, researchers derived the mind of consumers by talking about certain attributes while their mind is still in process of making the decision.

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The main target of any individual is to make a rational decision. However, they sometime might end up making irrational decision. The marketer should study Behavioral Economy (BE) to know how consumer decision-making power works. Afterwards that knowledge can be used while marketing your product or service.