Gabriel Maier

Jonathan Walker

FIN 101

July 18, 2023

Behavioral Psychology in Business

Businesses use a lot of psychology regarding habits and our common behaviors. One

example of this is the company Amazon. A few years ago, Amazon released a virtual assistant

called Alexa. Alexa can be used in devices, and there are even devices called “Echoes” that allow

users to access Alexa in their homes. Alexa also indulges a certain psychological leaning nearly

all people have: ease of use. People are always going to be drawn toward companies and stores

that are easy to access and buy things from. By allowing you to purchase things just by telling

Alexa you want to buy it, people are drawn to both use Amazon more often and buy more things

than they would have otherwise.

Another thing that draws people in is sales. People who are more economically-minded

always like a sale, and they are willing to buy more because the prices are lower. County Market

is a good example of this idea. Although many people don’t purchase things from County

Market, the monthly Penny Pincher coupons encourage a lot of people to buy more from the

store.

The word “free” also draws people in. Subway often has sales that involve things like

“Buy one get one free” or “Five for $5.” This encourages people to purchase more, as they

believe they are getting an incredibly good deal for what they are purchasing. However, these

deals benefit Subway more by allowing them to sell more, and it also convinces people to

purchase more to get that deal they believe is offered.

 An extremely common tactic using behavioral psychology is using scarcity to draw

consumers in. Starbucks has the extremely popular “Pumpkin Spice Latte” that is only available

for a few months every year. The feeling a consumer gets from believing they are one of a few to

get a product convinces them to buy more. People place more value on something that they think

is scarce. This could be considered as coming from the laws of supply and demand. Because

people think there is a lower supply of a product, the demand for that product goes up.

Something that comes up a lot when you talk about behavioral marketing is the fear of

missing out (FOMO). This is an emotion that comes up when someone feels they are not living

as good of a life as others around them. It’s a form of envy, and this fear is often used by stores

and merchants. Consider Macy’s, for example. Macy’s uses sales that occur for a very short time,

and people who experience this fear of missing out are driven to purchase more to participate in

the sales. FOMO comes into play for sales, limited edition items, and even shopping in brick-

and-mortar stores. Behavioral psychology is used more and more often, and everyone has

probably fallen victim to it multiple times.