The framing effect represents a cognitive bias in which individuals are tasked with deciding on options that have positive and negative connotations. Therefore, the decisions of individuals are being influenced by the manner in which information is being presented. Moreover, when it comes to equivalent details, they can be either more or less attractive depending on the features that are being presented. Understanding the framing effect in the context of business is crucial because it allows illustrating how companies can use cognitive bias to influence decision-making and target it in the desired direction.
A scenario of the framing effect at work is an example of the way in which companies market their product. For instance, when marketing a cleaning product for the bathroom, the main selling point of which is to eliminate bacteria and germs. There are two products in the supermarket, both of which do the same thing, although the marketing claims are different. On the packaging of one of the products, it says that it “kills 95% of all germs and bacteria in your bathroom and kitchen.” The second product packaging says that it “leaves only 5% of germs alive after cleaning the bathroom.” When comparing the two examples, potential customers are more likely to choose the first option because the marketing message makes it clear that the product ‘kills’ bacteria with a very high percentage promised to be eliminated. In addition, the fact that the product states that it eliminates 95% of bacteria is a positive attribute, from which customers will gain value. Therefore, even though the two products say the same thing essentially, the difference in the way in which information is being presented influences decision-making. The framing effect here is that one of the products seems more attractive to customers because of the features that are being presented. It is better for customers to hear that a product will kill the majority of bacteria instead of leaving a minority behind.
The scenario with cleaning product marketing shows that the framing effect uses several principles in order to influence the decision-making process. First, customers would like to avoid loss at any cost, and even in the case when a loss is minor, a sure gain, even of the same magnitude, is the preferred option. The way in which a message is being framed can give customers certainty as to whether they gain or lose something. Second, the brain is programmed to use shortcuts in regards to the tendency to use information that quickly comes to mind when making decisions about the future. Thus, the message of a product “killing 95% of germs” is easier to understand and thus will make the decision-making process quicker. However, this does not mean that the easiest message results in a better outcome, which is the point of the framing effect in business.
To conclude, the framing effect plays a crucial role in business because it allows companies to communicate the desired message to customers and influence their decision-making. In general, when managing or working with others, it is important to understand the importance of how specific information or message is being presented. Through more effective framing, it is possible to have better leverage of a point of view and influence others, as illustrated in the example involving the cleaning product.