Use behavioural economics to get your consumers to shop

Running a promotion? How you phrase it could mean all the difference to whether your consumer will buy.

"There’s a real difference in value between '50% off' and '50% extra free', but ask people and they will split between the two fairly evenly. People don’t bother actually working it out, they go for what feels right," said Han Zantingh, managing director - Asia at BrainJuicer, a research consultancy.

Human decisions really aren't that rational. Classical Economics may assume that people are rational (it makes economic models work better) people will decide on what feels better rather than what is better, said Zantingh.

For marketers, this means that there's a much more effective way to phrase promotions. Promotions are expensive - and for products like bottled water, they're essential. No amount of clever advertising can change, for example, the immutable fact that water is, in fact, just that. In situations where you can't encourage people to spend with you because you're actually different to your competitors, promotions are very important in changing consumer behaviour.

However, according to Zantingh, the traditional methods used to decide on promotions "are all about the 'what' rather than the 'how'.”

This is because they’re rooted in this classical assumption that people work out what a good deal is. So they’re presented in a very matter-of-fact way, and there’s a standard range of deals you see a lot: 3 for 2, 2 for 1, extra free, and so on. There’s not so much thought put into the phrasing, added Zantingh.

So how can marketers get the highest sales for the shallowest price cut? Though it's important to remember that every category is different and that what works for one might not work for the other, Zantingh advises that the following few principles can be effective when phrasing promotions:

1. Anchoring: Priming people for a high number e.g. 'Maximum 2 bags per customer'

2. Scarcity: Communicating that the product might run out e.g. 'Offer ends at noon today!'

3. Trust/Social Proof: Communicating that a credible source has endorsed the brand e.g. 'Product recommended by the New Haven Times'

Of course, effective phrasing is just a small part of what marketers can do to optimise promotions.

 Zantingh will be sharing more at Marketing magazine's annual Shopper Marketing event, 25 - 26 June. For more information, visit www.shoppermarketing-conference.com.

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