Behavioral Economics

Behavioral Economics Helping Marketers Better Understand Consumers

Behavioral Economics is the use of psychology in economics. It is the study of why people buy goods and services for reasons other than price, quality and maintenance. Instead of researching consumers rational choices like regular economics, Behavioral Economics studies the "predictable irrational choices" that consumers make. These irrational choices are usually caused by emotions or "social psychology ". Industries, marketers, the government and many more are engaging in behavioral economics. An example is a study done to research why people go to the gym. It was found through behavioral research that people will probably go t the gym if they had an appointment. The reason could be one of many: the person might not want to waste his money since they paid in advance, he might not want to waste another person's time or because he might not want anyone else to know that he didn't show. Another person suggested that the "pay per month in advance policy" is changed to" only pay if you did not visit the gym".
"Who knows what the economic impact would be?" posted Jeff Jones, partner and president of McKinney. "But what might it do for the churn rate?"
Behavioral Economics is not going to be the new way to advertise but is a reinforcement to the ways of marketing.