Behavioral economics in branding

 

Over the last few years, a growing number of brands and agencies have been applying principles of behavioural economics to position and build brands.

 

Behavioral economics is all about considering social, cognitive and emotional factors in understanding consumer behavior.

 

Behavioral economists are interested in the same things that standard economists are interested in: Why do people buy certain things? What are the market forces behind their decisions? But as opposed to standard economics that assumes that people behave rationally, behavioral economics does not have this starting assumption. Watch this video by Dan Ariely, a professor of Behavioral Economics from Duke University, who gives a good summary about the subject:

Behavioral economics has been slowly but gradually prompting marketers to take a step away from simply promoting a certain message, towards looking for more subtle and less invasive ways of finding connections to consumers.  According to this article on brandrepublic.com, digital marketers have been early adopters of behavioral economics in its application to user experience and design of web sites. And in fact, it makes perfect sense -- in the online environment, it's often about a choice between clicking on one link as opposed to another. Understanding irrational factors which drive people's choices on the web is crucial in building good brands online.