Applying Behavioral Economics To Retail

March 3, 2010

Recently, the McKinsey Quarterly published a brief article titled “A marketer’s guide to behavioral economics“. The author recommends four strategies for marketers, all inspired by research in behavioral economics.

Behavioral economics is, of course, a large and established field of academic research, complete with a Nobel Laureate (Daniel Kahneman). The academic work has been popularized in a number of books (examples: Nudge, The Winner’s Curse) over the past decade.

In my previous work at ProfitLogic/Oracle as well as my current consulting work with retailers, I have been on the lookout for opportunities to help my clients exploit these findings. Sadly, I have not come up with anything that isn’t already well-known or already being applied.

Against this backdrop, I was curious if the McKinsey article had new insights to offer; something that I could make Monday Morning useful for retailers.

Let’s take a look at the four recommendations from McKinsey.

1. Make a product’s cost less painful…