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Friday, June 29, 2012

Behavioural economics and construction marketing

Duke University professor Dan Ariely has conducted some research and written a few popular books outlining how humans often make (and repeat) seemingly irrational decisions -- and how these traits can be applied rationally, by salespeople and marketers seeking to convince people to behave the way they wish.

One of his clearest observations, which struck close to home because of its immediate application for my own business, is the Economist subscription offer.  Readers were presented with three choices.

You could pay $59.00 for a one year subscription to (online only).  You could pay $125.00 for a one year printed subscription.  Or you could pay $125.00 for a combination print and web subscription.

Ariely noted the obvious:  Why would anyone even consider the second option (print only) and why did the Economist offer it?

Well, the marketing geniuses at The Economist had in fact, devised a scheme that dramatically increased the number of subscribers signing up for the combined print and electronic version of the magazine.  Given a simple choice of a seemingly "much better deal," they took the combined offer.

When Ariely tested a comparison offer, where subscribers could simply elect to purchase the web or web+print options, a much higher percentage accepted the lower, web-only offer.

There are plenty of other examples of how marketers can use psychology to manipulate the results and stack the odds in their favour.  In fact, any person whose business is sales and marketing would be wise to spend as much time as possible understanding the growing body of psychological and scientific research.

Yes, we are creating a web directory to go with our printed publications.  So, based on these results, we'll replicate the Economist offer concept, with a third choice which really isn't rational or "necessary".

Maybe your own construction marketing strategies should follow these paths.

See Ariely's blog here.  See here.

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