Behavioral economics is the study of how and why consumers do not always act rationally —rational behavior is one of the fundamental assumptions underlying classical economics. Behavioral economics helps explain things like why consumers make impulse purchases and incorrectly value goods and services. Two of my favorite behavioral economists are Dan Ariely and Steven D. Levitt, authors of Predictably Irrational and Freakonomics, respectively–two books I highly recommend.
Nudge marketing is a key form of behavioral economics. It involves providing subtle “nudges” to guide human behavior in ways that serve marketers’ needs. Here we take a look at some interesting examples of how elements of behavioral economics can be put to work in the field of marketing.
For example, researchers at New Mexico State University conducted several experiments using nudge techniques in grocery stores. In one, they stretched a piece of duct tape across shoppers’ grocery carts and showed shoppers a flier that instructed them to put fruits and vegetables in front of the tape, everything else behind the tape. This simple act resulted in a 102 percent increase in the purchase of fruits and vegetables! In another case, a series of large green arrows were added to the floor of the grocery store to make a trail to the produce section. Shoppers followed the arrows nine out of ten times. Just as the marketers intended them to.
More recently, a beach in India used nudge marketing to tackle a common problem plaguing beaches and oceans: trash, specifically plastic. The beach is now home to a large, see-through fish sculpture made from barbed wire and mesh. The fish’s name is Goby. Attached to Goby is a sign that reads, “Goby loves plastic, please feed him.” Kids seem to love finding “food” for Goby. They’ve been picking up so much trash to deposit into the artistic receptacle that Goby regularly has to be taken from the beach to be emptied before being returned to his home. This little experiment in behavioral economics has been much more effective than the typical dirty blue trash bins that we see at many beaches around the world.
Nudge marketing does what it says—it provides small, subtle, psychological pushes to guide people in the direction the marketers want them to go. Best of all, it’s providing to be far more effective than blatant, in-your-face attempts to steer human behavior.
How could you apply principles of nudge marketing to move consumers in the directions you’d like them to go?
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Tags: behavioral economics, influencing consumer behavior, innovations in marketing, Marketing, marketing strategy, nudge marketing