A Good Example of Targeted Marketing

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The advertisement in Harlem is an excellent example of targeted marketing.

Risk aversion measures how willing you are to accept a bargain where the outcome is uncertain (but potentially more rewarding) compared to a bargain where the outcome is certain (but less rewarding). Statistically, the more money a person makes, the more risk-averse he is.

Therefore, poor people are more willing to take gambles with high degrees of uncertainty, but also high potential pay-offs. Thus, a lottery advertisement in Harlem – a neighborhood popularized for its extreme poverty and high crime rates – seems well-targeted to an audience willing to take the gamble with extremely unfavorable odds.

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  • Dawud Miracle

    Great example. It’s interesting to consider how a $2 lottery ticket with the promise of winning millions could be attractive to people in extreme poverty.

  • Allen Stern

    While I agree with your overall thoughts, I must say that Harlem is not the Harlem of the 70s/80s. And these ads are in all neighborhoods, rich and poor.
    But I do agree, just go into any bodega in a poor area and watch the people playing hundreds of daily numbers tickets or scratchoffs.