YOU'RE BEING NUDGED!!!

 

Have you ever purchased a large popcorn in a movie theatre, even though you knew you'd never be able to finish it, despite the fact that it was only slightly more expensive than a medium-sized popcorn? When was the last time you un-clicked the option to not make a voluntary donation for an online booking service(yes, Bookmyshow!!!) that charged you for its CSR initiative? Did you know that Netflix's 'play the next episode' option right after an episode's end is designed to encourage you to binge even if you aren't interested in watching the next episode? Yes, you are being constantly nudged and experts believe nudging is the new normal in modern advertising and marketing products among hyper-lazy, no motivation to decide customers.

In behavioural sciences, Nudge theory promotes positive reinforcement and indirect suggestions as techniques to affect the behaviour and decision-making of groups or people.For instance, Placing chocolates near the billing counter in a supermarket is the simplest and most common nudge in practice. Inversely, Sludging is anything in a process, the term is often used interchangeably with nudging , that hinders users. For instance, a simple board of ‘do not waste food’ with photos of malnourished kids near the mess dustbin makes one think twice before wasting food. (Or) When there is an additional cost for plastic bags at stores, you’re less likely to purchase one, thereby reducing plastic consumption.

Nudge Marketing

Nudge marketing is the process of sending marketing communications that appeal to an individual's psychology in order to urge desired behaviour. In simple words, marketing in such a way, the customer makes the decision making process heuristic. A heuristic is a mental shortcut that helps people solve issues and make decisions more quickly. The rule-of-thumb tactics reduce decision-making time and enable people to perform without continually pausing to consider their next move. The most important aspect of nudge marketing is to ensure that the nudging remains unknown to the customers. Higher the incognito better the customer stimulus to the nudge. shhh!!!

Amazon.in, The most preferred online shopping website of India is a typical example how nudging looks simple but a more lucrative way of business augmentation. Amazon.in remembering your card details might not look like a big deal, but If you had to remember your card details after 12 while mindlessly scrolling through Amazon's virtual store, you may be a lot less likely to purchase whatever splurge items you added to your basket. This is called convenience nudging. Urgency nudge can be badges, pop-ups or notifications that urges customers to buy earlier. Limited time deal or Deal of the day offer is a simple nudge to push customers to buy by creating a mirage of the desirables going out of stock soon. Similarly, Specifying the number of stocks left is yet another method of urgency nudging. Amazon basics and amazon’s choice is a form of Reassurance nudging.

The most efficacious and way out in front nudging used by Amazon.in-Amazon prime services pushed from two ends. Customers who wanted amazon prime video were enticed with prime delivery benefits, while those who wanted prime video services were lured with prime video services, resulting in a large client base for one of the India's biggest OTTs .

How to begin Nudge marketing in a business

Have you ever wondered why Internet Explorer(to be retired in June 2022) is still in use when there are so many more advanced internet search engines? How often have you visited a restaurant and ordered the same food without even looking at the menu? How many times did you remove voluntary donation(Bookasmile!!!) while booking your online ticket from a ticket booking website? These are simple instances of the power of default in action. The power of default explains the tendency for an agent to generally accept the default option in a strategic interaction. Thus, whenever an offering is set in default likelihood of it being selected is high. At the same time, It is imperative to keep the default mode to require less effort and with more incremental benefits.

The primary step of any nudge marketing is to nudge this power of default. The task of nudging should be done so as to leverage the power of default by driving it to the most efficient and lucrative end of the business.For instance setting the price of medium sized popcorn close to large popcorn(The decoy effect), assuming the medium sized popcorn as most preferred default option, is a simple nudge on default power.

Nudge wisely

In modern businesses, nudging is used both for positive and negative outcomes. For instance under the Zerodha’s Nudge feature investors are warned when they're about to break basic trading rules such as trading in risky illiquid instruments and penny stocks. While at the same time many social media sites and OTTs nudge using unethical means just to increase the indulgence and screen time. In many countries, Nudging technique with the power of default have lead to increased organ donations. The same technique can be used to accomplish our personal goals independent of the size of the goal. Thus, Nudging is the future of advertisements and modern marketing and it is crucial to practice nudging in an ethical as well as lucrative form.

ABOUT THE WRITER

B J K RAJKUMAR

Pursuing PGDM at IMT-H

A constantly evolving person interested in Global politics and debating.

Surviving Digital Disruption – A Blessing in Disguise

In 1997, VHS tapes and DVDs were disrupted by the advent of Netflix. Some years later, smartphones killed the usage of landlines and payphones together. In developed economies, vending machines have bid farewell to the small-store sector, and online delivery is close to shutting down restaurants as well. No matter where we look, digital and technological disruption seems inevitable. With disruption knocking on the doors of every industry, how do businesses make sure that they aren’t the ones going extinct when the time comes?

Is digital disruption something a business should fear? Not always. In this blog, we will explore how digital disruption led some businesses to actually perform better.

How can a business deal with Digital Disruption?

When a business is assessing the risk of digital disruption to its operations, a business can be faced with problem statements like the following – 

1. Apart from keeping track of all technological advancements in their industry, each business needs to ensure they are prepared to transition to a phase beyond the disruption. Does the company have enough money, workforce and the infrastructure to carry out the transition? 

2. If a disruption has begun, where do your peers stand with it? Have some businesses already begun adapting? If yes, then how are they dealing with it? Is there an opportunity to learn from them?

Gartner has devised an action model that presents companies with six choices on how they can approach digital disruption – 

1. Analyze the competitor’s actions;

2. Attack the disruption;

3. Alternative market opportunities can be pursued;

4. Ally with businesses handling the disruption;

5. Acquire the businesses with the tools to handle the disruption;

6. Avoid the disruption altogether.

In this article, we will explore some of these choices applied in real life businesses.

Alternatives and Avoidance

While digital disruption swept over the camera industry, digital cameras and video cameras were left behind by smartphones with cameras. So much so that as of 2019,  an iPhone 11’s camera quality was considered scarily close to that of a DSLR camera. However, one type of camera survived this disruption and evolved to become a status symbol – the polaroid camera.

The world’s first polaroid camera came from a company of the same name in 1937. While it controlled the instant camera market in the 70s, digital photography disrupted its success, until 2017, when a change of ownership led to a rebranding of the company.

Today, polaroid cameras are considered to be an icon of the vintage aesthetic. By staying true to its identity, and using its rich history to create an aura of nostalgia around its products, Polaroid did what many companies couldn’t – it pursued an alternative direction in the business and survived disruption, mostly on the power of the nostalgia it gives to people.

In comparison, Blockbuster video, which was toppled over by Netflix and online streaming, has only one store today in Oregon, USA, that too, which is often let out as an AirBnB. Could the right play on revisiting the past have helped Blockbuster video survive? Not necessarily. Blockbuster completely avoided the disruption and got defeated by its inevitability.

Polaroid survives on nostalgia, but it also survives on technology that is just as relevant and advanced today as it was when it came out in 1937. However, Blockbuster sold VHS tapes and DVDs, the technology for which was also disrupted by digital streaming and smart TVs. Thus, it is essential to remember that digital disruption cannot be survived if its technical support goes extinct.

Analyzing the markets for inevitable disruptions

Since the onset of the global pandemic in 2020, the education industry has had to undergo one of the fastest offline-to-online transitions. It’s safe to say that schools and colleges have survived because of the digital disruptions in their industry – if it wasn’t for platforms like Microsoft Teams and Zoom, there would be no way to teach students as long as the pandemic was in its strongest tides. 

Zoom, a platform founded in 2011, reached the zenith of its success at a time when not many businesses were doing so well – By February 2020, Zoom had gained 2.22 million users in 2020 – more users than it had gained in the entirety of 2019.

However, how long can online classes survive without the holistic aspect of being taught face-to-face by a teacher, in a class full of students? Is work-from-home much better than working in a physical office? The debate of virtual vs physical is what a business needs to carry out to understand if digital disruption will do any good to them. The better such platforms analyze their space, the more opportunities they will find to get the best out of whatever disruptions come their way.

Conclusion: Changing perspectives on Digital Disruption

There are many stories of failure due to disruption, but there are as many successes as well. A business’s approach and strategy towards digital disruption will matter for it in the long term. It is essential for businesses to make the best possible choice instead of completely avoiding the possibility of any disruption – to analyze and approach every possible choice and come out of a disruption as a better and stronger firm.

About the Author

  

Simaran Sinha

An avid reader with an interest in business research, personal finance and investing.