Behaviour Change

PROPAGANDA FOR CHANGE is a project created by the students of Behaviour Change (ps359) and Professor Thomas Hills at the Psychology Department of the University of Warwick. This work was supported by funding from Warwick's Institute for Advanced Teaching and Learning.

Monday, November 28, 2016

Why do I have so many coupons in my wallet?




One day, I just realized that I have many coupons in my wallet. Why do they make this kind of coupons? Why do they spend time and money for making regular customers? Let's think about our own experiences. Have you ever regret to order a new menu in a restaurant? Have you ever regret to change your job? These kinds of experiences can be explained by the 'status quo bias'.

Samuelson & Zeckhause (1988) first proposed the term 'status quo bias'. They defined 'Status quo bias' as an evident when people prefer things to stay the same by doing nothing or by sticking with a decision made previously. This means that people do not like to take a risk for trying something new, but instead they prefer to sick with a decision made previously. That's why people tend to choose the same menu in a restaurant. They used a questionnaire in which subjects faced a series of decision problems which were alternately framed to be with and without pre-existing status quo position. They found that subjects tended to remain with the status quo when such a position was offered to the,m. This idea is basically related to loss aversion. (Tversky & Kahneman, 1991). People try to make decisions which avoid the risk rather than decisions that maximize the profit.

This idea also can explain the reason why customers have high brand loyalty. This is why many firms try to target children. If a person became a regular customer for a brand they tend to continue their brand loyalty until they die.  The marketing which is trying to prevent customers to go to other places is called 'CRM marketing (Customer Relationship Management Marketing' or 'loyalty marketing'.
We can find these examples from everyday life as the photo shows.





References:

Samuelson, W., & Zeckhauser, R. (1988). Status quo bias in decision making. Journal of risk and uncertainty1(1), 7-59.

Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A reference-dependent model. The quarterly journal of economics, 1039-1061.

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