Can You Predict How Irrational Your Customers Are?

In this episode, Steve Davis and David Olney delve into the fascinating world of human irrationality, particularly as it pertains to customer behaviour. Drawing on insights from behavioural economics, the hosts explore whether it's possible to anticipate the seemingly unpredictable actions of customers. The discussion is sparked by Steve's appreciation for David's consistently insightful, albeit unpredictable, contributions, likened to the pleasant surprises of chocolate with steak.

In the Person segment, Steve plays a segment from a recent Adelaide Show podcast that features a discussion with Jordan Tomopoulos from the Adelaide Economic Development Agency about the economic climate in South Australia, focusing on the varying impacts on different demographics. It contains the Economic Doughnut analogy, which describes the economic landscape in a way that highlights the disparities between different age groups and their spending habits. Following the economic discussion, Steve and David reflect on the broader implications of these insights for understanding customer behavior and crafting effective marketing strategies.

In the Principles segment, Steve and David unpack the concept that while humans strive for rationality, our actions are often predictably irrational. This is based on a deep dive into Dan Ariely's work on behavioural economics, particularly his book "Predictably Irrational." The hosts discuss how Ariely's findings apply to business practices, customer service, and marketing. Key concepts from Ariely's work, such as the distinction between social and market norms and the principle of anchoring, are explored. Real-life anecdotes, including Steve's experience as a mobile DJ, illustrate these concepts.

In Problems, Steve shares his experiences with poorly executed attempts by PR agencies to place guests on podcasts, highlighting the importance of genuine engagement and understanding the specific content and audience of a podcast.

Finally, in Perspicacity, comedian, Dave Allen, is the focus. The episode concludes with a discussion on the timeless relevance of comedian Dave Allen's humour, while also considering the evolving social norms surrounding comedy and content that might now be considered outdated or inappropriate.

Get ready to take notes!

Talking About Marketing podcast episode notes with timecodes

01:24 Person This segment focusses on you, the person, because we believe business is personal.
The Economic Donut Effect

In this week's Person segment, we explore the actions of our customers through a discussion with Jordan Tomopoulos from the Adelaide Economic Development Agency, by discussing South Australia's economy.

This segment highlights the "economic donut" effect, showcasing how different demographics are experiencing the current economic conditions. The extremes of this donut include financially secure older individuals and young adults with low expenses and high spending freedom, contrasted by the middle segment—new homeowners and families—feeling the economic pinch the most.

This analysis offers valuable insights for businesses on targeting strategies and understanding consumer behavior in a fluctuating economic landscape.

10:05 Principles This segment focusses principles you can apply in your business today.
Predictably Irrational

In the Principles segment, the spotlight shines on the enlightening concepts from Dan Ariely's "Predictably Irrational." The book explores the often counterintuitive ways in which humans make decisions, blending behavioural economics with practical insights into human nature. Ariely's work, celebrated for challenging the Enlightenment's rationalist model, reveals our tendencies towards emotional consistency over purely logical actions.

The discussion delves into key takeaways that have profound implications for business practices, notably the concepts of anchoring, social versus market norms, and the psychological costs of keeping options open.

Anchoring, for instance, is highlighted as a crucial strategy in business, where the initial price or product description significantly influences subsequent consumer perceptions and decisions. Similarly, Ariely's distinction between social and market norms offers valuable lessons on the complexities of human interactions, especially in the context of pricing and service offerings.

Closing doors, another concept from Ariely's book, is underscored with personal anecdotes about making conscious decisions to cease certain activities to better focus on what truly matters. This principle, about the mental and emotional relief that comes from simplification, resonates deeply in both personal and professional spheres.

This segment of the podcast not only provid