Warrier Wala's Test + Learn

The human preference centre is designed to reflect our priorities. We weigh up options based on past experience, inherent knowledge and the prevalent influences. Consumers and decision-makers have live information at their finger-tips today – from simple price comparisons to in-depth expert reviews and analysis. Marketing needs to progress as well, not just by going digital, but in terms of a deeper understanding of who they are speaking to based on data-driven insights.

Weaving the narrative out of data is a slightly more scientific process than the traditional, growth-your-gut approach. Identifying trends and finding parallel theories in social sciences help marketers today establish patterns and maximize the impact of marketing automation tools. It

is also important to understand that there are varying (and multiple) touch-points where information can be captured.

It is also important to remember that many marketing principles are rooted in deeper social sciences. For example, the basis for buyer behavior is consumer psychology – manifested in one of its simpler forms as Maslow’s Hierarchy of Needs. In parallel, the evolution of followers on social media and tribes that follow brands is reflective of sociology, and an inherent human need for belongingness.

Concepts to consider in marketing

– Awareness

– Loyalty

– Access & exclusivity

– The user experience

– Maslow’s law [Marketing 1.0 – appeals to the mind (must have) | Marketing 2.0 – upon access to disposable income (nice to have) | Marketing 3.0 – aspirational]

Concepts to consider in economics

Pricing: Aligned – Pricing strategies and communication

Elasticity in economics relates to the likelihood of a purchase decision. Varied concepts of elasticity allow the projection of potential purchase decisions, such as cross-price elasticity, where the price of one good affects another, ceteris paribus. There are various factors that affect a pricing policy, and marketing isn’t always involved in the establishing price, but it’s important for marketers to understand how prospects will react to how you price your product.

An alignment with sales becomes quite critical on this front as well as organizations run the risk of misrepresenting their value proposition through discounting too often – or then not providing timely and impactful offers.

Market equilibrium – dd = ss: Aligned – Demand, Supply & Opportunity Cost

The first, and relatively obvious parallel – the concept of scarcity. A building block of demand and supply is the idea that there is a set quantity of goods available (or supply) and a related level of interest in acquiring said good (or demand). The trade-off between supply and demand typically a cost-benefit analysis, where a consumer would evaluate a purchase against what they are willing to sacrifice for it (or opportunity cost).

From the marketer’s point of view – take a walk in the shoes of your target audience – how do you convey the value they can derive from your product in a manner that is succinct and relatable? Does your message ensure this value proposition is incorporated into the cost benefit analysis? Think about the demand factors they have to give up in making the purchase – why would they be willing to do so?

Why consumers buy: Aligned – Observations of competition & trade-offs

Sure – most marketers might in fact be very well aware of their industry and relevant activity – but it’s easy to forget sometimes that goods can sometimes be purchased together (or complimentary goods) or then a purchase of one product can impact the purchase of another completely unrelated good.

For businesses – this means not necessarily conveying that making a purchase is the best decision in category – but rather, the best way to spend resources from the larger budget. A good example of where this is consistently experienced is when companies evaluate investing in innovation – particularly when returns from these investments take a long time, are generally high risk and depend on adoption by change-resistant staff.

Why consumers buy: Misaligned – Rationality and efficient markets (Need/Want/Wish)

There are some areas of economics that do not quite work with the marketers’ perspective. For example, economists assume consumers are rational and defer to a cost-benefit analysis in making their decisions. However, as any good marketer knows – a message that appeals to the right emotions – can throw the balance of logic right off.

Economists also assume that people have a “perfect knowledge” especially in the long run (as compared to the short run) and that’s a pretty utopic ideology. However, with the boom in social media and connectivity, “close-to-perfect knowledge” doesn’t seem that far a possibility and marketers need to ensure the right rendition of their message reaches the audience at each touch point.