Through the the­o­ries dis­cussed in Dan Ariely’s Pre­dictably Irra­tional (and largely based on the excerpts in Chris Yeh’s out­line of the book), two arti­cles have emerged on dif­fer­ent sides of one topic: our irra­tional decision-making in terms of prod­ucts and purchases.

One on how to take advan­tage of our irra­tional­ity when mar­ket­ing prod­ucts, and another on pre­vent­ing manip­u­la­tion by being aware of our own irra­tional­i­ties.

One point from each arti­cle, per section:

Price Rel­a­tiv­ity and the Encour­ag­ing of False Comparisons

  • Offer a pre­mium ver­sion of your product/service and make it easy to compare.
  • Real­ize that some pre­mium options exist as decoys — that is, they are there only to make the less expen­sive options look more appeal­ing, because they’re easy to compare.

The Fal­lacy of Sup­ply and Demand and the Rein­force­ment of Anchoring

  • Set your­self against “pre­mium” com­peti­tors in pre­mium mar­kets. Posi­tion­ing is crit­i­cal to the per­cep­tion of value.
  • Scale your pur­chases to your needs, not your cir­cum­stances or wal­let size. Try to objec­tively mea­sure the value of what you’re buying.

The Zero Price Effect

  • Offer free stuff (espe­cially to those whose affections/actions you desire most), but make sure you get ROI from it.
  • Do not over­es­ti­mate the value of items you get for free. Resist this by view­ing free stuff scep­ti­cally rather than wel­com­ing it with open arms. What are the hid­den costs involved (restric­tion on future choices, time and effort expended, etc.)?

The Exploita­tion of Social Norms

  • The mind­set of vol­un­teers vs. employ­ees (free vs. paid) is very dif­fer­ent — con­sider which behav­iour set you want before decid­ing on the type of labour to attract.
  • Con­sider care­fully before choos­ing to par­tic­i­pate [for free].

The Influ­ence of Arousal

  • Arouse your audi­ence and their behav­iour (espe­cially their decision-making) changes drastically.
  • Be aware when you are being aroused (not just sex­u­ally).

Design­ing for Procrastination

  • Pro­cras­ti­na­tion is an extremely com­mon human behav­iour — plan for it in your busi­ness and take advan­tage of it where it can help (trial offers that turn into paid ser­vices, for example).
  • Either favour fixed-rate, fixed-term plans — or become metic­u­lous about can­celling unused recur­ring ser­vices, or ser­vices with auto­matic price increases.

The Endow­ment Effect

  • ‘Free’ prod­ucts are val­ued less than pur­chased prod­ucts. It’s eas­ier to get more money from your exist­ing cus­tomers than it is to attract new ones.
  • Be will­ing to walk away from–and never rely on your inter­nal value judg­ment of–already pur­chased goods/services. Ask an impar­tial third party for their objec­tive advice.

Cap­i­tal­i­sa­tion of our Aver­sion to Loss

  • Nar­row your cus­tomers’ choices and they’ll be more likely to commit.
  • If your choices are arti­fi­cially nar­rowed, don’t pas­sively get fun­nelled towards the goal you’re being herd­ing toward. Don’t pay extra for options, unless you can point to hard evi­dence that you need those options. Some options exist just to make you doubt yourself.

Engen­der Unrea­son­able Expectations

  • Take advan­tage of expec­ta­tions of value cre­ation. Posi­tion your brand so that users expect great things, and they’ll get them.
  • Let your own opin­ions guide you, not the opin­ions of oth­ers. Don’t let mar­ket­ing set your expec­ta­tions. Rely on evi­dence and facts.

Lever­age Pric­ing Bias

  • Higher pric­ing means higher expec­ta­tions, but also more ful­fil­ment, even if the prod­uct isn’t actu­ally more ful­fill­ing. The placebo effect is strong.
  • Price often has noth­ing to do with value. Don’t fall prey to the ‘mon­ey­moon’.