Behavioral Economics: understanding human reasoning for marketing and sales at Tatva-Artha

Behavioral Economics: understanding human reasoning for marketing and sales

Business Week’s latest issue has an article on how companies analyze human reasoning and behavior to increase marketing and sales. It talks about 2 things:

Present Bias: People are more inclined to focus on immediate hassles of changing a habit than future benefit. To me, this also explains the laziness which prevents most of us from achieving big results, on personal or professional level.
Loss Aversion: People work harder to avoid losses than to pursue gains. This led the company to change the words in their advertisements from “save money” to “stop wasting money”. Again, very true in day to day context. We start doing exercise after encountering major disease, not before. It is a “loss aversion” after we have already encountered disease where as it was just a “potential benefit” before then.

My takeaway: Restate my “future-benefit” goals into a “loss-aversion” goals and, may be, I will have a better chance of achieving it