Use Psychology To Your Advantage

Joe Biden has just been declared the elected 46th President of the United States. Earlier, polls predicted Biden as the winner. Still, many believed that Donald Trump would emerge the winner. In 2016, the polls predicted that Hillary Clinton would win the election against Donald Trump. What happened was that Hillary Clinton whom the polls predicted would win the election lost instead in 2016. Is it any different this time around?

In 2016, the fact that the polls gave Hillary Clinton the edge resulted in complacency among the voters who would otherwise have come forward to show their choice. Many thought that since the polls predicted that their desired candidate would win, there would not be any difference if they did not put in their votes. The result was the election of Donald Trump as the 45th President of the United States instead of Hillary Clinton in that year.

Fast forward to 2020, the polls made a similar prediction about Joe Biden having an edge over Donald Trump. This time around, the large electoral base rooting for Joe Biden wanted to make sure that they do not make the same mistake as in 2016. Also many supporters of Joe Biden were so incensed with the thought of a second term for Donald Trump that they turn up in droves to cast their ballots. The difference now was the high turnout of Biden’s supporters in either mailing in their votes or turning up to vote. If these supporters had not been motivated by Donald Trump to turn up, the results could have been similar to that in 2016.

What happened is a good reflection of the importance of psychology or behavioral science in matters like the election, business or in your case, the startup. Daniel Kahneman did extensive work on behavioral science for which he earned a Nobel Prize. He studied the numerous irrational behaviors of people under varying circumstances. What he found was that people do not always make the rational decision when faced with a choice.

In business, pricing an item at $1.99 creates an illusion that it is considerably less than $2 when in fact it is almost the same. Having a sale which would end in a week gives a sense of urgency to the buyer who would otherwise not hurry up to make the purchase. Therefore in a startup, it is important to take into account the likely behavior of consumers in your product offerings and pricing.

If you are in retail, the prices of the goods you procure for resale may be similar or even higher than that of your competitors. However the prices you charge for them are, to a large extent, within your control. The same goes for the prices of services that you offer.  However there would be many situations where there are similar or the same products or services offered by competitors at a lower price than you could profitably charge. In such cases, the consumer would almost always pick the competitor’s offering of a lower price. However, you could counter this disadvantage by perhaps offering a 1-hour delivery service or an extended warranty. By adjusting the choices offered to the consumer, you now have a reasonable chance of securing the purchase.

Another way is to bundle something to the product in which you are not that price competitive. This changes the way consumers perceive the price difference. The consomers could no longer compare like with like thereby eroding the price advantage the competitors have. Therefore making adjustments by taking into consideration the psychology behind the consumers’ buying behavior wouls make the startup more viable than it otherwise would be.