Before the advent of the term, behavioral economics, marketers, and advertisers had to depend on logical persuasion and rational decision-making for achieving their goals. With the change in consumer behavior, these techniques started becoming ineffective. This is when behavioral economics came into play. Behavioral economics combines psychology and economics to decode a consumer’s complex behavior and actions in making a choice. Today, the best digital marketing company in India, like Skyram Technologies, is thoroughly considering and applying the concept of behavioral economics in designing an effective and persuasive marketing campaign.
Core Concepts of Behavioral Economics in Marketing
Unlike traditional economics, behavioral economics understands that consumers are not always balanced in their decision-making. Rather they are influenced by a mixture of external factors as they seldom have the complete information needed to make informed decisions. The study of behavioral economics includes core concepts in recognizing a consumer’s ability to decide with incomplete information at his disposal and a variety of external factors that he considers in the process.
Nudging – This is perhaps the most important concept of behavioral economics. Nudging is the concept of providing certain external cues and suggestions to influence the decision-making process of the consumer. In other words, nudges are external interventions that influence the overall decision-making of a consumer. For example, alluring languages are used in call-to-action buttons, using words like, “bestseller”, “limited offer”, “low in stock”, etc. to push consumers to decide on purchasing the product. Top digital marketing firms in Mumbai or India, like Skyram Technologies, meticulously use the concept of nudge marketing in designing compelling marketing campaigns that provide maximum conversions.
Cognitive Bias – It is one of the best-known aspects. It is a systematic error in thinking or deviation from the normal reasoning and judgment that arises when consumers are processing and applying information that is influenced by social factors like social pressure, emotions, or certain situations.
In the digital marketing sphere, cognitive biases are used to influence consumers’ decisions towards a product. Mentioned below are some examples of cognitive bias in the marketing realm:
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Anchoring Bias: This is the propensity to believe or rely on the very first piece of information that a consumer receives. For instance, if a piece of information about the price of a cycle is embedded in the consumer’s brain, then any amount that is poised as a discount seems a lucrative deal to him. He will then not go for any kind of market survey for better deals. A good digital marketing company in Pune will make use of anchoring bias to allure a customer by quoting attractive deals and discounts.
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Attention Bias: This is the tendency of consumers to pay attention to some other aspect of a product. For example, if you want to buy a jacket, you pay more attention to the look and color rather than the material.
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Confirmation Bias: This is a consumer’s propensity to choose a product or a brand that matches his belief. For example, if he has prior information that the share prices of a particular company yield profit, he will purchase the shares ignoring the threats or warnings of the market. A good digital marketing company in Mumbai knows how to extract data related to consumers’ preferences and push them to buy the product by creating compelling ads.
Paradox of Choice – The availability of a wide range of choices of products and services at the disposal often leads to a situation of indecisiveness and dissatisfaction for a consumer. The only cure to this problem is the process of simplifying decision-making for the consumers. Renowned digital marketing firms in Mumbai like Skyram Technologies, have a clear understanding of the term and know how to strategically limit choices for a confused consumer. These digital marketers are well-trained in creating marketing strategies that provide personalized recommendations, curated products, and more to make the decision-making process easy for the consumer.
Applying Behavioral Economics in Digital Marketing Strategies
As discussed earlier, behavioral economics is all about studying how consumers’ psychology can influence economic decision-making. This points toward a comprehensive understanding of the cognitive biases of consumers and using them to drive them toward their economic decision-making.
This process involves certain considerations that are mentioned below:
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Personalization: Digital marketers use this factor by tailoring the product or the brand keeping in mind the personal choice and preferences of the consumers. The best digital marketing agency in Mumbai knows how to use the customers’ data in creating a marketing strategy that makes the customer feel familiar with the brand/product and in turn leads to conversions.
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Scarcity and Urgency: These are two very effective tactics that are often implemented by marketers to drive sales for their products. By using terms like “limited stock”, “urgent sale”, “limited offer”, “low stock alert”, etc., digital marketers in general play with the FOMO psychology of the consumers and push them towards quick decision-making and raise conversions.
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Social Proof: This is a form of presenting positive reviews and points of view regarding the product that persuades other customers to make purchasing decisions. Digital marketers use terms like, “bestseller”, “product hitlist”, “top picks”, etc., to portray a notion that the product is most liked by the consumers that have already purchased. This information provokes other consumers to purchase the product too.
Ethical Considerations: Balancing Persuasion with Ethics
There is a considerable amount of ethics related to applying behavioral economics to designing a marketing strategy. Balancing persuasion with ethics is a critical aspect and digital marketers should know how to exploit a consumer’s psychology in driving him towards deciding to purchase the product.
he prime area of concern in terms of ethics related to the application of behavioral ethics is the exploitation of cognitive biases in driving sales. While using the tactic of creating a sense of urgency or scarcity, digital marketers need to strike a balance between reality and business interests. The marketing strategy should not lead to an absolute amount of impulsive buying that may end up in deep regret for the consumers.
Digital marketers need to be sensitive while exploiting personal data for sales promotion. Moreover, children and the elderly population must be the most vulnerable part of the population. Digital marketers must not exploit their vulnerability in designing ad campaigns. Their mental and physical health should be a paramount concern of a marketer. Another important factor in terms of ethics is transparency. While using social proof, digital marketers must provide real and factual data and reviews so that customers can make informed and wise decisions. Misleading consumers to drive conversions is a serious breach of ethics.
Case Studies: Successful Campaigns
Here’s presenting a few examples of successful campaigns implementing the principles of behavioral economics into marketing strategy.
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Use of Scarcity by Booking.Com – Booking.Com creates a sense of scarcity by using terms like,” few rooms left”, “last few offers” etc. to drive conversions.
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Personalization by Amazon.Com – Amazon implements the tool of personalization through its recommendation engine. It drives insight into the taste and preferences of the consumer by analyzing his purchase history. Then it makes recommendations based on that data and drives sales.
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Nykaa’s “End of Season Sale” and “Hot Pink Sale”– These tools are implemented by Nykaa to create a sense of urgency and drive sales.
Future Trends
The intersection between digital marketing and behavioral economics is on the verge of paving a new path for data analytics and technological innovations. Following this, several trends will also shape the future landscape of digital marketing.
Some of them are discussed below:
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AI in Personalization – Personalization is one of the most effective tactics of behavioral economics and AI has started to spread its roots into the field of personalization by allowing marketers to derive customers’ preferences.
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AR for virtual try-ons – Digital marketers can also utilize augmented reality or AR’s advanced features to provide consumers with a better try-on experience and interactive decision-making to drive sales.
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Blockchain for Data Privacy – Blockchain technology can handle, maintain, and secure huge volumes of data processed by digital marketers to analyze consumer behavior.
Final Thoughts
Skyram Technologies, deemed the best digital marketing company in India, has the potential to combine all the above-discussed behavioral economic policies and cutting-edge technology in designing marketing strategies that will not only attract the attention of consumers but also drive sales for the brand. It is the best in providing top marketing solutions to brands across the globe.
In the sphere of marketing and behavioral economics, there is no such thing as a single, constant cognitive bias. Yet, the goal of a digital marketing agency should not be to make use of consumers’ cognitive biases to mislead them. Rather, marketers should strive towards building a consistent relationship of trust and loyalty with the target audience. This will be a never-ending bond.
