The Powers of Behavioral Economics

Source: 3floyds.com

Ever wonder why Sam Adams can charge $200 for a 24oz bottle of Utopias? Why Russian River beers fly off the shelves? And why thousands of people travel to Munster, Indiana every year to buy a beer called Dark Lord? While each of these breweries make unique and high-quality brews, the success of these beers relies upon the powers of influence.

Robert Cialdini is a Professor of Psychology and Marketing at Arizona State University, where he authored a book called “Influence: The Psychology of Persuasion.” In this work, Cialdini describes six principles of persuasion that lead people toward certain acts, including, spending a lot of time and money obtaining certain beers. Several of the principles apply to high-end craft beers:

1) Social proof: when people do things that they witness other people doing. In the case of craft beers, consumers see “beer geeks” spending time and money chasing certain beers; this leads more people to do the same. Sites such as ratebeer.com offer forums for reviewing  and discussing beers, enabling other beer consumers to quickly determine which beers are in high demand.

2) Scarcity: limited resources. Simply put, people want what they can’t have (or what is hard to get). By limiting production of certain beers, breweries are able to charge more and create hype about certain releases.

3) Authority: people respect authority figures. People like the Alstrom brothers of Beer Advocate are known for their knowledge of craft beer, and consumers tend to respect their opinions about beer. Thus, when they write on their site that Pliny the Elder is “one of the best DIPAs on planet Earth, ever,” it is no coincidence that consumers gain interest in purchasing the beer.

While these principles can be controlled to a varying extent by breweries, there are certain steps breweries can take to increase the demand for certain beers. Social media and grassroots marketing can lead to social proof. Limiting production provides a sense of scarcity. Highlighting positive reviews from known critics demonstrates validation of a product. Although these actions do not guarantee success, they do encourage increased demand, which of course can only be sustained with a great product.

Subscribe

Subscribe to our e-mail newsletter to receive updates.