Management from Psychology perspective (Research Paper Sample)

COGNITIVE BIASES
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Cognitive Biases
The application of psychology in management and business processes is evident in the 21st century. The need for businesses to be competitive has made managers turn towards applying unique strategies that might contribute to differentiation in business processes. In this essay, cognitive bias as a form of psychological application in a business environment will be discussed. Additionally, the application of cognitive biases in the marketing of products and services will be examined. Application of cognitive bias is one of the upcoming trends used by businesses in sales and marketing.
During a psychological process, an individual uses cognition to process information about given issues in the environment. During the process of cognition, an individual is subject to making errors while interpreting and processing the information collected from the environment. Such an issue is referred to as cognition bias. According to Ehrlinger et al. (2016), cognition bias is the process by which an individual`s decision-making is influenced by the skewed perception that emanates from past experiences or personal preferences. Cognition bias emerges when an individual experiences a mental error due to the association of an issue to a given filter that is embedded in a person`s mind. Cognitive biases as errors in judgment and irrational behaviour contributed by the application of heuristics where individuals make decisions that seem good enough to them even though these decisions are not the best in the provided options. Cognitive biases mainly emanate from people individuals wishing to take mental shortcuts towards making decisions and judgments when an individual is solving problems or dealing with a presented challenge (Riddell, p.8). Individuals who make cognitive biases are indicated to be those in need of making quick decisions or are in a situation where they are ignorant of applying critical thinking during decision making.
Cognition represents the mental process of an individual that influences behaviour. Cognition is responsible for the decision-making of individuals in different environments. The decision leads to choices, and choices are made depending on the requirements of an individual (Iyengar and Lepper 2000, p.996). Sometimes individuals make decisions depending on mental processes and perceptions that emanate psychological influences. During a psychological process, an individual uses cognition to process and interpret information that is used to make decisions regarding different issues. Cognitive biasness leads to individual processing and interpreting information in the way which he or she believes is the best even though the decision may not be the right decision. In cognitive biasness individuals avoid using logic and critical thinking, and instead, they choose to use preferences, feelings, tastes, and perceptions leading to prejudice.
Businesses apply strategies that will entice consumers to use cognitive bias when making a decision towards choosing a product. In such a case, a business will seek to make consumers of a product be prejudiced by the look, feeling, or perception of a product other than the real taste and look of the product hence making increased sales even if the product is not of consumer preferences (Nouri et al. 2019, p.2). Businesses might apply cognitive biases to ensure that their product gains publicity and that individuals make decisions to use the product. The strategy is used when businesses understand that consumers are in need of making hasty decisions or have no complete knowledge about the product.
Businesses and firms apply cognitive biases in several ways when marketing their product. First, organizations use the loss aversion technique as a way of applying cognitive biases in the sale of a product. A brand makes its product to be perceived as a solution to preventing a loss in a given market. In this strategy, a business makes individuals perceive that failure to buy the presented product will lead to a loss, and hence consumers buy the product to prevent the loss that has been created to cause cognitive bias (Ehrlinger et al. 2016). Secondly, the framing effect is applied by firms to make consumers prefer the product. In this strategy, an organization presents information that seems to favour the consumer even if there is no difference made on the product (Nouri et al. 2019, p.5). For example, a product may be labelled to have 30% off, while another may have a label indicating 120% off. Consumers are likely to choose the product labelled as 120% off even if the price of the two commodities are the same.
Thirdly, organizations may apply confirmation bias to ensure consumers prefer the commodity of other products. A firm is likely to apply this strategy by confirming the strong beliefs of the consumers, making them feel positive about the product and hence preferring the product over others without confirmation. Fourthly, firms may use a bandwagon effect to create a cognitive bias that will make consumers use the product. A bandwagon effect is a strategy when a business provides that the product is what other people prefer and use, making consumers make a decision that the product must be the best (Ehrlinger et al. 2016). Most organizations that use this strategy link the product with individuals who are established and well known in society in order to create a class in the product. Additionally, businesses use salience as a cognitive bias strategy to make customers make decisions to buy the product. In this strategy, firms use unique packaging and branding to make commodities seem different from others and hence attract consumers who value uniqueness and differentiation. Consumers will buy a product that makes them feel different and better than o