Behavioral Economics and Sway in the Marketplace

November 8, 2014

By: Brent Stackhouse, MBA

The Stackhouse Agency, LLC

An understanding of behavioral economics profoundly benefits an organization. As goods are sold, elements such as price, brand, quality, and location are major factors. We know from economics that while a rational consideration could be price, we also account for luxury goods. There are many consumers who would willingly purchase a good at a lower cost, yet given a choice will purchase a good at a higher cost for status reasons, its associated service received, or for brand identity. Other components such as quality may not fully make up the higher price.

Consumers find value from many aspects related with the good, the organization itself, and from their own “consumer identity” concepts. Organizations may leverage growth, sales, and other objectives through specific research, consulting, and analysis. We, consumers, often like to be considered very rational and at times we, consumers, like the gentle sway and play of the marketplace.