This states that consumer choices will be influenced by how information is presented.
Presenting a positive spin
- A sign that says 10% of our customers are not fully satisfied – implies a negative connotation.
- 9/10 of our customers are fully satisfied – is a much more positive spin.
In this case the company will present the data in the most positive way – framing the data in a way which creates positive response.
Presenting price in the most cost-effective way
- Saying the cost of gym membership at £500 a year sounds a lot and may deter customers. But saying it costs just £1.37 a day ( less than a cup of coffee) sounds more attractive to consumers. At £1.37 they may be more tempted to purchase.
Loss in more significant than gain
An important framing effect is illustrating the potential for loss.
- If you are told taking a vaccination may lead to a small chance of adverse reaction, that may put people off.
- If it is portrayed as this vaccination is likely on balance to improve significantly health, then it becomes much more attractive.
- If you offer a discount for paying tax early, some people will take up the option and pay early.
- However, if the government say there will be a penalty for late payment – this has been shown to significantly increase early payment rates.
- In both cases, the financial cost is the same for both options, but people are moved into action by the prospect of a penalty – rather than discount.
Framing effect and questions
Related to this idea is the framing of questions.
- Do you believe the government should reduce spending on the national health service to increase spending on defence? – Very few people will agree.
- Do you believe the government should ensure adequate spending to ensure the nation’s defence? – Very few people will disagree.
The way the information is asked can vary enormously – and it becomes an issue of almost changing the question. But, both previous questions could be the same option, but the way it is framed will have a big influence on the outcome.