Daniel Kahneman, PhD, a professor of psychology at Princeton University, won the Nobel Prize for Economics in 2002. The interesting thing is that he wasn’t an economist. In fact, he said he’d never even taken a class in economics. Dr. Kahneman is a psychologist.
What he did with his research, beginning back in the late 1970s, was usher in a new way of thinking about why customers buy and how purchase decisions are made. His conclusion: companies that can better understand and accommodate consumer decision-making processes, and can help fulfill the emotional promise, will create more loyalty and realize increased revenue over an extended period of time — simple behavioral economics.
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Research has shown that decisions fueled by emotion very often bring less desirable outcomes than those made in a reasonable and logical fashion. One area of research in particular has focused on investors making stock trading decisions; the results are fairly clear cut: those who make decisions emotionally almost inevitably realize less favorable results. Yet, this is a highly emotional endeavor, much like gambling, where feelings of fear and greed tend to override rational logic.
Luckily, there’s new technology that will let traders know when emotion levels are flaring up, so they can get up, move slowly away from the computer and take a couple of deep breaths before hitting the buy or sell button.
Information wants to be free, but content wants a fee. This should get interesting.
We know information is the currency of the Internet and the lifeblood of marketing in a pull market, driven by search and navigation. This shift from broad distribution to select access is forcing companies to leverage data insight in order to make highly relevant information available to customers at key points in their purchase decision cycles, rather than pushing out generic information and promotion. It’s about information management; matching product solutions to rational needs and emotional desires, part of a larger shift from selling to helping customers buy.
Information is largely public domain. Content, on the other hand, is proprietary. It is the product.
This blog has extolled often the wisdom and foresight of Peter Drucker, and the lack thereof shown by so many business leaders who have failed to heed his sage advice. Those of us who have followed the long and illustrious career of Drucker — who would have turned a hundred years old this month — have to wonder what the legendary management guru would have to say about the current state of business, on the heels of the most severe economic downturn since the Great Depression. In all probability he would have said, “I told you so.”
