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Various organisations have adopted behavioural economics, partly as a result of the IPA championing it by providing visibility, information and insight. Here are a few examples. Hyundai – Consumer fear at the huge depreciation incurred when buying a new car prompted Hyundai into reframing the choice car buyers are faced with. Instead of shying away from the issue Hyundai offered new car buyers a guaranteed price for their car, valid for four years after purchase. Television advertising was used to communicate the deal and so reduce the perceived risk. Transport for London (TfL) had been telling people about the advantages of cycling to work for many years, but the communication had not been very successful. So, rather than keep telling people, TfL installed a bicycle hire scheme, sponsored by Barclays, which enabled two things. One: people could hire a bike and leave it at a designated point in London, and avoid capital outlay, maintenance, and storage costs. Secondly the scheme encouraged a change in behaviour because the bikes were made available, and their distinctive Barclays logo and bike stands are visible across the capital. Domino’s Pizza used the principles of BE to develop a new set of incentives. One of these was to credit a customer’s account which could be spent on future orders. This can increase purchase intentions. Cadbury’s reintroduced the Wispa bar in 2007 following its axing in 2003, and the subsequent campaigns on social network sites Bebo, Myspace and Facebook, and a stage rush by Wispa fans at Glastonbury. Instead of just announcing its return, Cadbury’s announced that Wispa would be back with a special edition limited run. Sales went through the roof, and the Wispa bar was available on a regular basis. However, by announcing a limited run of the brand it encouraged people to think that they needed to buy a Wispa or otherwise it would be removed once again. In other words, loss aversion was used to stimulate demand. See also ViewPoint 1.4for another example of the use of behaviourial economics. Source:Based on McCormick (2011a); McCormick (2011b); Panlogic (2011)
Question Why does behavioural economics resonate with advertising agencies?
Task Choose another brand and consider ways in which the principles of behavioural economics might be utilised.
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