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“Nudge Marketing”: Case Analysis Case Study

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Updated: Jun 27th, 2021

The case under consideration is “Nudge Marketing,” and the text will be assessed from the point of view of this phenomenon’s pros and cons.

Nudge Marketing: Pros and Cons

The notion of nudge marketing is tightly integrated into the practice of many trading corporations that use peculiar techniques to attract customers. The essence of this phenomenon is that using various schemes, for example, auxiliary visual prompts, advertisements, and other methods, sellers offer consumers to pay attention to a certain product or service. When evaluating this approach to sales from different points of view, it has some advantages and disadvantages concerning both sides. Therefore, as the analysis of this problem, the pros and cons of such nudge marketing will be considered, and appropriate conclusions will be made regarding the validity of its application. It is assumed that such an advertising technique has a significant benefit for sellers but does not always help buyers in the conditions of the variety of the commodity market.

Premises and Conclusions Concerning the Advantages of Nudge Marketing

When talking about the prerequisites for such a theory of sales, it should be noted that it has appeared relatively recently in the sphere of trade. According to Kahn et al. (2014), due to the constantly increasing competition in the market, it became necessary to look for new ways to attract customers, and one of them was the nudge theory. However, today, such an approach to the organization of advertising campaigns can be found in different places since both large corporations and small trading facilities are actively using this technique. From the point of view of merits, this method of sales has several premises that became the reason for the formation of this marketing approach.

Premise 1. High Competition

A high density of outlets, the constant appearance of new goods and services, the regular change of consumers’ interest – all these factors lead to a significant increase in competition among market enterprises. The development of the theory of attraction through nudging customers in the right direction has become for sellers one of the ways to increase demand for certain products and at the same time not to lose profits. Stocks for particular things that are sold today in stores of different profiles are one of the ways of nudging. As Soraghan, Thomson, and Ensor (2016) claim, the use of specific brands, for example, allows sellers to attract buyers because the level of popularity of a product directly depends on sales. If consumers see familiar goods that, moreover, are sold at a promotional price, it will certainly benefit the marketer and at the same time will help the customer to obtain the desired product at an affordable price.

Premise 2. Assistance in the Variety of Services

The application of this marketing technology in practice has become for sellers an additional tool for helping clients to orient in the variety of goods and services. According to Kahn et al. (2014), to enhance customers’ knowledge in the current assortment, marketers began to use an appropriate nudge technique with the help of various auxiliary tools – bright signs, clues, recognizable markers. Today, it looks quite natural when this or that producer places appropriate advertisement and uses different methods of attracting, for example, memorable slogans. As Guthrie, Mancino, and Lin (2015) note, in the food sector, consumers often prefer recognizable products, which is the result of effective advertising work. Therefore, such a premise is essential.

Premise 3. Stimulating the Economy

The emergence of nudge marketing was caused by the need to control the level of sales and thereby effectively spend available resources, organizing the level of supply and demand that would be positive for the economy. Tan, Lv, Liu, and Gursoy (2018) remark that in the sphere of tourism, the stimulation of consumer interest is largely possible due to successful advertising campaigns when buyers are offered interesting tours, favorable vouchers, and other ways of entertainment. This approach allows forming a stable system of commodity-money relations, which, in its turn, benefits both sellers and the state as a whole.

Conclusion

Considering the premises for the development of nudge marketing as a commercial phenomenon, it can be noted that various factors influenced its formation. Several merits that this type of sales organization has provides for active adherence to the provisions of this concept by different sellers. Not only the producers of goods but the state as a whole benefit from targeted nudging consumers to purchases.

Issue

The central issue that arises in describing the merits of nudge marketing is whether this principle of work is successful and correct from an ethical point of view. According to Tan et al. (2018), the targeted control of customers’ desires certainly benefits sellers but can be viewed as a tool of manipulation. Therefore, the problem should also be considered in terms of its shortcomings.

Arguments

As arguments in favor of nudge marketing, the scientific articles of different authors are used as well as the data given in a statistical ratio. Thus, according to Guerassimoff and Thomas (2015), the increase in consumer motivation makes it possible to significantly reduce the risk of economic collapse. Also, the reasons for convenience for consumers themselves are the main ones.

Premises and Conclusions Concerning the Disadvantages of Nudge Marketing

When considering the concept of unobtrusive but stable manipulation of customer desires, this approach to sales has some drawbacks. To describe them, first, it is essential to pay attention to the prerequisites for the development of nudge marketing theory from the negative side. Moreover, minuses are certainly present, and some of them are significant.

Premise 1. Losses and the Absence of Competent Managerial Strategies

According to the case under analysis, many sellers use the nudge marketing model to attract as much customer attention as possible to their products. Nevertheless, sold goods do not always have a sufficiently high quality, which encourages manufacturers to take extreme measures and attract buyers in all possible ways. As Soraghan et al. (2014) claim, the formation of certain buying behaviors is one of the methods of market manipulation that is aimed at maintaining competitive positions. Insufficiently effective management strategies do not allow some companies to promote their goods in other ways, and the concept of nudge marketing is used.

Premise 2. Pursuit of Profit

Based on the principle of unconditional sales, some sellers ignore the generally accepted rules of fair competition and do their best to attract customers. In the case under consideration, missing dollar signs in menus, the display of user purchases in general, and other methods of unethical business are mentioned. Since these techniques are successful enough, marketers do not neglect to use them in the pursuit of profit.

Premise 3. The Recession of Customers’ Interest

The reasons for the loss of consumers’ interest can be different. Kahn et al. (2014) note that knowledge gaps regarding specific goods and their quality can lead to a decline in sales growth. This premise is significant, but in many respects, it overlaps with the previous ones. Sellers want to return the demand for their products and resort to the help of nudge marketing.

Conclusion

Negative aspects of nudge marketing are largely related to the manipulation of consumers’ desires and the intention to sell goods at any price. The interest of sellers is due to an attempt to receive as much profit as possible, thereby attracting the maximum number of clients. Some methods do not correspond to ethical standards and can be challenged by the public.

Issue

The issue is as follows: should the use of the concept of nudge marketing be replaced by modern sellers? If mass discontent arises, many companies will probably have to reconsider the policy of attracting customers. Otherwise, crises will be inevitable, and losses will be substantial.

Arguments

As arguments, excerpts from the case under consideration and facts from scientific works are used. The reliability of the information is beyond doubt since the sources are peer-reviewed. The division into pros and cons involves the need to evaluate the arguments to identify the most rational and least valuable in terms of their validity.

The Rationale for Choosing Arguments

From the list of reasons that have influenced the formation and development of the nudge marketing concept, it is possible to single out those that are of the greatest importance regarding their strength and the weakest, insignificant. For this purpose, specific terms will be used – deductive and inductive arguments. These definitions can help to assess the relevance of evidence in favor of or against the phenomenon under consideration.

Deductive Arguments

The most significant deductive argument implying analysis from the general to the particular is that sellers use nudge marketing conditions to confront competitors in the context of the struggle for consumers’ attention. This statement is valid since, by simple reasoning, it is possible to understand why some organizations begin to use non-standard approaches to increase customer demand. This truth-functional argument gives a chance to conclude in favor of the possibility of further using the model’s terms.

The least significant assumption is the judgment that nudge marketing helps to stimulate the economy. Despite confirmation in the scientific literature, this argument is unsound and can hardly be considered a basic one. The impact on the economy, in general, is not very significant and is unlikely to be regarded as a crucial factor.

Inductive Arguments

While considering inductive statements implying conclusions from the private to the general as arguments, it can be noted that the losses of companies directly lead to the introduction of nudge marketing. Such inductive generalization is based on the assumption that the loss of sellers is a cause, and the concept of trade is a consequence. Therefore, such an argument can be considered strong and cogent.

The weakest is the fact that nudge marketing is a modern trend and a popular movement in trade. It cannot be asserted that this or that concept is used solely as the imitation of the main direction of market development. This causal argument has no basis and, accordingly, can be considered uncogent.

Conclusion

Nudge marketing has a significant benefit for sellers; however, it does not always help buyers to choose high-quality goods in the market. The prerequisites for the development of this concept are different, and it has pros and cons. The central issues concerning this approach are whether it is necessary to ban nudge marketing and whether this trading technique can be regarded as successful from an ethical point of view. Deductive and inductive arguments allow identifying the most and least significant assumptions in terms of the application of this commercial theory.

References

Guerassimoff, G., & Thomas, J. (2015). Enhancing energy efficiency and technical and marketing tools to change people’s habits in the long-term. Energy and Buildings, 104, 14-24.

Guthrie, J., Mancino, L., & Lin, C. T. J. (2015). Nudging consumers toward better food choices: Policy approaches to changing food consumption behaviors. Psychology & Marketing, 32(5), 501-511.

Kahn, B. E., Chernev, A., Böckenholt, U., Bundorf, K., Draganska, M., Hamilton, R.,… Wertenbroch, K. (2014). Consumer and managerial goals in assortment choice and design. Marketing Letters, 25(3), 293-303.

Soraghan, C., Thomson, E., & Ensor, J. (2016). Using food labels to evaluate the practice of nudging in a social marketing context. Social Business, 6(3), 249-265.

Tan, H., Lv, X., Liu, X., & Gursoy, D. (2018). Evaluation nudge: Effect of evaluation mode of online customer reviews on consumers’ preferences. Tourism Management, 65, 29-40.

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