Asked for predictions and future trends, younger people and elders forecast a different future. The judgement is based on past experiences, where the elders had a longer time to watch. Now there is research which uses stock market predictions and inflation expectation to measure the difference in estimation between age group.
Ulrike Malmendier and Jessica Wachter show in their paper how long time experience correlates with investment decisions. People with long experience include old information in their judgments. Do they make better predictions? The study has no answer for that.
Past experiences stick. Did you ever notice the warm emotions showing up when memories to a nice situation long ago appear? Another nice thing of the past is that we know how all ended. And we can connect with others about the long gone events.
For the ones who follow politcs: party members choosing a candidate are mostly elder and more extreme than the ones who vote. So their candidate might have problems.
Artificial Intelligence has no memory
Humans differ from artificial intelligence in learning. AI connects the data and learns from what was in short sight. Humans take their whole life experience together and build their judgements on that.
Hiding the past helps sometimes
There is a connection between memories memories in market research and in own, personal ways to think and judge. Discovering the role of memories in own judgements and being able to switch it on and off helps to get a better picture of the world of younger people. It is about trying to look at the world while leaving out past memories.
Having a long memory may be helpful in forecasts and judgements. Mathematical evidence from the stock market does not give any proof for that.
Customer journey and past experiences in market research
Along a customer journey the traveller takes a lot of decisions. Will old memories take a big influence on that decision? Research shows it does. Big example are cars. Seniors buy different and bigger cars.
The article is about storytelling in village communities still observed in the 21th century, conspiration theories and modern advertising. My experience as longtime villager and suburb dweller helped me.
I am living in the same village I spent my childhood some years ago. There are still many natives, some of them never moved out of their parents and grandparents house. They tell stories about families in the village, what they do, what the members of that families do and their fates.
Wondering why I did not know anybody mentioned in the stories while quite many villagers from associations, businesses and events, I asked the storytellers who these people are. The commone response was how could it happen that I do not know the people from the stories.
The characters are fictional. It is similar to movies many people have seen. Everybody is expected to know the story of the movie, and some words go into common language, like “catfishing” (pretending to be another person online), “gaslighting” (making somebody questioning their own reality) and “weinsteining” (behaviour close to what Harvey Weinstein is imprisoned for).
Village storytelling, repeatedly told by villagers, are the local kind of the bigger stories in movies. The stories connect the community. In the neighbouring village they have other stories the locals do not know.
Modern conspiration theories follow a similar scheme. Insiders know the story, and they feel the knowledge makes them much smarter or at least better informed than others.
What do we do with that information? There are stories others impose on us with the argument “As long you do not know the story you do not belong to us” or they use for gaslighting us. These stories are not worth anything for anybody except for the teller. There are other stories well told and worth remembering and retelling, for example “Good Wife”. Newly elected governments might also suffer the comparison between their results and the stories they told before election.
This post is about using group decisions for personal development and avoiding the trap of getting contradictory advice. A scaled down method from social research is useful to get better advice for personal and business matters.
“Guter Rat ist teuer” (Good advice is expensive) is an old German meme. Jokes transfered that to “Guter Rad ist teuer”, meaning a good bicycle is expensive. This is also true for getting good advice in transition periods, where many of us are vulnerable and insecure.
Some annoying people give unwanted advice. Their motivation is to lift themselves and their self-esteem by influencing somebody to change behaviour. Social and market researchers exclude some participiants for the reason that their opinion is not helpful. For personal and business growth it is important to ignore them too.
We like to ask people we know and we trust. They tell us their opinion looking from their own situation. For giving best advice they are supposed to leave their world and go into the thought system of the one they want to help. That is not easy to do and it is prone to errors. Example: I (the author) am really good at fixing cars and bikes. I am inclined to I think everbody can do that. For many people that skill is not important, so they cant, and I have to consider that if giving advice.
So, what to do, to not fall into despair after the first advice from a friend, collegue or coworker or fall into more despair after getting different advice and statements from different people.
How about asking for example 20 people, and write down or memorize the answers. If the same answer appears more often, there must be some reason behind it. I do not include the statistical proof for that right now.
For me that technique solved a personal problem: I generally do not trust human authorities. I think most of them are somehow crazy, corrupt and stupid. How to find truthful information with this precondition? I want to participate at the wisdom of humanity. My solution is finding opinions and statements which are similar – if many rely in the same facts, there must be some truth in it.
Pricing affects everybody. Selling your apartment, selling used furniture, doing salary negotiations or finding prices for your products. How to find a price liked by the seller and buyer? In my seller history I found situations with low prices where the customer voluntarely added a gift, and many situations where nobody wanted to buy. The reason for this can be “no market for the product” and “price is prohibitively high”. The latter one means there is a market for the product, but not at the charged price.
The next chapters give structure to this complicated matter.
The classical theory of pricing for optimal is very simplified. It assumes a linear demand function, with only one determinant, the price: demand=f(price) . This means only demand determines the price. What happens if demand has many more determinants?
This can be:
The look of the selling (web-)site
Do the salesmen make a good job?
Do I get good advice from the staff?
Can I expect some value if I pay more?
Does the product make me feel better?
Do I have the budget for luxury?
What are the prices of the competitors?
The price the seller wants
Point 1-4 are the value to the product added by a good sales team. Example: if a retail store buys a pallet with 1000 packets pasta for 600 € and sells the package for 1,2 € the sold package is not the same product as on the pallet. The services of the retail store are added.
The following graph is an example. It may look different for a specific produkt. The graph with the numbers given there works good for used cars and expensive utilities sold on Ebay or webshops.
Example: make advice a valuable good
Many brick-and-mortar retailers complain that their customers do not pay for advice. What they do not tell: how much do their prices differ from common internet sellers without any consultancy? Is there really value added in the store?
In old times, when sales was based on printed catalogs, there was the famous trade costing, with list prices, heavy rebates, and purchase prices. Most retailers ordered their stuff at wholesales, which themselves made their cuts. The result was that end user prices were about 3-10 times as high as the factory price. I understand that many want this time back. The customers had no choice, they had to buy locally. Many wishes and dreams of customers weren’t ever fulfilled for the high costs of maintaining catalogs and storage.
Now many internet retailers order directly at the manufacturers, and they have to look for competing offers worldwide.
There are two approaches for long-term pricing: with interchangeable goods, many manufacturers, in the long run the price will be the production cost plus some earnings. The earnings are the incentive for producing. Examble: a spare part for an historic car. Production cost is 150 €, with this part added the car gains 2000 € value. If the seller knows that and wants a high price, the buyer might look for another source which produces it for 150 € and pays additional 50 € for the favor.
In Services it is a bit different. Production costs is one side. The other is: how much will the buyer profit from my service? If the seller, you, knows that 25-50% of the profit for the seller, the trainer or consultant, are normal.
Is there a formula for prices?
In economic theory the price is equal to marginal use. That means the price equals the benefit the buyer thinks he has from the last unit he or she buys.
If we can measure the benefit in money and realtime, we have the formula.
The benefits are listed at the beginning of the article. The problem is that the customer does so many estimations, that change over time. Also new competitors with low price entrance strategy might show up.
When selling over a website it is quite easy. Look at the ones who buy related to the ones who look at the article. If there are many who look and do not buy then lower the price, if most of the visitors buy then raise. This needs a lot of finetuning. Sometimes visitors look a few times at the articles until they finally buy. When they see that the prices go down, they might wait even longer. So you might want to include the total number of visitors.
How to calculate?
There is a mathematical formula and there are ways to survey it.
We measure the first eight determinants, with due consideration of costs:
how to find and count
The look of the sales (website) position.
Survey of visitors
Are the salespeople doing a good job?
not available everywhere, get feedback
Do I get good advice from the staff?
Can I expect value if I pay more?
Tests and surveys on buying motivation, own samples
Do I feel better because of the product?
Tests and surveys on buying motivation
Do I have the budget for luxury?
What are the prices of the competitors?
The price the seller wants
Look deep inside you
Market research helps with the first six points. Usually it is necessary to repeat the market research every 3-6 months with the well-known market research problem: the target person doesn’t like to answer. They are bored and do not know whatfor they took their time to answer the questions. We must therefore look for other methods. An easy-to-install method is to encourage visitors to comment. You may get 1-5% comments from the customers. This responses add up to valuable data source. It is also possible to conduct studies with paid testers. There are some problems with representation of the correct user group there, additional research helps to circumvent this.
How do I find the right story for my product, how does my storytelling become a success?
Products are enhanced with storytelling. I am looking for a 17 mm socket, which of the three available nuts or wrench sockets will I buy:
Simple picture on blue background, price € 5.60, supplier unknown
Same picture as 1., but additional information that it was made in China by a small factory in Shenzen from the best steel for heavy use, price 8.30 €
Again the same picture as 1., and the same manufacturer as 2. The dealer introduces himself as Franz Müller from Rottweil in deep Swabia, who specializes in the sale of quality tools. Price € 9.20.
I learned that Swabian dealers are very quality conscious. Franz Müller connects to my experience, and his story gives me expectation that the tool will run smoothly and that can use it without any problems. I order his stuff despite the higher price.
Storytelling has to appeal the customer’s mental world
Good examples for that:
Promise of getting rich fast with Network Marketing. You are shown the beauty of wealth. The way to do this is very simple: you win a few customers who in turn win new customers.
Anyone who has ever been to partner exchanges surely knows the many supposedly young and good-looking women and men who promise the perfect relationship. Fortunately, they don’t present their price list until late, so you don’t have to pay for the illusion of a perfect relationship due to the lack of a valid contract.
Berlin advertising agencies in particular currently love telling stories from the ideal world of the rurals village or a small city with intact neighborhood “where everybody knows your name. The stories are pinned to every product whose distributor requests it.
Coaches encourage other their coaching clients to tell their history. That is supposed to induce more interest from potential customers. A very common story is that of the poor lady or gentleman, stricken by fate. This person believed him/herself and made it again into great wealth. And there are photos from trips to exotic places or they buy artworks.
How to find your story?
Take care that your story does not disguise the product, unless the story is the product. Example: an email from a coach who promised me a great development as a globally admired speaker and expert in my discipline. I asked myself: “What does he even offer”? It was simply an rhetoric training, as I learned later. By reaching into the rhetorical multi-level marketing language, however, he created unpleasant associations for me. If any kind attention was the target of the action, the coach is successful. If he wants to be a serious personnel developer, less so.
Market Research helps you to find about more about your targeted group.
To the featured image: Thanks to Allie for sharing their work on Unsplash.Photo by Allie on Unsplash