The Homa Files

Ken’s Take: Spawned by books like Freakonomics and Predictably Irrational, behavioral economics is hot … 

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BrandChannel, Sacramento Water District Leverages Peer Pressure, Sep. 15, 2009 

People aren’t always rational.

This insight, familiar to brand managers, is the basis of behavioral economics, which uses psychological insights to predict these sometimes illogical choices.

The impact of peer pressure is a popular recent topic among behavioral economists.

Behavioral economists are developing ways to get patients to take their medications (pill containers that trigger e-mail alerts when opened) and testing the effectiveness of marketing promotions (optimal purchase levels for “free” shipping to drive upsell).

Marketers are using social tools like Facebook to allow teens to identify with their brands, hoping to influence their fans’ peers.

As for the most effective methods of social influence, not all forms are equal.

While we put greatest trust in people we know, trust in virtual strangers has reached a surprisingly high level. Marketers who capitalize on this, by offering consumers the chance to rate their products, find that they are more trusted than companies who don’t allow ratings.

Full article:
http://www.brandchannel.com/home/post/2009/09/15/Sacramento-Water-District-Gives-Marketers-Lesson-In-Harnessing-Peer-Pressure.aspx

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This entry was posted on October 8, 2009 at 7:41 am and is filed under Economics, Social Media & Networking. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.