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Updated 29 Sep 2020

Peta Broomberg: Convincing people to choose your product

A relatively new discipline called behavioural economics is challenging traditional assumptions about how people evaluate information and make decisions. 

Monique Verduyn, Entrepreneur, 04 June 2014  Share  0 comments  Print

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Studying how consumers actually behave, rather than how they behave in theory, could help marketers become far more effective.

Marketers and advertisers are constantly trying to understand human motivation and behaviour so they can influence it.

We asked Peta Broomberg, marketing and advertising lecturer at Red & Yellow, how and why you should care.

1. What is behavioural economics?

It’s where psychology and economics meet in the world of marketing. It challenges assumptions and helps us think about how customers behave in totally new ways by showing that people don‘t always make buying decisions rationally.

2. So what influences consumer decision-making?

People are influenced by context, past experiences, biases, stereotypes and a wide range of other factors, conscious and unconscious.

3. Can you give an example?

The common sales promotion ‘buy one, get one free’ is a typical instance. Studies have shown that if you offer people ‘50% off if you buy two’, the promotion will be far less successful, even though the value is exactly the same.

That’s the kind of irrationality that behavioural economics takes into account.

4. How does this challenge traditional marketing?

It gives us the ability to better predict – and influence – human behaviour so that we can develop products and marketing messages that appeal to customers.

Some of the key principles seem counter-intuitive, but offer real insights into how we should design, sell, price and market products.


5. How can entrepreneurs apply these principles practically?

  • Most people would prefer to avoid making a loss than acquiring a gain. It’s better to talk about a surcharge for late payment, than a discount for early payment.
  • The more choices people are given, the less likely they are to choose between the options. In practice, people buy more if there is a choice of three jams on a supermarket shelf rather than 50 options.
  • People‘s purchasing decisions are influenced by previously introduced reference points, even if these are irrational.  On a menu, the second most expensive wine will look like a bargain compared to the most expensive one.
  • People will usually opt for instant gratification rather than long-term reward.  They‘re more likely to act to lock in a short-term gain or avoid an immediate penalty, even if it means sacrificing a larger reward further down the line.
  • People are deeply influenced by the behaviour of other people. For example, an Eskom campaign that shows that 95% of consumers are switching off their geysers at night can be effective in persuading more people to do the same to conserve electricity in other ways.

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Monique Verduyn, Entrepreneur

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