Money cash Shekels currency 521.
(photo credit: Reuters)
We all know the of the popular expression “cash is king.” There’s a famous
cartoon from my childhood that I see hanging in many shops. In the first frame,
a man dressed in tattered clothes says, “I sold on credit,” while in the second
frame, a well-to-do-looking man with a big cigar in his mouth says, “I sold for
But what does cash do, exactly? And is the statement “cash is
king” always true? Well. Not quite.
While in Vienna, I stumbled across
the highly acclaimed book Secrets of the Money Lab by Hewlett-Packard chief
economist Kay-Yut Chen. The book discusses a variety of important concepts at
the crossroads between economics and social psychology. One of these is about
the principle of reciprocity.
When someone is hired to do a job for which
the minimum wage expected is $10, and the worker is paid $12 an hour, what is
the relationship between worker and boss? Berkeley economist George Akerlof
describes such a relationship as a “partial gift exchange.” This means that
while real money is changing hands in exchange for real work, there’s also
something else at play here: The extra money is accepted as a gift by the
employee, who then works harder than a similar worker who would have been paid
the lower wage. Essentially the worker receiving this “extra” pay is
reciprocating with harder effort for the “gift” of the extra money.
in the real world, when this was originally tested, something surprising
happened; The workers would boost productivity in amount of work done per hour
compared to a lower-paid control group (as theorized), but that extra effort
dissipated quite quickly after the first few hours. (If you’ve ever given a
raise to an employee, this may not be not surprising to you – within a few weeks
or months things are usually back to the original level of productivity, as it
was before the salary increase.) What researchers did find is quite fascinating:
When the gift was a true gift-like item, for instance a ticket to an exotic
destination or a bouquet of flowers, workers reciprocated much stronger with
harder work than those who received cash.
When I was a teenager, I ran a
student learning program for Agudath Yisrael of America, and once a week there
would be a raffle among all the attendees, with nice little prizes. They were
great incentives for the students to learn.
One week, I did not have a
chance to buy gifts, and knowing what I personally would appreciate, I raffled
off two $5 dollar bills.
The winners of that week’s drawing were happy,
but nowhere near as impressed as those who got the toy or trinket I had raffled
off the week previously.
One of the fathers who had come by to pick up
his son called me over and advised me that “a gift that costs fifty cents will
be more valuable to a child than a $5 bill.”
The image of piles of dollar
bills and bundles of banknotes speaks very strongly in ads to the
business-opportunity market. Even though we all know that real work is required
to successfully earn an honest living, the power of the visual image of cash,
and even the color green (in the United states, where it is the color of money),
has been proven to impact ad performance and gain buyer attention.
targeting an affluent demographic, however, the use of such images can backfire.
This is especially so when not presented with the right back story. Although,
ultimately, even for this market it’s very much about the cash and the prestige
your product or service will bring to them.
The color green is also often
employed by retailers to attract eco-minded clients. Does that mean it’s
environmentally friendly? Not in the slightest! Just goes to prove, yet again,
how important perceptions are in marketing.
In fact, CNN reported that
colors can increase brand recognition by a whopping 80 percent. This is
according to a study by psychology and management researchers at the University
of Loyola, Maryland. Finding a way to work specific, strategic colors into your
logo, branding, retail space and other design elements will help your clients
and potential clients associate those colors with your company.
what it takes… go repaint the walls! Your company and brand must constantly be
broadcasting a message to help shape the perceptions of the potential customer,
as well as the current customer, to what this brand represents. When there is a
vacuum in the concept of who you are and why you exist, the brand story gets
lots and follows whatever pattern the market draws for it. The perception of the
brand can be that it’s an “old-fashioned” brand, a “does that brand still
exist?” brand, or sometimes the brand goes into total
firstname.lastname@example.org Issamar Ginzberg is a business adviser,
marketer, professional speaker and rabbi who has been published in more than 50