Tag Archives: Argentina

*Event

Designers should borrow insights from behavioral economics

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Many design practitioners aim to enhance the beauty of an existing product or develop novel products and services. However, market does not always pay off their effort. Carefully designed products often fail to attract consumers. What should designers do to enhance sales?

One solution is to borrow insights from behavioral economics. Studies show that behavioral economics can increase the adoption rate of newly designed products because it overcomes consumer resistance.

I was once invited by Palermo University in Argentina to share findings about the commercial impact of behavioral economics in the context of design. I shared my experimental findings about three Korean companies.

(1) Samsung’s printer would sell more if its ugly version is placed next to it because joint evaluation helps consumers consider aesthetics importantly,

(2) LG’s Styler would sell more if the clock in the store presents time in analog not in digital because doing so encourages consumers to think abstractly and creatively to appreciate the value of something new, and

(3) SK Telecom’s AI speaker would be used more often if it has a human feature and viewed as a foreigner or child because people become more tolerant about the mistakes of the AI speaker.

Cases

Why does the amount of Coke differ across bottles?

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When I had a lunch at Buenos Aires, Argentina, I ordered four bottles of Coca Cola. Interestingly, bottle sizes differed and the amount of soda in each bottle looked different. I simply thought this was due to the Quality Control failure of the Coca Cola in Argentina.

After coming back from Buenos Aires to Seoul, I met an interesting case about Corona Beer. When this competitive Mexican beer was initially introduced to US in 1980s, American beer companies were concerned about the disruptive competitor. Budweiser soon noticed that, however, the amount of beer differed across bottles. Corona claimed that this reflected the Mexican spirit of leisure. Similar to what Corona did, Coca Cola may want to express its Argentinian spirit of leisure.

One of the most well-known reframing strategies in marketing is PAD (Pennies-a-day) strategy, the temporal reframing of a transaction from an aggregate expense to a series of small daily or ongoing expenses. According to Gourville (1998), it fosters the retrieval and consideration of small ongoing expenses as the standard of comparison, whereas an aggregate framing of that same transaction is shown to foster the retrieval and consideration of large infrequent expenses. This difference in retrieval influences subsequent transaction evaluation and compliance.

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Reference

Gourville, J. T. (1998). Pennies-a-day: The effect of temporal reframing on transaction evaluation. Journal of Consumer Research, 24(4), 395-408.

To increase transaction compliance, marketers sometimes temporally reframe the cost of a product from an aggregate one-time expense to a series of small ongoing expenses, often in spite of the fact that the physical payments remain aggregated. This temporal reframing is identified in this article as the “pennies-a-day” (PAD) strategy. A two-step consumer decision-making process of (1) comparison retrieval and (2) transaction evaluation is posited to explain the effectiveness of this strategy. In a series of laboratory studies, general support for PAD effectiveness across a range of product categories and specific support for the proposed two-step model was found. The PAD framing of a target transaction is shown to systematically foster the retrieval and consideration of small ongoing expenses as the standard of comparison, whereas an aggregate framing of that same transaction is shown to foster the retrieval and consideration of large infrequent expenses. This difference in retrieval is shown to significantly influence subsequent transaction evaluation and compliance.

Cases

Could we use a single commercial space for multiple purposes?

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Each commercial space has its own purpose. At a restaurant, we eat food. At a bar, we drink beer. At a cafe, we take a coffee. We rarely drink beer at cafes and we do not ask for coffee at bars. As Google Map shows, cafes are not listed when we search for bars. Similarly, bars do not appear when cafes are searched for.

However, some commercial spaces in Buenos Aires, Argentina serve more than one purpose. For instance, Hobbs Palermo looks like a restaurant. However I ordered a bottle of alcoholic beverage late night and, at a day time, I noticed a person who drank only a bottle of Coca Cola. It is a restaurant, bar, and cafe.

Bar El Federal (or the Federal Bar) is even called as cafe bar. Located in the old downtown of Buenos Aires, it is an authentic pub with wooden interiors and antique bottles. However, some people eat sandwich, others drink beers and even the others read books under the dim light.

We can eat pizza at Starbucks. We can drink coffee at Michelin restaurants. If we overcome the thought that one space should be used only for a single purpose, we will be able to use space creatively.