Consumer Behavior

Consumer Behavior 

Economic Theory of Loss Aversion: People put more effort into preventing a loss than making a gain. For example, in a recent study, one group of potential audience members were given a discount code to purchase tickets, and a second group of potential audience members were given a gift voucher worth the same as the discount code. More people used the voucher, because it was perceived as something that already held value.

Law of Least Effort: Responding to a difficult question with an answer to another, easier question. Lesson: ask an easier question! Don’t make your potential customers work so hard.

Paradox of Choice: More choices can be overwhelming, and more people will give up. By limiting the available options, communication is easier and the decision-making process for the customer is easier and faster, so they are more likely to make a purchase.

Seeing all of your options at the same time makes you happier with the choice that you make. For example, when people have the option to select their seats based on a map of all the available seats, they are generally more satisfied with their purchase (and, they tend to spend more!)

Primary Error & Anchor Pricing: People are more heavily influenced by the first info they receive. The first info that most people see is located in the upper left corner of a page or website. Therefore, take care in what info you place there. Everything that follows will be judged by the first (anchor) information. Tiffany used this concept in an ad for a ring that wasn’t selling. By introducing another, more expensive ring, the original less expensive ring looked like a bargain and then started selling.

Books for more information on Consumer Behavior:

Predictably Irrational
Nudge
Thinking, Fast and Slow