Psychology as a key to business decisions:
Understanding the consumer and improving marketing
DOI:
https://doi.org/10.51896/rilcods.v5i48.321Keywords:
Decisions, Psychology, Strategy, Marketing, Behavior, Finance, ConductAbstract
The impact of psychology on business decisions occurs in various aspects, such as consumer behavior, marketing strategies, organizational behavior, and purchases. In this article, we provide an overview of how psychology shapes business decisions by highlighting the importance of integrating psychological insights into business operations; we also emphasize the need for more research to improve our understanding of the intricate relationship between psychology and business. In recent years, two fields of study have gained popularity: marketing and applied psychology. Marketing focuses on delivering value to customers and explores how human psychology influences business decision-making. These fields complement each other and can be used to understand and influence consumer behavior efficiently. Research has found that people's trading decisions are not always rational and are often influenced by cognitive biases such as loss aversion, framing effects, and overconfidence. As a result, people make suboptimal decisions, such as overpaying for insurance, making risky investments, and making unnecessary or risky purchases. Psychological insights can be used to understand and predict how marketable are perceived, valued, and used by consumers, which can help companies design effective marketing strategies.
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