Page 51 - Decoding Decisions ~ Making sense of the messy middle

51 CHAPTER 4 INFLUENCING THE MESSY MIDDLE

6. Power of free describes the fact that there is something special about the

price of zero. The demand for a product or service is significantly greater at
a price of exactly zero compared to a price even slightly greater than zero.
In his book “Predictably Irrational”, behavioural economist Dan Ariely writes
about a study in which people were given the option to choose between two
offers. One was a free $10 Amazon gift card, the other a $20 gift card that
could be bought for only $7. More people chose the $10 gift card, despite the

other option offering superior value. The power of free can be thought of
17
as an emotional hot button – a source of irrational excitement that can be
critical in persuading a consumer to make a purchase decision.

While certainly not a definitive list of every bias in play, our set of six
represents several of the most powerful principles identified in the literature,
all of which are suitable for testing at scale. It also has the advantage of
covering implementations that range from simple copy changes to more
complex merchandising and logistical decisions.

Testing the six biases

The biases identified by The Behavioural Architects have been thoroughly
examined in an academic context, but to gauge their importance to
marketers we knew we would have to place them within a purchase-making
context to see how they affect the emotional weight of competing brands.

The previous experimental results we reviewed were often from relatively
small samples, without a purchase or brand aspect, and not systematically
applied across different products and categories. So we set out to build
a method that would address these challenges: a shopping simulation
purpose-built to provide the insights marketers need.

As the basis of our experiment we chose to apply conjoint analysis – a statistical
technique much used and well understood in marketing to quantify the relative

importance people place on the different attributes of a product or service.

17 Ariely, D. (2008). Predictably Irrational: The Hidden Forces That Shape Our Decisions. Harper.