December 13, 2013

Silver Lining

I have heard about this term Silver Lining during my very bad days. Incidentally, I came across it my Marketing Class recently. Here it goes.

Mental Accounting : Who's Happier ?

Mr. A was given tickets to lotteries involving the World Series. He won $50 in one lottery and $25 in the other.
Mr. B was given a ticket to a single, larger World Series lottery. He won $75.

Survey: Who is happier A or B ?
Results: A: 56  B: 16 No difference: 15

In Western culture, give gifts in multiple boxes than in single box.
Idea: Good News in Multiple Boxes.

Mental Accounting : Who's Unhappier ?

Mr. A received a letter from the IRS saying that he made a minor error on his tax return and owed $100. He received a similar letter the same day from his state income tax authority saying he owed $50. There were no other repercussions from either mistake.

Mr. B received a letter from the IRS saying that he made a minor error on his tax return and owed $150. There were no other repercussions from his mistake.

Survey: Who is unhappier A or B ?
Results: A: 66 B: 14 No difference: 7

Bad News in Multiple Boxes -> BAD Effect.
Bad News - Integrate it.

Silver Lining Principle
Amy lost a cycle $180.
Chris lost a cycle $200.
But Chris found a bill on the road for $20. So, in net,  Chris lost $180.
When considered that $20, Who is happier ? Chris is happier. This is called SILVER LINING Principle. Because that plus $20 makes him sort of better.

Apply to business
A car is worth $20000. Bill it for $22000. But give a rebate of $2000. So total price is $20000

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