This article by the marketing society is a fun 10 minute read. It will draw your attention on the developments in the behavioral economics area and how it applies to companies and regulators today.
- While behavioural science is, for the most part, being put to good use across a wide range of sectors and purposes, it can be leveraged to take advantage of consumers.
- The article talks about “sludge” to represent the dark side of the nudge theory in economics.
- Sludging includes things like hidden add-ons, or long and confusing fine print, hidden subscriptions, or bureaucratic red tape and paperwork. In short, sludge is any measure which makes it harder for a consumer to do what’s in their best interest.
- Regulators and other organisations are realising the need to monitor, minimise or even stop these sorts of practices - acting as a type of ‘BE Police’ to protect consumers.
- Behavioural science has demonstrated why previous consumer protection laws and regulations aren't sufficient and has offered an alternative that has recognised consumer biases and fallibilities.
- This article delves into two types of ‘BE policing’, showcasing several recent case studies from regulators all over the world.
Inspired Companies Insight:
- We refer to nudge as “inspired profit” and “sludge” as uninspired profits. To have sustained profitable growth, it is essential that companies make sure that they don’t earn uninspired profits from techniques like subscription traps, drip pricing, information overload, false discounts and pressure selling. To build long term trust with the new C.E.Os, organisations need to make good profits that are a result of value creation and not value extraton.
