Introduction to The Brainy Business Podcast
Melina Palmer: Welcome to episode 15 of The Brainy Business, understanding the psychology of why people buy.
Melina Palmer: This Behavioral Economics Foundation’s episode is about availability, ready?
Melina Palmer: Let’s get started.
Announcer: You are listening to The Brainy Business podcast, where we dig into the psychology of why people buy and help you incorporate behavioral economics into your business, making it more brain friendly.
Announcer: Now here’s your host, Melina Palmer.
This week’s Brainy Business podcast focuses on availability and scarcity.
Melina Palmer: Hello.
Melina Palmer: Hello everyone. My name is Melina Palmer and I want to welcome you to The Brainy Business podcast.
Melina Palmer: Last week’s episode was dedicated to scarcity, and if you’ve listened to that already, you know that the topic today, availability, ties right in.
Melina Palmer: Similar to the bond between anchoring and.
Melina Palmer: Adjustment and relativity, scarcity and availability can often be found together like peanut butter and jelly.
Melina Palmer: I mentioned quite a few episodes there.
Melina Palmer: And I want you to know you can find the links for those, as.
Melina Palmer: Well as any relevant articles, studies, or.
Melina Palmer: Anything else interesting in the show notes for the episode.
Melina Palmer: I’m not going to mention them every.
Melina Palmer: Time something is linked, but if you.
Melina Palmer: Hear me say something that makes you.
Melina Palmer: Think I should look that up, check the show notes first, because I’ve probably already done that heavy lifting for you.
Melina Palmer: You can find the show notes within the podcast app you’re listening to or by visiting thebrainybusiness.com 15. Because this is episode 15, and because this is a foundational episode, there’s a.
Melina Palmer: Free worksheet available for you to download on that same page of the website.
Melina Palmer: Thebrainybusiness.Com 15, and clicking on the image.
Melina Palmer: Near the top of the page.
Melina Palmer: You can follow along with that as.
Melina Palmer: You listen to the episode or use it after.
Melina Palmer: Either way, it’s really helpful for you.
Melina Palmer: To understand the concept and then actually apply it in your business, which really.
Melina Palmer: Is the whole point.
Understanding the Availability Heuristic
Let’s talk about availability and no, this.
Melina Palmer: Isn’t availability on our calendars.
Melina Palmer: It is more about the way your.
Melina Palmer: Brain, how easily something comes to mind or is available to your brain when you think about it, as I have done on some episodes in the past.
Melina Palmer: Here on the podcast, I’m going to start explaining this concept to you by.
Melina Palmer: Asking you a few questions. While I know I can’t hear your responses, that’s okay.
Melina Palmer: It will still work the same even.
Melina Palmer: If you are answering inside your own.
Melina Palmer: Head or, you know, shouting out your responses in your car or on the.
Melina Palmer: Treadmill at the gym, you know, do.
Melina Palmer: What you got to do.
Melina Palmer: I support you.
Melina Palmer: I’m here for you, okay?
Sharks vs. Cows: A Perceptual Bias
Most people are more afraid of sharks than cows, according to Daniel Kahneman.
When I say the word shark, what comes to mind?
Melina Palmer: What do you see and what words.
Melina Palmer: Are associated with those images.
Melina Palmer: When I do, my consumers are weird presentation.
Melina Palmer: I always show an image of a big toothy shark with its mouth wide open and ask people the same question.
Melina Palmer: What words come to mind?
Melina Palmer: They are probably some of the same ones that came into your head.
Melina Palmer: The most common responses I get are shark week, teeth, bite, jaws, or the dunna, noise, run blood or other violent terms.
Melina Palmer: Once the responses are done for that.
Melina Palmer: Image, I put up another, and this.
Melina Palmer: One is of a sweet, gentle cow.
Melina Palmer: Looking right at the camera with those big brown eyes.
Melina Palmer: What words come to mind when I say the word cow?
Melina Palmer: Common answers include milk, cute farm, steak, burger, or delicious.
Melina Palmer: And my personal favorite, aw which happens almost every time I speak on this topic.
Melina Palmer: While most people are more afraid of sharks than cows, the truth is there.
Melina Palmer: Are less than one.
Melina Palmer: There’s less than one shark related death each year.
Melina Palmer: But death by cow in just the United States is 22.
Melina Palmer: Some other interesting shark facts from National.
Melina Palmer: Geographic are in 1996, toilets apparently injured 43,000 Americans a year and sharks injured only 13. That, same year, buckets and pails injured almost 11,000 Americans.
Melina Palmer: And somehow 2600 Americans were injured by room fresheners. Sharks still just 13. Also,
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Melina Palmer: you have a one in 63 chance of dying from the flu and.
Melina Palmer: A, one in 3.7 million chance.
Melina Palmer: Of being killed by a shark during your lifetime.
Melina Palmer: That also compares to the one in.
Melina Palmer: 218 chance of dying from a fall.
Melina Palmer: And in an interesting little note from Time magazine, in New York alone, people.
Melina Palmer: Are bitten ten times more each year by other people, then worldwide, by sharks.
Melina Palmer: You are far more likely to simply die while swimming in the ocean or in a car crash on the way.
Melina Palmer: To the beach than you are to.
Melina Palmer: Be killed by a shark.
Melina Palmer: So if all that is true, why do we fear sharks so much more?
Melina Palmer: And even after I have told you all of these statistics, why will you still fear sharks more than cows, toilets and air fresheners?
Melina Palmer: It’s because of availability.
Melina Palmer: This is another time when your brain gets lazy and uses a simple rule of thumb to make its decisions instead of researching or really caring about the.
Melina Palmer: Facts with availability, we humans all decide.
Melina Palmer: The likeliness of something happening is based.
Melina Palmer: On how easily an example, instance or.
Melina Palmer: Case comes to mind.
Melina Palmer: So when we think about sharks, the.
Melina Palmer: Only times we hear about them are.
Melina Palmer: When they’re attacking people. That’s when they’re in the news, or if we’re watching movies like Jaws or.
Melina Palmer: On Shark Week, which really focus on.
Melina Palmer: Their teeth and them biting and eating things.
Melina Palmer: When someone is attacked by a shark, it’s big news, and we hear all about it for a long time.
Melina Palmer: It’s easy for your brain to remember these examples, so you assume they happen more often than they do, and similarly.
Melina Palmer: That your likelihood of suffering the same.
Melina Palmer: Fate is higher as well.
Melina Palmer: On the other hand, we have a lot of great interactions with cows.
Melina Palmer: We teach our, children about them at a young age and see them.
Melina Palmer: At petting zoos or on farms, and they’re so cute.
Melina Palmer: Can you ever think of a time you heard of someone being killed by a cow?
Melina Palmer: Probably not, so your brain categorizes it.
Melina Palmer: As less likely to happen regardless of the actual statistics.
Melina Palmer: It’s the same for driving in cars or seeing a toilet or air freshener.
Melina Palmer: You have far too many experiences not.
Melina Palmer: Being injured by these items, so your brain does not associate them as something to be scared of.
Melina Palmer: Now don’t get me wrong, I don’t want you to finish this episode and.
Melina Palmer: Be scared of everything around you.
Melina Palmer: And to be clear, availability is about more than death and disaster, and I’m going to try to lighten it up as we keep going through the episode.
Melina Palmer: I will give some positive examples for you in your business as well. Don’t worry.
Daniel Kahneman’s Research on Availability
Melina Palmer: So Daniel Kahneman, the author of Thinking, Fast and Slow and a forefather on.
Melina Palmer: The research of availability, dedicated chapter twelve.
Melina Palmer: Of his book to the concept.
Melina Palmer: In case you want to go pick one up.
Melina Palmer: I’m going to paraphrase some of it.
Melina Palmer: Here, because, as I’ve said on past episode, the book is quite dense, uses a lot of academic terms, and I.
Melina Palmer: Prefer to keep it as relatable as possible here on the podcast.
Melina Palmer: With availability, your brain swaps out easily available numbers for complex ones.
Melina Palmer: So here we go.
Melina Palmer: If I asked you what two plus two is, you immediately had a number come to mind.
Melina Palmer: That is an easy calculation for your subconscious brain, and you are quick to manifest the answer.
Melina Palmer: You can almost instantaneously know that two.
Melina Palmer: Plus two is four.
Melina Palmer: Now for this next one.
Melina Palmer: And no pulling out the calculator. What is 24 times 86?
Melina Palmer: Unless you are like my husband, who is a total freak of nature for doing math in his head, you probably did not have a number come to mind quickly.
Melina Palmer: More likely, you probably knew immediately whether.
Melina Palmer: You could do that math in your head or not.
Melina Palmer: For me, I’m strictly no math in.
Melina Palmer: My head kind of person.
Melina Palmer: It is not a skill I possess, and I always go calculator, even for the simplest math.
Melina Palmer: Maybe not two plus two, but much beyond that. And I’m reaching for the calculator.
Melina Palmer: So you would have gotten some simple parameters in your brain if this was something you knew you couldn’t do in.
Melina Palmer: Your head, maybe arrange, the answer would be between.
Melina Palmer: Perhaps that number is more than 250 and less than 10,000, and the less.
Melina Palmer: Confident you are, the larger your range will.
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Melina Palmer: be.
Melina Palmer: But beyond that, you didn’t do much.
Melina Palmer: What happens with availability is your brain swaps out the question at hand for.
Melina Palmer: One it’s more likely to be able to answer quickly, or one it would prefer to answer.
Melina Palmer: Unfortunately, it does not always swap out for a new question that provides the.
Melina Palmer: Right answer to the one you were asked.
Melina Palmer: In the case of the complex math.
Melina Palmer: You substituted what is 24 times 86?
Melina Palmer: It’s 2064, by the way, in case you were waiting with bated breath.
Melina Palmer: So you swapped that out.
Melina Palmer: You substituted with an estimate of the range of possible numbers.
Melina Palmer: With availability, it’s about how easily examples come to mind.
Melina Palmer: Those you could think of easiest are weighted as most likely.
Melina Palmer: For example, because Hollywood divorces are common.
Melina Palmer: In the media, you will exaggerate how often they occur.
Melina Palmer: Dramatic events have a higher impact on your mind.
Melina Palmer: If you just saw an accident on the side of the road or heard about a plane crash, they will impact.
Melina Palmer: Your view of the world for a while.
Melina Palmer: Most people overestimate what percentage of the household chores they do and underestimate the contributions of their significant other because they.
Melina Palmer: See and feel and endure everything they’re doing and don’t necessarily see that with the significant other.
Melina Palmer: Similarly, in teams, everyone seems to overestimate their own contributions compared to everyone else.
Melina Palmer: And this is a direct quote from the book.
Melina Palmer: Personal experiences, pictures, and vivid examples are.
Melina Palmer: More available than incidents that happened to.
Melina Palmer: Others or mere words or statistics.
Melina Palmer: A judicial error that affects you will.
Melina Palmer: Undermine your faith in the justice system more than a similar incident you read about in the newspaper.
Melina Palmer: Statistics and lots of numbers or charts don’t mean much to our brains.
Melina Palmer: We get bored and stop listening or.
Melina Palmer: Internalizing what’s being communicated.
Melina Palmer: But stories, our subconscious brains love stories.
Melina Palmer: Especially ones that are interesting and captivating and draw us in.
Melina Palmer: And this is definitely not the first.
Melina Palmer: Time I’ve mentioned stories, or this in general. On the podcast, we hear stories of.
Melina Palmer: People like Justin Bieber getting famous on YouTube, and it begins to feel like it’s more common than not.
Melina Palmer: Did you know that one in three.
Melina Palmer: British children have said they want to.
Melina Palmer: Be a, professional YouTuber when they grow up?
Melina Palmer: It was three times more than any who said they wanted to be doctors.
Melina Palmer: Or nurses, which is really kind of sad.
Melina Palmer: And while there are some full time YouTubers, they’re few and far between.
Melina Palmer: How many views do you think you.
Melina Palmer: Need to make it big on YouTube.
Melina Palmer: What if you got a million views a month?
Melina Palmer: If you woke up tomorrow morning and saw that you now have a million.
Melina Palmer: Views a month, is that enough?
Melina Palmer: The top 3% of YouTubers are getting around one and a half million views.
Melina Palmer: A month, and they make less than $17,000 a year from their advertising revenue.
Melina Palmer: Wa one quote from the article I’m referencing, which is in the show notes of course, says you can have half.
Melina Palmer: A million followers on YouTube and still.
Melina Palmer: Be working at Starbucks, but still, everyone.
Melina Palmer: Thinks it’s easier than it looks and they will be the one to break.
Melina Palmer: Through because the stories are in our faces and easier to relate to than these types of statistics in your business strategies.
Applying Availability in Business
Melina Palmer: Try and keep that in mind as well.
Melina Palmer: Your social media strategy should support the.
Melina Palmer: Rest of what you’re doing in your business.
Melina Palmer: Even the top social media stars get most of their money from sponsorships and other avenues.
Melina Palmer: Use social media to gain a following.
Melina Palmer: To sell other things, not to gain money from the platform.
Melina Palmer: If you do make some money that way, awesome. But it should not be the main strategy. Sorry everybody.
Melina Palmer: I feel like I’m just popping all the world’s balloons on this episode. It’s not my intention, I promise.
Melina Palmer: So let’s get into some more fun examples of availability in action so you.
Melina Palmer: Can use this in your business.
Case Study: Tourism in Norway and Mars Bars
In 2014, tourism to Norway increased by 40% because of a movie.
Melina Palmer: Okay, I have another question for you to shake things up.
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Melina Palmer: In 2014, tourism to Norway increased by over 40% because of a movie.
Melina Palmer: Do you know what it is? I’ll give you a second to think through some of the options.
Melina Palmer: Norway 2014. Believe it or not, it’s because of the movie Frozen, a cartoon which is.
Melina Palmer: Set in a fictional place but closely modeled on Norway. And since then, things have continued to grow.
Melina Palmer: In 2016, the country essentially cut its.
Melina Palmer: Tourism advertising budget because they’re overflowing with visitors.
Melina Palmer: People hiking up to Trolltunga increased from.
Melina Palmer: 1000 to 100,000 in five years, and those visiting Pulpit Rock increased from 60,000.
Melina Palmer: In 2009 to 300,000 in 2016.
Melina Palmer: Apparently, a village with 215 permanent residents.
Melina Palmer: Is now visited by 700,000 tourists a year.
Melina Palmer: If you are one of my listeners.
Melina Palmer: From Norway, please let me know what.
Melina Palmer: This has been like.
Melina Palmer: leave a comment on the Facebook page which is B I Z, or send me an email, melina@thebrainybusiness.com to share your experience.
Melina Palmer: It sounds crazy. And remember, in this case, Norway, the.
Melina Palmer: Country didn’t do anything.
Melina Palmer: This is all because of a movie.
Melina Palmer: That was made by Disney, that was very popular.
Melina Palmer: That is sort of set with looking at what it could, it sort of looks like there.
Melina Palmer: It’s not actually even, like I said, set in Norway.
Melina Palmer: And they didn’t do anything to gain all of this good publicity and tourism.
Melina Palmer: Similarly, in 1997, the sales of Mars.
Melina Palmer: Bars went up significantly, but they did.
Melina Palmer: Not increase their advertising. Any guesses as to why?
Melina Palmer: According to Jonah Berger, author of Contagious: Why Things Catch On, which is a super awesome book, I highly recommend it.
Melina Palmer: This was because of the Mars rover. These two examples show a little bit about how our brains associate information together that the conversations would actually be hey, did you hear about that Mars rover?
Melina Palmer: Yeah, that’s amazing.
Melina Palmer: Speaking of which, I’m hungry.
Melina Palmer: How about a Mars bar?
Melina Palmer: It seems a little ridiculous, but really, that’s how our brains work when it.
Melina Palmer: Comes to availability and your business. You want to associate yourself with things people are already talking about or what’s.
Melina Palmer: Going on in the world around you. You need to be aware of what’s.
Melina Palmer: Trending on social media or in the.
Melina Palmer: News or pop culture because that is.
Melina Palmer: What people are talking about and searching for. And you want to get a associated.
Melina Palmer: With those things, knowing of course, to pick and choose some.
Melina Palmer: You don’t want to be maybe associated with something super controversial.
Melina Palmer: Use good judgment and you may get lucky like Norway or Mars bars.
Melina Palmer: But I recommend doing what you can to make your own luck instead of waiting for Disney to make a character that’s named after your business.
Melina Palmer: In last week’s episode on Scarcity, I gave a bunch of examples, including some.
Melina Palmer: From Starbucks and Disney and their recent.
Melina Palmer: Big wins, including the Unicorn Frappuccino, Rose.
Melina Palmer: Gold, Venti Takeaway cup, and rose gold mini ears. As I mentioned then, the examples of.
Melina Palmer: Items that flew off the shelves, it.
Melina Palmer: Was partially because they hit on items that were all the rage at the time.
Melina Palmer: Rose gold has gone in and out of fashion since the 1920s, but really blew up recently with the release of.
Melina Palmer: The Rose Gold iPhone, of which I’m sure it surprises no one that I have a rose gold iPhone to go with my Rose Gold Starbucks cup and.
Melina Palmer: My rose gold mini ears. And also I have rose gold sunglasses.
Melina Palmer: I’m silly and ridiculous.
Melina Palmer: Anyway. People like me love Rose gold these days and want it in everything from.
Melina Palmer: Cups to phones to sunglasses and mini.
Melina Palmer: Ears and wedding takes.
Melina Palmer: People are actively seeking out rose gold, and if you offer something in that.
Melina Palmer: Shade, people will probably.
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Melina Palmer: go gaga over it.
Melina Palmer: If, like those examples from last week.
Melina Palmer: You have a limited number available using scarcity to your advantage.
Melina Palmer: With availability, it could cause people to start sharing or bragging on social media and fueling the fire to your benefit.
Melina Palmer: My advice in using availability in your business is to watch what people are.
Melina Palmer: Talking about and find ways to interject yourself.
Melina Palmer: I recently had a friend tell me she knows someone who is a handwriting expert.
Melina Palmer: When people were going bananas over the royal wedding, as they always seem to.
Melina Palmer: Do, she wrote an article about what.
Melina Palmer: The signatures of Harry and Meghan said.
Melina Palmer: About them, and it was a big hit, meaning it got picked up by USA Today and the Huffington Post and the Dr. Oz show and outlets around the world.
Melina Palmer: I don’t know her personally, but it’s my understanding that this was not happenstance, this was deliberate and it worked.
Melina Palmer: Watch the trends, what people care about and are talking about, and find a.
Melina Palmer: Way to integrate your business and what you do to that conversation and know that it’s something that you want to.
Melina Palmer: Be looking for ways even when it.
Melina Palmer: Seems really out there, left field totally different.
Melina Palmer: That’s a really great time to put.
Melina Palmer: Your spin on something because there will.
Melina Palmer: Be a lot less people talking about.
Melina Palmer: It, making you more unique and more likely to be picked up like this woman.
Melina Palmer: As with scarcity, not everything is going.
Melina Palmer: To be a giant win every time, but if you try enough times, something.
Melina Palmer: Might stick and propel you and your business to new heights.
Aligning Expertise with Trends
Melina Palmer: Find ways you can align your expertise to those trends.
Melina Palmer: While it looks really obvious when you hear the example now, most people who.
Melina Palmer: Are handwriting experts probably would not have.
Melina Palmer: Thought to capitalize on the royal wedding with an article like that.
Melina Palmer: And obviously they didn’t. And now they aren’t the authority in the space, but this woman is instead.
Melina Palmer: I’m recording this episode a few weeks before it airs, so if some of these trends are out of date by.
Melina Palmer: The time you listen to this, please.
Melina Palmer: Forgive me, but right now people are.
Melina Palmer: Talking a lot about Nike and the Colin Kaepernick campaign.
Melina Palmer: Serena and Osaka are trending on Twitter because of the US Open and football.
Melina Palmer: Season is starting, so the NFL will have a lot of activity as well.
Melina Palmer: Even if the connections are not obvious.
Melina Palmer: Try and come up with ways you can align your expertise to those trends.
Melina Palmer: What do you know about that people would care about? And how can you connect with those curious minds?
Melina Palmer: And as a hint, if you want.
Melina Palmer: A little bit of help, check out the freebie this week@thebrainybusiness.com.
Melina Palmer: 15.
Melina Palmer: If someone is searching for articles or.
Melina Palmer: Information on the US Open, what do they want to know? What is interesting about Serena and Osaka?
Melina Palmer: I did not watch, but it appears the women’s final ended about an hour.
Melina Palmer: Ago and Serena lost looking through Twitter.
Melina Palmer: It appears.
Melina Palmer: There are claims the umpire made some bad calls against Serena.
Melina Palmer: It was overly controversial, and there’s a claim of a sexist remark by the umpire.
Melina Palmer: I’m guessing this will be in the.
Melina Palmer: News for a bit, and there might be follow up articles.
Melina Palmer: What could you have written about or.
Melina Palmer: Done a video or podcast episode or whatever to connect your business as an expert during this conversation?
Melina Palmer: And if it seems like a weird mix, all the better.
Melina Palmer: That means, like I said earlier, no one will have your same perspective. If you work in tennis.
Melina Palmer: Everyone would expect you to have an.
Melina Palmer: Opinion about the US Open and the.
Melina Palmer: Controversial final, and it’s going to blend in with the noise.
Melina Palmer: But what about the scarce opinions, the ones people don’t expect?
Melina Palmer: How does this tie into the real estate market? Or credit unions or shoe sales or bakeries?
Melina Palmer: Or if you’re a handwriting expert in episode four, questions or answers?
Melina Palmer: I talked a lot about my absolute favorite book, A More Beautiful Question by Warren Berger.
Melina Palmer: One of the items I referenced is.
Melina Palmer: Combinatorial thinking, which helps you get more innovative ideas.
Melina Palmer: The idea is to combine things together that others would not think go together to come up with something novel and amazing.
Melina Palmer: And that often seems really obvious after the fact.
Melina Palmer: He.
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Melina Palmer: Says.
Melina Palmer: Instead of trying to connect a and.
Melina Palmer: B, look at connecting a and z, or better yet, a and 26 things that don’t seem related at all, like.
Melina Palmer: Gym memberships and video stores, can come together to make something amazing. Like Netflix.
Melina Palmer: The worksheet for this week, like I.
Melina Palmer: Hinted at, has some prompts to help you do this for your business.
Melina Palmer: Remember, you can download it@thebrainybusiness.com 15. It might seem a little weird at first, but I encourage you to give it a shot.
Melina Palmer: It can make a big difference in the way you think about everything.
Leveraging HARO for Media Opportunities
Melina Palmer: And if you have never heard of.
Melina Palmer: Something called HARO, which stands for Help a Reporter Out, H A R O, you need to check this out.
Melina Palmer: HARO is a website, an area that connects reporters with potential sources.
Melina Palmer: So three times a day, I get emails from HARO that are all the different reporters that have stories they’re working on and places where they would like a source.
Melina Palmer: They sometimes would specifically call out that they’re looking for a, psychologist or somebody who has a business perspective or marketing perspective.
Melina Palmer: There are things on fitness. there’s been a lot of disaster related questions with the hurricane happening on the east coast right now, and you can see what people are interested in.
Melina Palmer: And there are a lot of times.
Melina Palmer: Where I am responding and someone’s not asking for a behavioral economist or that type of perspective on a topic, because they don’t know that they need me yet.
Melina Palmer: They don’t know that this exists. So I have been interjecting myself and commenting, responding and writing out how I relate to that.
Melina Palmer: The article that I was quoted in recently on Haiya was something I found on HARO, and again, they were not looking for a behavioral economist perspective, but.
Melina Palmer: I reached out and said, hey, this.
Melina Palmer: Is a really a different and unique perspective that I think would be helpful for your readers.
Melina Palmer: And obviously the author agreed and quoted me in the story.
Melina Palmer: And I’ve been having quite a few connections that have worked out well through HARO.
Melina Palmer: And again, there are a lot of.
Melina Palmer: Times that I am responding and pitching and they go off into oblivion and I never get quoted.
Melina Palmer: And that’s fine, but it’s worth the time, it’s worth trying.
Melina Palmer: And I have included myself on all sorts of things that I wouldn’t have thought were relevant, like dating and you know, the grocery store situation obviously makes sense, but there are tons and tons of ways that you can relate your business to other areas, even if.
Melina Palmer: You don’t think that they’re tied together.
Melina Palmer: And you should use this worksheet that I have on the freebie, which again is at thebrainybusiness.com 15 to help practice.
Melina Palmer: Flex that muscle a little bit. And I would definitely recommend signing up for HARO.
Melina Palmer: Just Google for H A R O. Help a reporter out and you’ll be able to sign up.
Melina Palmer: They let you sort based on category. I just get everything because you never know where something might fall and make sense.
Melina Palmer: And there’s a lot of weird stuff in there, but it’s interesting.
Melina Palmer: It helps you to know what people are talking about in a way that you know what reporters are going to be writing about.
Melina Palmer: And even if it just gives you.
Melina Palmer: Ideas for your own blog posts or.
Melina Palmer: Videos, you know, it’s worth giving it a scan a, few times a day when it comes around.
The Diamond Invention: Scarcity and Availability in Marketing
Melina Palmer: Diamonds became the powerhouse they are today through a combination of scarcity and availability.
Melina Palmer: Okay.
Melina Palmer: Last week I promised to revisit the.
Melina Palmer: Fascinating story about how diamonds became the powerhouse they are today through a combination.
Melina Palmer: Of scarcity and availability, with a few.
Melina Palmer: Other behavioral economics concepts thrown in there as well.
Melina Palmer: As I shared on, that episode, diamonds are not really all that rare.
Melina Palmer: And diamond engagement rings, especially with large, spectacular center stones, were not popular until the early 1940s.
Melina Palmer: And the concept of a, diamond being forever was essentially created to ensure.
Melina Palmer: People would never try to resell their.
Melina Palmer: Diamonds and disrupt the market.
Melina Palmer: I’m going to reread the first paragraph on that article, even though I read it last week, just to help.
Melina Palmer: Set the stage here. The diamond invention, the creation of the idea that diamonds are rare and valuable and are essential signs of esteem is a relatively recent development in the history of the diamond trade.
Melina Palmer: Until.
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Melina Palmer: The late 19th century, diamonds were found only in a few riverbeds in.
Melina Palmer: India and in the jungles of Brazil.
Melina Palmer: And the entire world. Production of gem diamonds amounted to a few pounds a year.
Melina Palmer: In 1870, however, huge diamond mines were.
Melina Palmer: Discovered near the Orange River in South Africa, where diamonds were soon being scooped.
Melina Palmer: Out by the ton.
Melina Palmer: Suddenly, the market was deluged with diamonds.
Melina Palmer: The British financiers who had organized the South African mines quickly realized that their investment was endangered.
Melina Palmer: Diamonds had little intrinsic value and their price depended almost entirely on their scarcity.
Melina Palmer: The financiers feared that when new mines were developed in South Africa, diamonds would.
Melina Palmer: Become, at best, only semi precious gems. The major investors in the diamond mines.
Melina Palmer: Realized that they had no alternative but.
Melina Palmer: To merge their interests into a single.
Melina Palmer: Entity that would be powerful enough to.
Melina Palmer: Control production and perpetuate the illusion of scarcity of diamonds.
Melina Palmer: The instrument they created in 1888 was.
Melina Palmer: Called De Beers Consolidated Mines Limited, incorporated in South Africa.
Melina Palmer: And yes, as I said last week.
Melina Palmer: They mean that De Beers.
Melina Palmer: Over the next hundred years, De Beers owned and controlled over 90% of the world’s diamonds.
Melina Palmer: Through a carefully crafted mix of controlling price, available inventory and strategic advertising. Using availability, they completely changed the world.
Melina Palmer: The article then goes on to say the diamond invention is far more than a monopoly for fixing diamond prices.
Melina Palmer: It is a mechanism for converting tiny crystals of carbon into universally recognized tokens.
Melina Palmer: Of wealth, power and romance. To achieve this goal, De Beers had.
Melina Palmer: To control demand as well as supply. Both women and men had to be made to perceive diamonds not as marketable precious stones, but as an inseparable part of courtship and married life.
Melina Palmer: To stabilize the market, De Beers had.
Melina Palmer: To endow these stones with a sentiment that would inhibit the public from ever reselling them.
Melina Palmer: The illusion had to be created that diamonds were forever, forever, in the sense.
Melina Palmer: That they should never be resold.
Melina Palmer: In 1938, Harry Oppenheimer, who was the.
Melina Palmer: 29 year old son of the founder of De Beers, went to America to meet with an advertising agency because with.
Melina Palmer: Europe on the verge of war, they.
Melina Palmer: Were not a good candidate to increase diamond sales.
Melina Palmer: So the British company turned to America because, quote, in 1938, some three quarters of all the cartel’s diamonds were sold for engagement rings in the United States.
Melina Palmer: Most of these stones, however, were smaller and of poorer quality than those bought in Europe.
Melina Palmer: And had an average price of $80 a piece.
Melina Palmer: Oppenheimer and the bankers believed that an.
Melina Palmer: Advertising campaign could persuade Americans to buy more expensive diamonds.
Melina Palmer: And, oh, were they right.
Melina Palmer: They did some research and found that.
Melina Palmer: The amount of diamonds sold in America.
Melina Palmer: Was down 50% due to the economy.
Melina Palmer: Changing social attitudes, and the promotion of competitive luxuries.
Melina Palmer: The agency suggested a well orchestrated advertising and public relations campaign that would strengthen the public’s mind of diamonds with romance.
Melina Palmer: And quote, since young men buy over.
Melina Palmer: 90% of all engagement rings, it would.
Melina Palmer: Be crucial to inculcate them in the.
Melina Palmer: Idea that diamonds were a gift of love.
Melina Palmer: The larger and finer the diamond, the.
Melina Palmer: Greater the expression of love.
Melina Palmer: Similarly, young women had to be encouraged to view diamonds as an integral part of any courtship.
Melina Palmer: They leveraged the then new medium of motion pictures.
Melina Palmer: Stars of the screen were given diamonds to use as their symbols.
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Melina Palmer: of indestructible love.
Melina Palmer: In addition, the agency suggested offering stories.
Melina Palmer: And society photographs to selected magazines and newspapers, which would reinforce the link between diamonds and romance.
Melina Palmer: Stories would stress the size of diamonds that celebrities presented to their loved ones, and photographs would conspicuously show the glittering stone on the hand of a well known woman.
Melina Palmer: Fashion designers would talk on radio programs about the trend toward diamonds that Ayer planned to start.
Melina Palmer: The Ayer plan also envisioned using the British royal family to help foster the romantic allure of diamonds.
Melina Palmer: An Ayer memo said, since Great Britain.
Melina Palmer: Has such an important interest in the diamond industry, the royal couple could be of tremendous assistance to the British industry by wearing diamonds rather than other jewels.
Melina Palmer: Queen Elizabeth later went on a well publicized trip to several South African diamond mines, and she accepted a diamond from Oppenheimer.
Melina Palmer: In addition to putting these plans into.
Melina Palmer: The sale of diamonds had increased by 55% in the United States since 1938.
Melina Palmer: Action, N. W. Ayer placed a series of lush four color advertisements in magazines that were presumed to hold elite opinion.
Melina Palmer: Featuring reproductions of famous paintings by such artists as Picasso, Durene, Dali, and Duffy.
Melina Palmer: The advertisements were intended to convey the idea that diamonds, like paintings, were unique works of art.
Melina Palmer: By 1941, the advertising agency reported to its client that it had already achieved impressive results in its campaign.
Melina Palmer: The sale of diamonds had increased by 55% in the United States since 1938.
Melina Palmer: That’s just in a three year period for those of you, that missed that.
Melina Palmer: And it reversed the previous downward trend in retail sales.
Melina Palmer: N. W. Ayer noted also that its campaign had required the conception of a new form of advertising, which has been widely imitated ever since.
Melina Palmer: There was no direct sale to be made. There was no brand name to be impressed on the public mind.
Melina Palmer: There was simply an idea. The eternal emotional value surrounding the diamond it further claimed that a new type of art was devised and a new color, diamond blue, was created and used in these campaigns.
Melina Palmer: This went on and on. As I said last week, this article.
Melina Palmer: In The Atlantic was very long but very fascinating.
Melina Palmer: They created then the “diamond is forever” line in 1947. Then they started using television when it came into the forefront.
Melina Palmer: And they create, even created a diamond information center to place a stamp of authority on any of the historical data.
Melina Palmer: And news that it released. The advertising agency became the source of information to the publishing world on diamonds.
Melina Palmer: Everyone went to them.
Melina Palmer: First, it was the HARO. Before HARO existed, they had the world.
Melina Palmer: In the palm of their hand, or on their finger, more likely, and kept.
Melina Palmer: Writing themselves deeper and deeper into the story.
Melina Palmer: They went on to reverse a.
Melina Palmer: 1500 year tradition of marriage in Japan, to incorporate diamond engagement rings, just like they did in America.
Melina Palmer: And when they found themselves flooded with.
Melina Palmer: Tiny diamonds that contradicted with their previous messages, they created the eternity ring to.
Melina Palmer: Encourage people who had been married a.
Melina Palmer: Long time to buy even more diamonds.
Melina Palmer: But still never sell the ones they have.
Melina Palmer: De Beers and the diamond invention, as the article calls it, is the original availability case study.
Melina Palmer: And they changed the face of the.
Melina Palmer: Entire world forever in a way that.
Melina Palmer: Almost no one knows or cares to know, because our brains relate to the stories and the images of what we see most frequently.
Melina Palmer: Diamonds subtly spoke to the subconscious brain and became a piece of our culture.
Melina Palmer: Without people even realizing it.
Melina Palmer: De Beers had the money to buy the time on screen and radio and print and subsequently in the brains of the masses.
Melina Palmer: And while I mentioned money right there, it was not a huge amount compared.
Melina Palmer: To the benefit they got for their efforts.
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Melina Palmer: According to the article, by 1979, N. W. Ayer had helped De Beers expand its sales.
Melina Palmer: Of diamonds in the United States to more than $2.1 billion at the wholesale.
Melina Palmer: Level, compared with a, mere 23 million in 1939. In 40 years, the value of its sales had increased nearly 100 fold.
Melina Palmer: The expenditure on advertisements, which began at a level of only 200,000 a year and gradually increased to 10 million, seemed a brilliant investment.
Melina Palmer: What do you think? Is it worth $10 million to make 2.1 billion? I think most would agree.
Melina Palmer: How about just the.
Melina Palmer: The mere $200,000 a year to make 23 million?
Melina Palmer: Yes, definitely worth the investment. One other thing that they did that far too many people neglect is solid.
Melina Palmer: Research into the mindset of the consumer.
Melina Palmer: Consumer.
Melina Palmer: And they looked for new ways to get their message out there.
Melina Palmer: You all know I am all about research and how the brain actually works.
Melina Palmer: And testing and looking at studies so.
Melina Palmer: You can make comparisons instead of just.
Melina Palmer: Doing a few traditional ads.
Melina Palmer: They knew people had idols.
Melina Palmer: They wanted to be like, getting their products affiliated with those people could mean huge interest if done right today, we.
Melina Palmer: Might call this the Oprah effect.
Melina Palmer: And while it would be nice if.
Melina Palmer: You could get your product mentioned by.
Melina Palmer: Oprah or Ellen or a Kardashian, as I’ve shown in this episode, it.
Melina Palmer: Doesn’t need to be quite that fancy. You can just be watching the conversation.
Melina Palmer: Paying attention and trying to see how.
Melina Palmer: You can interject yourself and looking for the right time.
The Timeliness of Marketing and Availability
Melina Palmer: When hurricane season is approaching, people are more likely to get flood insurance.
Melina Palmer: I mentioned that right now we have, hurricane that has been going.
Melina Palmer: Around on the east coast.
Melina Palmer: And again, I’m not sure when you’re.
Melina Palmer: Going to be listening to this, if.
Melina Palmer: You’re listening later, but this happens, you.
Melina Palmer: Know, every year, and it’s a time where people would be more likely to get flood insurance.
Melina Palmer: People are more likely to get flood insurance after a flood because of this availability effect.
Melina Palmer: And that’s actually, you know, the least.
Melina Palmer: Likely time that you need it because.
Melina Palmer: You just would have have needed it. And it’ll be a long time before a flood theoretically comes back.
Melina Palmer: So when hurricane season is approaching, it would be a time if you I recently talked with somebody who is working in disaster preparedness.
Melina Palmer: You know, that’s the right time where.
Melina Palmer: You would want to be messaging and.
Melina Palmer: Communicating about what you do in advance of a hurricane because, you know, people.
Melina Palmer: Are talking and thinking about it and.
Melina Palmer: Immediately after how they can be prepared next time and want to buy something from you.
Melina Palmer: Or if you sell insurance, you would want to be messaging about that right after something was really big and notable.
Melina Palmer: In the news because it’s at ah.
Melina Palmer: Top of mind for people.
Melina Palmer: Those stories are in their heads.
Melina Palmer: They’re thinking about this in a different way.
Melina Palmer: And that’s a time where you can.
Melina Palmer: Be part of the conversation and elevate.
Melina Palmer: Yourself in a way that you couldn’t do otherwise.
Melina Palmer: If De Beers could do it back before the Internet and the invention of hashtags, you can do it too.
Conclusion and What’s Next
Melina Palmer: This episode on availability is part of Brainy Business podcast series.
Melina Palmer: And with that, this episode on availability is a wrap.
Melina Palmer: I hope you got some really helpful examples and that you will be able to find a way to interject yourself and your business as an expert in an area where you might not have.
Melina Palmer: Thought possible before next week.
Melina Palmer: Episode 16 is all about framing one of my favorite topics.
Melina Palmer: I’m really excited to talk with you about it and give lots of tips and examples.
Melina Palmer: Until then, thanks again for listening and learning with me. And remember to be thoughtful thank you.
Announcer: For listening to The Brainy Business podcast.
Announcer: Melina offers virtual strategy sessions, workshops, and other services to help businesses be more brain friendly.
Announcer: For more free resources, visit thebrainybusiness.com.
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