23/02/2022 Assignment no 1

Psychology in Business

OKASHA PARACHA
53006
BSBA 3RD (A)
SUBMITTED TO: MISS NAIMA WAHEED
  PSYCHOLOGY:
Psychology is the scientific study of the mind and behavior,
according to the American Psychological
Association. Psychology is a multifaceted discipline and
includes many sub-fields of study such areas as human
development, sports, health, clinical, social behavior and
cognitive processes.

 BUSINESS:
Business is the activity of making one's living or making money
by producing or buying and selling products.

 BUSINESS PSYCHOLOGY:
Business psychology combines advanced business practices
with the study of human behavior to improve the productivity,
efficiency and culture of workplaces.
Modern day business psychology finds its roots in industrial
psychology, which originated in the United States in the early
1900s.

Business psychology can be used in every facet of business. 

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 Marketing: 
Marketing professionals apply psychological principles in new
product or service marketing. Business psychology helps them
understand consumer behavior, develop motivational messaging
and create compelling marketing campaigns to convert
customers.

 Talent Recruiting & Management:

 Business psychology helps human resource professionals
differentiate job applicants using behavioral science methods. It
also teaches them motivational coaching techniques to improve
employee performance.

 Executive Leadership:
 Business leaders can use psychology tools to assess the business
intelligence of an organization and create processes that
stimulate innovation and productivity.

 Change Management:
 Change can be a difficult process at any organization. Whether
moving to a remote workforce or addressing ethical challenges,
understanding human behavior can help managers anticipate and
mitigate workforce issues.
 
 Organizational Culture:

 Defining a corporate culture helps organizations develop long-

term strategies, hire the right people and grow their brand.
Understanding the value of neuroscience tools in the workplace
can build a long-lasting and powerful corporate culture.

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  MARKETING PSYCHOLOGY:
Marketing psychology anticipates buyer behaviour by
understanding our cognitive biases. As consumers, we are
irrational, and our decision-making is largely driven by these
innate biases. 
Marketing psychology, therefore, applies theoretical knowledge
to the marketing field.
Marketing campaigns are essentially created and funded with
one aim in mind – to get people to buy a product or service.
 
There are many ways that businesses entice us to buy.
 
For example, have you noticed that most stores prices things as
being so many pounds and 99p e.g., £3.99 or £26.99?
There is a reason why stores do this and it relates to how we see
the price and our reaction to it. It may only be a penny
difference but buying something for £25.99 is better than £26.
 
And there are the deals, the BOGOFS (Buy One, Get One Free)
and ‘buy one, get one half price’, all of which suggest we are
getting a better deal.
 
But it is not just the pricing but the fact that the deal ‘can’t last
forever’, along with the exciting colours of red on most sale
ticket prices…

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You get the drift. The company creates a specific circumstance
to appeal to a certain reaction within you – ‘I must have this and
I must buy it now because it could be double the price next
week’.
Every organization use these kinds of different stimuli to attract
new customers by targeting them emotionally. Marketing
psychologists often use different psychological techniques for
the marketing of their products.
Few techniques used by marketing psychologists are:
Scarcity Marketing
Psychologists believe that humans place a value on things that
are harder to obtain. According to Shahram Heshmat, we can
think of scarcity in a positive way because it “orients the mind
automatically and powerfully toward unfulfilled needs.”
Scarcity marketing is where consumers fear that they will miss
out on what’s on offer, thus losing their freedom of choice.
Some of the ways marketers use this idea can be through:
 Black Friday sales. Originally, Black Friday was the name
given to sales that took place the day after Thanksgiving.
However, it’s fast becoming a global trend that attracts
bargain hunters around the world. For decades retailers
have managed to create a sense of scarcity around highly-
discounted, popular products leading to empty shelves—
especially during the holiday shopping season.

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  Exclusive access. When it comes to upgraded membership
options, brands are able to make their product offering feel
premium and exclusive. Whether it’s VIP access to a
special service or being given extra features in a product,
having access to something that isn’t readily available to
others allows customers to feel like they are in possession
of something scarce, and thus special.
Loss Aversion Marketing
Nobel Prize-winning psychologists Daniel Kahneman and Amos
Tversky discovered Loss Aversion during their research on
Prospect Theory. In short, Daniel and Amos found that people
seemed to value avoiding a loss more than accessing an
equivalent gain.

Marketers use Loss Aversion Marketing on a regular basis

Some Loss Aversion Marketing strategies include:

 Trial offers. Research tells us that we value items we own

more than those we don’t. And so, by offering your

customers the opportunity to own the product—even if it’s
temporary—you are allowing them to potentially feel the
loss of not owning the item.
 Creating a limited resource. One way to entice customers

into making a purchase is to inform them of the scarcity of

your product. Commonly used in e-commerce businesses,
brands often create a certain amount of stock and let the
customer know if there’s only a few more available.
 Offering a gift with purchase. Whether it’s free shipping,

a discount code when a customer spends a certain amount,

or free gift wrapping, the idea of losing a free gift can often
serve as a strong incentive for convincing your customers
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 to make a purchase that they were originally on the fence
about.
 CONCLUSION:
Psychology plays an immense role in helping the marketing
department to attract buyers and if the psychological
principles are used to properly understand human wants and
needs and most importantly human behavior they can help the
business grow.

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