The chief objective of most business corporations is to lead the industry segment of their operation. But, can some companies achieve massive success by implementing proven psychological principles in their day-to-day operation? The answer is, “yes.” A company can undergo incredible transformation just by focusing on the behaviour and thought processes of its customers.
As Nepal also holds a lot of industrial potentials now, it is even more relevant to build an exemplary business in Nepal today.
Psychology in business
It is generally presumed that people are rational and predictable. But, people are impulsive, short-sighted, and irrational in many instances. Thus, here comes the application of behavioural science techniques based on psychology in the business world. Through the careful evaluation of human decision-making and their surroundings, it is possible to predict their next actions with much accuracy.
Human behaviour is an outcome guided by life experiences, beliefs, culture, and other supplementary elements. Consequently, the complexity rises while unrolling the daily actions of people.
For instance, if a particular variety of ice cream costs less, consumers may think that it is cheaper because it tastes bad compared to other varieties. Here, the perception of the price of ice cream has come into play. But, the ice cream might have cost less because of readily available local ingredients in its production. It is apparent that people make decisions using limited information and draw inferences through those finite details. Perception and passion distinctly influence our actions.
Netflix, one of the most famous companies in the world with a market capitalisation of USD 102.28 billion as of October 15, 2022, uses the psychological principle called “Idleness Aversion.” This principle states that people are happier when they are busier. Since Netflix is a video streaming platform, there is a high probability that users get bored on this platform. So, they must have the option to keep their users occupied. Thus, Netflix auto-plays the trailers when somebody dwells on the title of the video.
This can be frustrating at times but outweighs the costs of boredom. The same principle is also used by YouTube to engage users. Termed “Play on Mouse Hover”, this technique is very successful in killing the boredom of waiting. This principle also explains why passengers walk to the next bus stop when the bus is late. Staying idle is much more annoying than being active. Therefore, businesses shall also focus on creating constructive busyness for their customers.
Playing with fear
Scientifically, humans are 96 per cent animals; 96 per cent of our genes are common to the animal kingdom. Since the evolutionary ages, we have been far more familiar with fear than other emotions. The sole reason behind the survival of the human species for three billion years is fear. Fear is our age-old animal instinct of aggression.
Consequently, fear is widely used by marketers. Fear motivates people to take action. The global cyber security business readily uses fear in marketing. “Get complete peace of mind online,” a pitch from Kaspersky’s website in September 2022 uses fear as the motivator to promote their products and services.
The fear of cyber threats and unpredictability of events on the internet such as hacking of credit card information, ransomware attacks, cyberextortion, and many others directly enter into the fear centres of consumers’ brains. Consumers believe that they need those products and services to prevent those risks. Thus, here comes the scientific principle of “Loss Aversion.”
“Loss Aversion” states that the fear of losing something motivates people more than the desire to gain something. Also, a scary headline grabs a person’s attention like nothing else. That is why it is more common to see negative news compared to positive ones on news sites.
Currently, we all share this principle regarding dengue news. We are using mosquito-repellent creams, coils, and liquid throughout this season. Some of us even combine the use of mosquito netting and repellents due to the fear of dengue. Thus, it is common to see a rise in sales of those accessories in dengue-prone areas. However, this has also resulted in an increase in sales in the areas of the country that are unsusceptible to dengue.
Business is always about people: it is run by, for, and on behalf of people. People invariably have a sense of curiosity and a deep sense of envy as well. Thus, here comes the principle of “Exclusivity Scarcity.” Exclusive products appeal to people and they become valuable due to their rarity. The scarcity principle says that the rarer something is the more valuable it is. An exclusive line of products from Adidas and Tommy Hilfiger fall under this category. Likewise, hotels provide “Limited rooms left” booking offers. “Exclusivity scarcity is a technique for more effective marketing as it builds value.
This idea is successfully applied by Nepali internet service providers as well. To name a few, the WorldLink fesTVty offer, Dashain-Tihar offerings from Vianet, DishHome, and Classic Tech fall under this category. People purchase those internet packages before the discount goes away.
Humour is humane
The advertising industry frequently uses humour appeal as well. People recall hilarious information better as humour heightens interest in the business and increases people’s attentiveness. The advertising of Hattiichhap chappal is an excellent example of this humour effect. “Hatti baliyo ki hattichhap chappal?” (Which is stronger: an elephant or the elephant-marked flip-flops) and the answer “Ustai-ustai ho” (almost the same). Because of the dialogue’s humorous appeal, Hattichhap chappal’s brand recognition has increased. Additionally, it rhymes a little bit and is simple to remember.
Another well-liked tactic in marketing is rhyme. Rhymes help the message sink deeper into the customer’s head. They are persuasive and people are more likely to remember them. Rhyming information is simple for our brains to store and recall. Dabur Nepal has created a rhyme for its chyawanprash advertisement, which is quite popular in the country. The rhyme is: “Gharmai dui chamchako tayari, rakchha tadha bimari” (The preparation worth two spoons at home keeps your sickness away).
This rhyme has certainly increased the recall value of Dabur Chyawanprash.
Psychology plays a crucial role in business. Marketing strategies that incorporate psychology can change a product’s standing in the market. Psychology impacts a person’s physical, verbal, and expressive behaviours, which in turn impacts customers and their choices. The creation of precise models of consumer behaviour has the potential to alter the business world.
Psychology is necessary at all organisational levels. It aids in staff selection, training and motivating people, workplace design, and eventually for the construction of an enterprise itself. People’s thoughts can shed light on their behaviour. This aids in making expert decisions and creating long-term company plans. As a result, psychology has a significant impact on business.
To better understand how psychology might be applied in business more precisely, further research is required in this field.