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What is behavioral economics? Why does it matter to you?

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Podcast Episodes

What is behavioral economics? Why does it matter to you?

356. Unleashing the Power of Pricing: Mastering Consumer Behavior for Higher Sales (Refreshed Episode)

In this episode of The Brainy Business podcast, host Melina Palmer delves into the psychology of pricing strategy, drawing from her experiences at a conference for female entrepreneurs and her expertise in behavioral economics, which also served as the foundation for her book, The Truth About Pricing. Melina emphasizes the importance of understanding the subconscious influences that drive consumer behavior and how businesses can leverage sensory cues and anticipation to shape purchasing decisions. 

She shares insights on creating an irresistible introduction, utilizing the five senses, and leveraging principles of behavioral economics to capture customers’ attention and drive sales. By discussing anchoring and adjustment, relativity, and the power of presenting multiple options, Melina provides practical strategies for entrepreneurs to apply in their retail businesses. Her engaging storytelling and relatable approach make this episode a valuable resource for entrepreneurs looking to increase consumer engagement and drive higher sales through effective pricing strategies.

In this episode:

  • Uncover the psychology behind pricing strategies to gain a competitive edge in the retail market.
  • Craft an irresistible introduction to captivate customers and leave a lasting impression.
  • Leverage the five senses to create a memorable and immersive shopping experience for your customers.
  • Implement anchoring and adjustment techniques in pricing to influence consumer behavior and drive sales.
  • Understand the importance of presenting multiple options to increase consumer engagement and boost sales.
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HERE'S A 2 MINUTE TIP.

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SHOW NOTES:

00:00:00 – Introduction

Melina Palmer introduces the podcast episode and mentions that it is releasing on the same day as the launch of her third book, The Truth About Pricing. She discusses how this episode was the basis for the book and encourages listeners to order a copy.

00:02:18 – Pricing Strategy and Selling Techniques
Melina talks about observing how people position their offers and discuss their services at conferences and events. She mentions that skilled presenters follow a pattern and are able to subtly make the audience want their offer. This pattern is based on the same foundation as pricing strategy.

00:07:47 – Subconscious Evaluation
Melina discusses how she constantly evaluates advertisements and messaging around her, even though she may not consciously realize everything her subconscious is taking in. She emphasizes that subconscious evaluation plays a significant role in selling techniques, such as the anticipation created by the smell of freshly baked cookies.

00:11:41 – Order of Events
Melina explains the importance of the order in which events occur in a selling experience. She contrasts a positive experience of smelling cookies, receiving a special offer, and enjoying a free sample with a negative experience of being interrupted by a salesperson and feeling irritated. The same offer can result in different outcomes based on the order of events.

00:17:02 – The Core Takeaway on Pricing
Customers will find a way to pay for your product if it solves a real problem and is positioned effectively. Delivery and understanding behavioral economics are important factors in getting customers to take action.

00:20:08 – The Scent of the Cookies
To capture your ideal client’s attention, you need something nearly irresistible. Use all five senses to create an engaging and memorable experience through platforms like social media, podcasting, or visuals.

00:23:13 – Give Them Something to Keep Them Interested
Offer something of value to your potential customers. For services, provide lead magnets. For physical products, allow customers to sample or experience the product to create a sense of ownership and desire.

00:24:30 – The Power of Touch and Scarcity
Utilize touch to stimulate the brain’s ownership response. Incorporate scarcity by creating a sense of urgency and fear of missing out. Countdowns and limited-time offers can motivate customers to take immediate action.

00:34:13 – The concept of anchoring and adjustment
Anchoring and adjustment is when the brain latches onto a number and then adjusts up or down based on that initial anchor. This concept can influence our decision-making, as demonstrated in scenarios like buying Snickers bars at the grocery store.

00:36:08 – The concept of relativity
Relativity plays a role in decision-making by comparing options. In an example from an advertisement for subscriptions to the Economist, removing a seemingly undesirable option led to a shift in people’s choices. Understanding relativity can help marketers create effective pricing strategies.

00:39:11 – Building pricing options
When setting prices, it’s recommended to provide three options: the best offer, a decoy with worse value, and a third item for balance. This approach allows for value comparisons and caters to different customer preferences. The presentation and order of pricing options can influence decision-making.

00:42:22 – Mastering pricing strategy
Mastering pricing strategy requires an understanding of the principles and how they work together. Each product or service may require different tweaks and adjustments. Incorporating these learnings into pricing strategies can lead to better customer engagement and profitability.

00:43:52 –  Conclusion,
Melina’s top insights from the conversation. What stuck with you while listening to the episode? What are you going to try? Come share it with Melina on social media — you’ll find her as @thebrainybiz everywhere and as Melina Palmer on LinkedIn

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