Cost of Thinking: A variable in the Profitability Formula of Organisations

A customer when is out for a purchase, he is not miffed about his purchasing decision. Mind already has taken a decision, what to purchase & why to purchase. However, sometimes you become jittery when you see an advertisement about a new product in the same product category, you intend to purchase while on your way to the shop. Did you ever experience it?

Two theories come in play. One theory explains mind’s continually attempting effort to minimise hidden costs and hidden risks. Therefore, it is the force of mind, compelling the customer to buy a known product only. The second theory describes what all goes inside when you look at a new product.

However, the underlying facet of both the theories is where ‘Advertising’ plays its role.

In my one of earlier blogs, I explained about resistance of brain to experimenting newer things. It always tries going a beaten track. It always looks for stability so that it does not have to apply its ‘brain’ again to know about the new thing. This aspect of brain helps us in building our habits. It follows a pattern of thinking out of its habit while taking a decision; any deviation to earlier decision criteria, puts it into ‘discomfort state of mind’.

This is where the Law of Advertising comes in picture. Advertisement and repeated advertisement first breaks the inertia of customers about a new product and then same inertia is used to stop customer switching over to another product later. What a brain, we human beings have? Same principle, two applications.

In researches conducted on consumer behavior so far, not much has been found how brands influence customers at macro level but it does when seen at behavior level. Advertisements incite & persuade customers to buy a product based on specific advertisement themes.

What goes inside our mind is that customers try minimizing their efforts directed towards reducing hidden costs and hidden risks of using a new product. These efforts are primarily focused on minimizing efforts  for information acquisition, learning, storage, retrieval, comparison, evaluation etc. This is called Cost of Thinking.

This habit of ours put us into a very awkward situation. If I say that this habit of ours only makes us pay premium on product we purchase and that too again and again. Out of this only, companies compel their customers to buy their products again & again and pay premium of using it repeatedly.

Conclusively, it can be said that our intention to reduce, Cost of Thinking, helps companies to make profit for themselves. Companies as per available research data available, try getting targeted and potential customers to their fold using the ‘principle of minimizing the Cost of Thinking.’ And the means used for this is ‘Advertising’. Advertisements are aimed to incapacitate customers of thinking to switch to another brand. Thereby, making customers buy same product or products, over & over again and also pay premium for our ‘habits’ at continuum.

CEOs, so do not hesitate, go for & keep aside a budget for branding your products and reap the benefit continuously. Advertising is the winning Profitability Formula; do not doubt its advantages.

At the end, it is the game of Mind only.


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