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Could the ‘herd mentality’ work for us today?

Ever heard of a Neuroeconomist? Not me, either. Not, that is, until I read a recent article by Maggie Fox, Reuters’ health and science editor. I found what she learned fascinating and informative, and it led me to think there’s some knowledge there that marine dealers can use right now.

According to experts, like Neuroeconomist Gregory Berns at Atlanta’s Emory University, people take on a “go with the herd mentality” during a financial crisis because people are “wired” to follow the crowd when times are uncertain.

Berns studies the biology of economic behavior. He puts people in magnetic resonance imaging (MRI) scanners to test their responses to various scenarios. Specifically, he studies patterns of their brain activation. One clear pattern: The “fear center” in the brain lights up when people are uncertain.

“When presented with a situation where they don’t have information or the information is ambiguous, we see activation of the amygdala and insula,” Berns told Fox.

That opens the door to people doubting their own judgment and leaves them subject to following the herd. “Our brains are really wired to accept the group opinion of the world,” Berns contends. His new book, “Iconoclast,” is just out and aims to teach people how to avoid this herd behavior.

Paul Zak, of the Center for Neuroeconomics Studies at Claremont Graduate University in California, agrees. “We are really hyper-social apes. We learn almost exclusively from each other,” he said.

“Gossip is really important because it is another way that we learn socially,” he added.

OK, Norm, so where are you going with this? Rewind a couple of days to Tuesday’s Dealer Outlook, in which I described a bold move by South Shore Marine in Huron, Ohio, during the boat show at Cedar Point. South Shore displayed a large poster showing all their unit boat sales, by month, from 2004 to present. The numbers clearly showed that people are buying boats and that business is up this year. In fact, it clearly showed that through August ’09, South Shore has already beaten its total sales for last year, 146 units to 140, with 4 months still to go!

“We wanted to demonstrate that our business is solid and growing again,” explained Tom Mack. “We decided providing such information would say to customers and prospects they can be certain we’ll be here tomorrow.”

If, then, these Neuroeconomics studies are worth their weight, it’s time we establish, using whatever technique works, that sales are improving. People are buying. Uncertainty is disappearing. Every dealer may not have as good a story as South Shore’s, but every dealer has some positive story to tell.

Find it and tell it now. The “follow the crowd mentality” could work for you.

Comments

4 comments on “Could the ‘herd mentality’ work for us today?

  1. steve s

    Norm, I agree with most of your posts but promoting manipulation marketing strategy? If there’s a 60% decline in business that doesn’t mean things are great when you have a 7% increase the next year. Let’s not become the real estate industry with bogus statistic marketing. Sheeple mentality is what ruined the economy to begin with. MarineMax, the AIG of the marine industry, peddled these tactics while they monopolized territories with 35% margins and horrible service. The secret formula remains the same: Treat the customer and employee like gold and provide exceptional service before and after the sale.

  2. AnonymousBob

    Well, Gordy’s Cash for Clunkers comments is completely random but exhibits total herd mentality in its premise. It’s actually a perfect example of the “manipulation marketing” Steve mentions in that Gordy is merely repeating something he learned from others.
    The post from Norm highlights the exact buying/selling patterns that most people exhibit nowadays. They like the herd mentality because the manipulation marketing says we’ll all be liked by the herd if we buy/sell a certain item like everyone else. In reality, it’s called “keeping up with the Joneses” and has been in existence forever. With the proliferation of the internet and our constant 24/7 bombardment of advertising, the situation is only becoming worse. That’s why the housing market imploded as badly as it did – you had every Tom, Dick, Harry, and Jane rushing in to flip a house or speculate on a bare lot. Once the “everyday” person gets involved, it’s time to take the contrarian action. That’s why investors like Warren Buffet are getting richer.

  3. steve s

    Bob, great points. I think Norm’s article should’ve bee titled “could keeping up with the Joneses mentality work today.” Unfortunately, the answer is still yes and that was the primary motive for most buyers during the last ten years. Hopefully that will change and we’ll get back to positive reasons to buy, like entertainment. In the future, maybe more boats will be kept and used long-term for the right reasons because people will by within their means. During the conspicuous consumption, greed is good era, how often did we see buyers purchase a $125k sport yacht when they truly could only afford a $60k cruiser?

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