October 26, 2012
Mind + Money
Focus on the positive
To make a sale the seller will usually focus on the positive rather than the negative. For example, when faced with a decision between two packages of identical beef, one labelled "80% lean" and the other "20% fat", the first seems more appealing.
Behavioural economist and author Dan Ariely claimed The Economist’s pricing structure for print and web deals offered irrelevant alternatives that promoted subscriptions to the print publication. At the time, the price for print-only and print-plus-web was the same. The Economist responded in a blogpost – and pointed out its pricing had changed.
Percentages or numbers
Depending on the goal, people tend to use actual numbers to play things up and percentages to play things down. Philip Zweig’s book ‘Your Money and Your Brain’ gives one of many examples. Saying "9 out of 10 customers rate our service as excellent" sounds better than "90% of our customers rate our service as excellent."
Study the menu
Restaurant menus are well thought out and may prompt diners to choose dishes they otherwise would not. Economics professor Tyler Cowen, author of An Economist Gets Lunch, suggests in The Atlantic ordering a dish that sounds unappetising rather than popular. The unappetising dish may be something the kitchen staff cook well but takes more time and skill to prepare.
Not so special offers
Sales pitches are sometimes made offering either a free introductory period or reduced payments for the first few months before moving to a higher price. An alternative offer with the same total cost right from the start of the contract may seem less appealing but is effectively the same.
Every day, people encounter the framing effect. Framing can influence choices between options that are effectively the same by emphasising positive rather than negative factors.
Whether it's shopping, voting or making financial decisions, the way choices are presented can influence the decisions we make. The eZonomics article What is ... the framing effect explains in more detail.
Among the five examples in this slideshow, several different circumstances are covered. One involves a magazine subscription plan and another a supermarket.