Can Psychology Lead to Better Business Solutions?
What lies behind our everyday choices: who to vote for, what movie to watch, which brand to shop from or which travel destination to choose?
AUBG marketing professor Milena Nikolova used insights from behavioural economics to analyze the key factors behind our decisions. Her lecture “Behavioral Economics and Tourism” presented patterns of consumer behavior which can reveal the success of the fast-growing and innovative tourism industry.
Nikolova explained that the biases embedded in the human psychology can cause irrational behaviour and influence investment decisions.
Nikoleta Ilieva, a fourth-year student, found the concept helpful in both professional and personal aspects of the decision-making processes. “I learned many new ways how psychology influences the economic decisions made by individuals,” she said.
These psychological aspects which shape the choice of the consumers are the core of Behavioural Economics. The professor said that understanding behavioural thinking is a major focus in the tourism industry today as it can increase profitability and sustainability.
According to Nikolova, if we observe the behaviour of a tourist, we can analyse the factors triggering his/her choices. Also, the different ways in which an offer is presented, for example, may affect the way in which the consumers respond. Simple ideas such as providing a more detailed description of the offer or even rearranging the products in a certain way, can increase the chance of purchasing the good. Even the place where you position the price in an offer can also have a big difference.
Nikolova said that the right approach to appeal to a customer is to start with the experience, then describe the pleasure the consumer will obtain from it and last, finish with the price.
Behavioural thinking also leads to better sustainability practices, according to her. When a certain location becomes a tourist destination, apart from increasing profit, the environmental and social impacts should be taken into account as well.
In order to raise awareness among the consumers, Nikolova said, one might use an approach that has proved successful. It does not only attempt to educate them but also to naturally lead them to do the right, favorable for the environment and the local people, actions. Instead of trying to present the long-term benefits of a certain behavior such as preserving the nature, the focus should be on the short-term benefits, such as having fun at a game of recycling the trash.”This was a very smart combination of how to market tourist destinations, for example, to potential customers,” Ilieva said.
Nikolova, a psychology graduate, applied consumer behaviour principles directly to the adventure travel industry. “I learned that tourism can be beneficial for the economy but also can be done in a way which protects the environment and the local culture,” she said.
She has had a particular interest in tourism for more than 10 years. Last month she presented at the Adventure Travel World Summit in Chile and decided to do it at AUBG too.
“Because I felt that there was a very strong and positive reaction among the participants I wanted to share this knowledge with you,” she said.