Drishtikon: A Management Journal

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Nudging Behaviour in Marketing Dynamics:Behaviour Economics and Marketing-An Interlinking


Affiliations
1 Symbiosis Law School, Pune, Maharashtra, India
     

   Subscribe/Renew Journal


Economics is gradually showing a change in school of thought with a shift from an optimization based quantitative approach towards a more consumer-centric qualitative approach. The most controversial yet highly acclaimed and recognized concept of the year comes from the award winning contributor to Behavioural Economics – Noble Prize winner Richard Thaler for “ Nudge Theory”.

Nudging has perhaps been one of the biggest contributions to Behavioural Economics in recent times. Behavioural Economics is a relatively new field that is revolutionizing the way we look at human behaviour and is creating a significant impact on related genres of Psychology, Decision-making and Management. Nudges can be used by both businesses and government to shape the behavior of employees, customers, and citizens. Prestigious Ivy League like Yale School of Management now offer programs to senior executives of global conglomerates in understanding Behavioural Economics for creating breakthrough managerial decisions and marketing ideas. Parallel to Behaviour Insights Team of Public Policy schools like the Harvard Kennedy School of Government, there is Center for Customer Insights Teams on the same lines at top Ivy League colleges and both provide insights into behavioural dynamics of citizens and customers respectively. Hence we do understand that Behavioural Economics is being closely associated with Psychology and Consumer Behaviour and when a breakthrough concept like Nudging is acclaimed worldwide in Behaviour Economics, it opens avenues for marketers and companies to understand how Nudge Marketing can be used to understand consumer behaviour better and help the consumer to make more informed decisions.

This perspective paper analyzes the relevance and importance of Behavioural Economics and Nudging concepts for Marketing by introducing few of the core principles of the disciplines and depicts how they are strongly interlinked. Secondly it discusses the practical implications/methodological usage of Nudging and Behavioural Economics for Marketing with special emphasis for present era digital marketing. Given the short time span since the introduction of Nudging and its initial utility in public policy, one could say that the current status of its implications in Marketing is still nascent and has plentiful scope for continuous innovation. Though some companies are utilizing Behavioural concepts to their benefit but for substantive change to be brought in, innovative marketing strategies have to be developed. This perspective paper will help industry and researchers to understand the importance of this inter-disciplinary interlink and therefore, develop some gamechanging strategies. In this context, several questions such as what is Behavioural Economics and why it is important, what is Nudging, how does it impact consumer behaviour, etc., become important to understand.


Keywords

Nudging, Marketing, Choice Architect, Cognitive Bias, Nudge Marketing, Behavioural Economics.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Camerer, C., Loewenstein, G., & Prelec, D. (2005). Neuroeconomics: How Neuroscience Can Inform Economics. Journal of Economic Literature, 43, 9-64.

  • Cho, J. (2004) Likelihood to abort an online transaction: influences from cognitive evaluations, attitudes, and behavioral variables. Information & Management, 41, 827-838.

  • Cialdini, R. B. (2007). Influence: The psychology of persuasion.

  • Foxall, G., & Goldsmith, R. (1998). Consumer psychology for marketing. London: International Thomson Business Press.

  • Gintis, H. (2009). The bounds of reason: Game theory and the unification of the behavioral sciences. Princeton: Princeton University Press.

  • Goldstein, D., Johnson, E., Herrmann, A., & Heitmann, M. (2008). Nudge your customers towards better choices. Harvard Business Review, 86(12), 99-106.

  • Hirshleifer, D. (1995). The Blind Leading the Blind: Social Influence, Fads and Informational Cascades, in Mariano Tommasi and Kathryn Ierulli, eds, Ch.12, pp. 188-215, The New Economics of Human Behaviour (Cambridge University Press 1995).

  • House of Lords Report. (2011). Science and technology select committee on behaviour change, HL 179, 2010-2012. London: The Stationery Office Limited.

  • Johnson, E. J., & Goldstein, D. (2003). Do defaults save lives? Science, 302, 1338–1339.

  • Kahneman, D. (2011). Thinking, fast and slow. New York: Farrar, Straus and Giroux.

  • Leicester, A., Levell, P., & Rasul, I. (2012). Tax and Benefit Policy: Insights from Behavioural Economics. Institute for Fiscal Studies.

  • Loewenstein, G., Bryce, C., Hagmann, D., & Rajpal, S. (2015). Warning: You are about to be nudged. Behavioral Science & Policy, 1(1), 35-42.

  • Loewenstein, G., & Haisley, E. (2008). The economist as therapist: The methodological ramifications of “light” paternalism”, in Andrew Caplin and Andrew.

  • Kahle, L. R., & Close (2011). Consumer Behavior Knowledge for Effective Sports and Event Marketing. New York: Routledge.

  • MarketWatch. (2016, June 20). Richard Thaler: ‘Brits Are Voting With Their Guts’. Retrieved 9 December 2017 from https://www.marketwatch.com/video/richard-thaler-brits-are-voting-with-their-guts/00CDC7BC-4A32-45E4-8556-BAAE4CD41596.html

  • McSmith, A. (2010, August 11) First Obama, now Cameron embraces ‘nudge theory’. Independent. Retrieved 9 December 2017, from https://www.independent.co.uk/news/uk/politics/first-obama-now-cameron-embraces-nudge-theory-2050127.html

  • Mullin, S. (2017, August 14) 13 Cognitive Biases in Ecommerce. Retrieved 12 December, 2017 from https://www.shopify.in/ blog/13-cognitive-biases-ecommerce

  • Nolan, J. M., Schultz, P. W., Cialdini, R. B., Goldstein, N. J., & Griskevicius, V. (2008). Normative social influence is underdetected. Personality and Social Psychology Bulletin, 34, 913-923.

  • Nunez, K. (2015, May 4). Psychological techniques and concepts in marketing research: Game changing marketing research. Retrieved 17 May 2018, from http://sdama.org/knowledge/psychological-techniques-and-concepts-in-marketing-research-game-changing-marketing-research-5/

  • Peters, J., Beck, J., Lande, J., Pan, Z., Cardel, M., Ayoob, K., & Hill, J. O. (2016). Using healthy defaults in Walt Disney World restaurants to improve nutritional choices. Journal of the Association for Consumer Research, 1(1), 92–103.

  • Pfeiffer, C. (2016, June 21) Economist Richard Thaler: Brexit is a Perfect Example of Irrational Behavior. Business Insider. Retrieved 9 December 2017, from https://www.businessinsider.in/Economist-Richard-Thaler-Brexit-is-a-perfect-example-of-irrational-behavior/articleshow/52849458.cms

  • Samson, A., & Voyer, B. G. (2014). Emergency purchasing situations: Implications for consumer decision-making. Journal of Economic Psychology, 44, 21-33.

  • Steffel, M., Williams, E. F., & Pogacar, R. (2016). Ethically deployed defaults: transparency and consumer protection through disclosure and preference articulation. Journal of Marketing Research, 53(5), 865-880.

  • Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth, and happiness. Yale University Press.

  • The Australian Government Best Practice Regulation Handbook June 2010.

  • The Economic Times. (2018, March 07). The war of the wallets. Retrieved 7 March, 2018 from https://brandequity.economictimes.indiatimes.com/news/business-of-brands/the-war-of-the-wallets/63194232

  • The Guardian. (2017, Oct 09). What is behavioural economics? Retrieved 9 December 2017, from https://www.theguardian.com/world/2017/oct/09/what-is-behavioural-economics-richard-thaler-nobel-prize

  • Voyer, B. G. (2015). ‘Nudging’ behaviours in healthcare management: Insights from Behavioural Economics. British Journal of Healthcare Management, 21(3), 130-135, special issue ‘innovation in healthcare’.

  • Yale School of Managemet. (2017). Center for Customer Insights. Better Marketing with Behavioral Economics. Retrieved 2 January 2018, from https://som.yale.edu/faculty-research/our-centers-initiatives/center-customer-insights/insights-review/blog/2014/12/better-marketing-behavioral-economics?blog=3488


Abstract Views: 402

PDF Views: 0




  • Nudging Behaviour in Marketing Dynamics:Behaviour Economics and Marketing-An Interlinking

Abstract Views: 402  |  PDF Views: 0

Authors

Shailey Singh
Symbiosis Law School, Pune, Maharashtra, India

Abstract


Economics is gradually showing a change in school of thought with a shift from an optimization based quantitative approach towards a more consumer-centric qualitative approach. The most controversial yet highly acclaimed and recognized concept of the year comes from the award winning contributor to Behavioural Economics – Noble Prize winner Richard Thaler for “ Nudge Theory”.

Nudging has perhaps been one of the biggest contributions to Behavioural Economics in recent times. Behavioural Economics is a relatively new field that is revolutionizing the way we look at human behaviour and is creating a significant impact on related genres of Psychology, Decision-making and Management. Nudges can be used by both businesses and government to shape the behavior of employees, customers, and citizens. Prestigious Ivy League like Yale School of Management now offer programs to senior executives of global conglomerates in understanding Behavioural Economics for creating breakthrough managerial decisions and marketing ideas. Parallel to Behaviour Insights Team of Public Policy schools like the Harvard Kennedy School of Government, there is Center for Customer Insights Teams on the same lines at top Ivy League colleges and both provide insights into behavioural dynamics of citizens and customers respectively. Hence we do understand that Behavioural Economics is being closely associated with Psychology and Consumer Behaviour and when a breakthrough concept like Nudging is acclaimed worldwide in Behaviour Economics, it opens avenues for marketers and companies to understand how Nudge Marketing can be used to understand consumer behaviour better and help the consumer to make more informed decisions.

This perspective paper analyzes the relevance and importance of Behavioural Economics and Nudging concepts for Marketing by introducing few of the core principles of the disciplines and depicts how they are strongly interlinked. Secondly it discusses the practical implications/methodological usage of Nudging and Behavioural Economics for Marketing with special emphasis for present era digital marketing. Given the short time span since the introduction of Nudging and its initial utility in public policy, one could say that the current status of its implications in Marketing is still nascent and has plentiful scope for continuous innovation. Though some companies are utilizing Behavioural concepts to their benefit but for substantive change to be brought in, innovative marketing strategies have to be developed. This perspective paper will help industry and researchers to understand the importance of this inter-disciplinary interlink and therefore, develop some gamechanging strategies. In this context, several questions such as what is Behavioural Economics and why it is important, what is Nudging, how does it impact consumer behaviour, etc., become important to understand.


Keywords


Nudging, Marketing, Choice Architect, Cognitive Bias, Nudge Marketing, Behavioural Economics.

References