I studied the biographies of top entrepreneurs and economists, Here is one common pattern which sets them apart....

 “If you repeat what successful people do, no one can stop you from being successful”

What makes a few individuals stand out consistently above the rest? Their deliberate choices, instead of plain luck. This enigma is likely not hidden in the logical smorgasbord of intelligence or effort tied hand in hand, but in how people actually reason and act. Defining success varies. A select few gauge it with their financial stashes while security and happiness is the buzz for others. Irrespective of how each one might define the term, one fact is certifiable: success is recurrently observable in predictable trends. The priceless ability an individual can possess is his capacity to observe, learn and apply these trends.

History is filled with success stories, waiting for us to scoop them up. Provided that we have the same means to replicate their winning strategies alongside blocking their blunders, there is no reason holding us back from reaching our desired milestones. Keeping this in view, I analysed the life stories and actions of powerful economists, business people, and entrepreneurs. Instead of appreciating their riches, one should focus more on what unifying element can be found in their thought processes. One insight that kept coming back was their understanding of one crucial and underrated part of modern economics and finance- "consumer psychology"

Consumer psychology is linked to an individual’s finances revolves around “Behavioural Economics.” Most CEOs and economists, heretofore, understand the underlying tricks quite well. If one understands how a consumer is compelled to buy, fulfilling those conditions will guarantee repeat orders. In the name of long-term company credibility and goodwill, many economists and the “wealthy” purposely forego acquiring profits.  

Trust is a commodity stronger than the typical profits. It enables a person to have faith in their company through thick and thin. Predicting consumer behavior, understanding their needs and wants, and offering them at reasonable rates makes products stand out. This enables billionaires to catapult their companies into the limelight.  

Lets take four  real and live examples of some of the biggest corporate entities, for a better understanding on how one can understand consumer psychology, and potentially master the ever-evolving market. 

1. Steve Jobs (Apple)- Hooking orthodox customers with simplicity. 

Apple and iPhone- a brand of prestige nowadays, but when new in markets, used a simple consumer psychology trick to hook customers, new and bold, to orthodox and conservative.
Back in 2007, when the iPhone was introduced, it was in a tough spot, with no scope for capturing market share. It was against the then tech giants like Nokia, Windows Mobile, Motorola, Blackberry, and a dozen independent retailers scattered around the world. These giants had established themselves in the market using the same techniques and consumer psychology as mentioned above. They preferred trust above profits, market share instead of profit share. But Steve Jobs knew that. If one reads the biography of Steve Jobs, especially the day of his speech and introduction of iPhone, on January 9, 2007. 2007, A time when people were orthodox, a time when there was distrust, and people preferred safety over convenience, a time where Nokia dominated the market, like no other company, But Steve knew consumer psychology well.

 Jobs knew complex designs, or ultra-high technology, might sound good on paper, that was the initial idea: to pose iPhone as an ultra-high technology phone, market it as a decade ahead of its time, but it was scrapped. He knew what the consumers wanted- convenience AS WELL AS safety. Jobs was a master at framing Apple's products in a way that made them seem revolutionary, even though many were iterations of existing technology. In his speech, he reframed how he framed his phone- not an ultra high tech beast of a machine, but a simple, convenient item, which could make everyone's life much easier, a tool not restricted to elite government employees but to common men as well. Why? Because his target market was common people, to break Nokia's barrier in the phone market and infiltrate and grab as much market share as possible. The user interface was very simple, the phone was made to look like a friendly tool, to convey the message that even old people, who were bad at technology, could adapt. 
He removed the inconvenience of a stylus and made finger-enabled phones. This, along with the friendly user interface, is provided for simplicity, convenience and safety. This is a popular trick, used even nowadays. So, to aspiring entrepreneurs, what can you learn? If you are targeting a wider market, try to simplify your product as much as possible. Make it friendly, not a beast, and try to make a difference - an innovation. 

2. Jeff Bezos (Amazon) – Baiting with "free" delivery

"Free" is a powerful word. But in the corporate and economic world, nothing is ever Free. Everything has a cost. But the word "Free" is a powerful bait. It drags in customers a long way out of their convenience, and once they are at the final steps, certain "hidden charges" are revealed. Consumers, blinded by this four-letter word- "Free" often overlook these charges and place an order. It's the same trick when a cafe claims to give free food, if you can finish a certain absurd quantity of food in under a time limit- a popular tactic to increase sales. While on the surface, delivery is Free, but other charges like shipping charges, handling charges, and "warehouse" charges are imposed. These indirect charges add up and negate the free delivery charges. These are called as hidden charges, which one uses to indirectly manipulate customers into buying while maintaining their sense of security, with a false fallacy- "Free Delivery"

Additionally, Amazon is a corporate entity that uses the FOMO effect to its absolute maximum. This is a powerful negotiation trick used by negotiators in political matters (effectively used in conflicts like World War II, peace treaties, and in modern economic deals). FOMO means Fear of Missing Out. Humans have an aspiration to get what they want, no matter the cost. That's why you may find some people ambitious, and some people as stubborn. People try their best to get what is not easily achievable- that's why things which are less in supply (like paintings, monuments, exquisite stones- like artificially regulated diamonds) fetch such a high price. Amazon usually lists labels like- Soon to be sold out or "5" remaining, buy now. When we scroll through offers like these, our brain is turned on an impulse mode, meaning that we become anxious of it running out (even though u may not have considered buying it beforehand). Hence, Amazon tricks you into buying things you may not need, or may not have been looking for.

The e-commerce giant indulges in what I call “Advanced Discounting,” a use of psychological impact which builds on the popular FOMO (Fear of Missing Out) phenomenon. Here’s what happens: During peak shopping events like Christmas sales, Black Friday, or the Great Indian Festival, Amazon marketers increase the so-called original price of several products well in advance of the sale. Later, during the sale period, these marketers would ease the prices pretty substantially – sometimes a whopping 60-70% off. Again, this ranges the price of the item back to its original price or price tag, slightly lower than the average market rate. This, however, is extraordinary from the eyes of an average consumer. The impact that is left behind is that shoppers will always tend to think that they will have to pay the excessively hyped “original” price if they choose to refrain from purchasing it at that time. This compels them to buy on impulse, actually oftentimes filling their carts, just to “save,” even when they do not need the item.

3- Howard Schultz (Starbucks)- Sating people's psychological need for "Luxury and Show-Off

What we as humans most like to do is to insert our superiority- this is the norm going through since the existence of humanity. We humans like to compare each and every aspect of our life, even to the level that the great Marcus Aurelius quoted in his book regarding stoicism that- "Comparison is the thief of joy." Yet it seems like our need for asserting dominance and superiority is not easily sated. This is a very powerful psychology, as far as the corporate world and exploitation is concerned. Luxury is the best way for one to charge maximum profits- in luxury, there are no moral guidelines, no bias or "social obligation." Howard Schultz was a master of this trick, and I believe in the market of luxury, he has implemented this trick far better than ANY other entrepreneur, exploiting the age-old human sentiments and jealousy.

When Starbucks was established, it was just plain old normal, nothing to stand out. Coffee was quite commonly sold, scattered among individual players in the market, yet no united front or company. Surely a mere or petty thing like coffee can't be associated with luxury, right? But what Howard Schultz has taught me is that- if you are good with your words, and build up a brand value- anything can become luxury, and I mean anything, and people will pay absurd amounts of money for it. It plays on people's idea of maintaining mystery as well as building up excitement. Starbucks is usually portrayed, for the "rich" ,as a luxury brand, endorsed by many top-class celebrities (usually paid to do so), and some of the richest people (who were also usually stakeholders in these companies). People usually get influenced by these tricks and words of people and are ready to spend full money (which can be otherwise used to buy an entire meal) on a simple cup of coffee. Its not the cup of coffee that matters, it's the iconic "Starbucks" logo that matters. Mr. Howard Schultz, worked hard enough on building up the brand value of this company, a symbol of prestige and ultimate status- the pinnacle of opulence. 

The target market here was NEVER the rich people, they wont spend their money on a coffee, they don't care about pretences or showoff. The target market were young impulsive teenagers, young adults, and the middle class. A popular quote that I am reminded of is 

Rich people use their money to make themselves richer, while others spend their money to show themselves richer

 

4. Reed Hastings (Netflix)- How Netflix makes you keep watching (Even When You Don’t Want To)"

Netflix is another powerful corporate entity- who entered the market defeating one of the biggest and most trustworthy entertainment companies- Blockbuster, grounding themselves in the market for the coming decade. How is this possible? "CONSUMER PSYCHOLOGY" like all other is the answer to all the questions you might have. Lets see how consumer psychology is involved here. 

Netflix has a policy- a golden rule, which is used by them to hook customers. If you have ever buyed a membership from amazon, you will realise that it is required to pay beforehand, and credit card details are usually saved (which will deduct money from your account, usually at end of each month). 
Reed Hastings really mastered the art of framing words. Netflix was advertised as a offer- "too good to refuse." Netflix approached customers saying- Pay one time and watch unlimited shows, any amount of time, anywhere you want, without any restrictions. When consumers pay for a month, or for a year- they have a need to utilize what they have paid for, known as "squeezing the juice out of a stone." This is also known as the psychology of "utility". Customers, engage and keep on binge-watching and enjoying shows. Netflix advertises and generalises using their platform for every activity- whether it be partying, movie nights, date nights (generally popularised as "Netflix and Chill", to cater to the younger generations), watching while eating food, and showering. In a desperate attempt to utilize the money they have paid, they get addicted. Once they do get addicted, they cannot spend even an entire day without these platforms, almost forcing them to buy another month of subscription, trapping them in a cycle of stimulation and pleasure.

Netflix does not wish for new subscribers or viewers to feel overwhelmed by the number of shows. Based on Netflix activity and search history, the "Recommendation" section and "Top Movies / Shows" sections have been added (utilising the psychology of simplicity, which has been discussed in the iPhone and Steve Jobs case study). Another pretty powerful trick they use is that they are masters of organising (psychology of framing). Suppose you're an active viewer, on a Sunday morning, willing to spend your entire day watching something good and enjoying, and you see that Netflix has a 10-hour movie, an entire show. You will in that case, most likely shirk it off, and not watch it, thinking its too much commitment or because its not worth spending such a long time. So what Netflix does it- break down the "ten" hours of material into simple 1-hour episodes. Now, viewers become intrigued. They think- "Let's just watch one episode, it wont do any harm", but Netflix knows that. They won't let you off the hook after one episode. Each episode ends with a cliffhanger, exploiting our adrenaline-driven brains. It will usually be a dramatic scene- the death of an important character, a "table turned" situation, compelling you to watch the next episode, continue the drama, and feed into Netflix cycle of stimulation, and getting addicted, making you THEIR long-time and permanent customer. 

From Jobs' love of simplicity, to Bezos’ crafty pricing, coupled with Schultz’s branding mastery of luxury, it’s mundane to realise that success is not just a product, but rather an understanding of the consumer’s psyche. There is no doubt that psychology has many branches, yet the one strand that carves ‘influence’ and ‘wealth’ is consumer psychology. As far as aspiring entrepreneurs, dreamers, and changemakers are concerned, if these strategies are refined, applied, and used ethically, then we might be closer to turning the ‘ordinary’ and ‘billionaire’ divide into a thinner line than believed.

At the end of the day, success is not just forged in a boardroom or conference hall, it is engineered into the minds ‘people.’

So the next time you have an idea you want to work on, ask yourself,

“Do I understand what my customer feels?” Clearly, if you answer yes, then you are halfway closer to success.

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