Economics & Marketing: The Me Bias

The more I learn about economics, the more convinced I am that the central theme a marketer can learn from economics is this: people are selfish.

Economists prefer to frame this in a different way.  They prefer to say it thus,

people respond to incentives.

But let’s face it, in giving someone an “incentive” you’re really giving someone the opportunity to say, “what’s in it for me?”

Our decisions on anything are made with the assumption that we will in some way gain from the transaction.

“Give me that baloney sandwich.”

“What’s in it for me?”

“If you don’t, I’ll punch you.”

“Sold.”

See?  It goes all the way back to the lunch room.

The  Main Take-Aways

1. Since I have a “me” bias, a marketer should talk to me. Every piece of communication by anyone should be constructed as though it were a conversation (or whatever type of exchange it is) between two people.  Assuming that there is exactly one person reading, looking at, listening, watching etc. is a much better strategy for connecting with a large audience than communicating in a way that makes the individual feel less significant.
2. I am not always rational. Traditional economics holds that you and I make choices which will provide us the most benefit.  In recent years, some economics who also study psychology, have realized that when they actually test this assumption, decisions are often influenced by irrational factors.  People look at prices relatively, prefer to stick with what they’ve got, and are loss aversive.  And absolutely everyone is above average.  Myself an above-average marketer, I must understand these so-called “predictably irrational” behaviors and attempt to “nudge” the human imperfect decision makers in my audience my way.  Also, while it is wise to convince me instead of  everybody, it is important to realize I tend to like things I can relate to.
3. An effective market transaction is one in which I feel like a winner. If you as a marketer successfully sell me on something, the thing you’ve sold me had better live up.   I paid a price I believed was fair based on the benefits you claimed I would get.  If it don’t get those benefits, I won’t buy again.  Worse, I may try to take revenge (an easy option in the social media world).

Flickr Credit: ClickFlashPhotos / Nicki Varkevisser