Psychology Of Marketing: How You Can Make It Work

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Understanding how people think and why they think what they think is the real secret behind businesses that have become successful. This article can guide you in launching a successful brand.

What use is having a great product or service if people do not know about it? Let’s reframe the question – Can you really make an effective product or service if you do not know what people want? It is extremely important for a marketer or a business to understand what the customers want. Unless you know what people want and what compels them to make a purchase, it is impossible to make a great product or service.

The truth is great marketers and brands use psychological theories to effectively communicate with potential customers. I will explore the important principles of psychology applied in marketing in this article; but, let us first see what marketing psychology is.

What is marketing psychology?

Humans are emotional beings and can be made to do various things if the right emotions are triggered: marketing psychology attempts to understand how various human emotions can be used in the formulation of effective marketing strategies.

Marketing psychology seeks to understand how consumers think, reason and make decisions. Great marketers around the world use the findings of marketing psychology in a calculated way to turn potential customers into loyal consumers.

11 important principles of psychology applied in marketing

1. Priming

According to Psychology Today, “Priming effects appear in a person’s responses stimuli, such as the speed with which the person is able to categorize a string of letters as a word or non-word.”

For example, a person who has just finished a glass of milk will be faster in recognizing a related word such as “white” than an unrelated word like “dog”.

Priming occurs when people are exposed to mental representations of a concept with things related to it. The mental activation influences people to react quickly when they see things related to the concept.

But, how is it related to marketing? Using priming techniques, you can help customers remember key information about your brand or your products and services. For example, if you own a restaurant and you want your customers to order Mexican food on a given day, playing Mexican music in the background may be your best bet.

The subconscious mind will place more importance on Mexican food because it will quickly relate the music with the food.

2. Social proof

The social proof theory is sometimes also called the “me too” theory. The theory is simple but extremely useful while formulating marketing strategies. Social proof is the theory that people will mirror the beliefs or actions of people or groups they like or have trust on. For example, people who love pizza will start buying pizza from a pizza counter of a food court in a shopping mall once they see you buy from it. In other words, social proof works on the theory that if other people I like are doing it, I should too!

Below are some examples of how social proof work:

• TV comedy shows with recorded applause and laughter increase the perception of the show being funny.
•  “Billions and Billions Served” displayed outside McDonald’s increases the perception of tasty food being served by the fast-food chain.

Social proof may be enhanced using the following techniques:

• Having a celebrity talk about your product and services.
•  A large group of people or community approving your products.
• An expert approving your products and services.

3. Reciprocity

How many times have you followed someone on Instagram and they have followed you back as a mark of courtesy? Yes that is right, a lot of times! Dr. Robert Cialdini calls this “reciprocity” in his book Influence: The Psychology of Persuasion. The concept of reciprocity is very simple – you do something for someone when they do something for you.  This process of exchanging mutual benefit is widely used in forming marketing strategies.

The three types of reciprocity are:

1. Generalized: in this form of reciprocity there is no expectation of a returned favor. People do things for another based only on the notion that the same favor would be returned when necessary.
2. Balanced: as the name suggests, this form of reciprocity involves balanced exchange of favor.  For example, someone might exchange something in hope of getting something of equal value back.
3. Negative: this form of reciprocity happens when one person involved in the exchange tries to get more than the other person

Some ways reciprocity is used in marketing:

•  Valuable information offered to customers in exchange for signup for future marketing offers.
• Freebies offered to a potential customer in hope that it would lead him to purchase something.
• Attention and mentorship offered by a leader in exchange of loyalty.

4. The decoy effect

The decoy effect is used as one of the most delicate marketing strategies. The idea behind the decoy effect is to get the buyers to switch from one option to the most expensive one.

You walk into a theater to catch your favorite superhero in action. You and your family members are super excited and decide to buy some popcorn while watching the movie. The popcorn counter displays 3 options for you: which one would you choose?

Regular bucket – $3
Medium bucket – $6.5
Family bucket – $7

Mostly likely you would choose the family bucket because it looks reasonable for the whole family. On the other hand, had you been alone, chances of you picking the regular bucket would increase. The medium is the decoy. Not many would buy the medium bucket because it makes no sense. Marketers know this very well! In fact, all you ever had was two choices between the regular and the family buckets.

In a TED talk, “Are we in control of our decisions?”, Dan Ariely explains the decoy effect using The Economist subscription packages as an example.

5. Anchoring

The anchoring effect, in marketing, uses a shortfall of the mind. The mind does not give importance to the intrinsic value of an option but to the comparative values.

For example, if my favorite store sales t-shirts at $30, but I find them at $15, I’d go crazy- I’d probably even buy 4 t-shirts! However my friend, who usually does not spend more than $10 to buy a t-shirt, wouldn’t be half as impressed to know about the offer.

In other words, anchoring effect can be defined as the mind’s tendency to put more importance on the first piece of information offered. Anchoring happens when the first piece of information offered influences the entire decision making process.

For example, if you tell someone that a certain product normally costs $50 she will immediately feel she has found a bargain when she sees the same product priced at $30. Likewise, she will feel the product is overpriced when she sees it advertised somewhere at $55.The first price here acted as an anchor influencing all her future decisions regarding the product.

Let us see some ways marketers use anchoring to influence customers:

• Original price vs discount
• Monthly vs Annual plans
•  Price increases
• Multiple unit pricing

6. The scarcity effect

Based on the psychology that people want what is difficult to get, scarcity marketing plays on people’s fear of missing out.

How many times have you seen “sale ending soon” hanging outside a store? Well you can’t resist the temptation and hop inside the store just to see what’s on sale. That exactly is the scarcity effect!

A study conducted by Worchel, Adewole and Lee very well explains the scarcity effect. Participants were asked to rate cookies from two different jars. The two jars contained 10 same types of cookies. After the participants rated the cookies, 8 were removed from one jar. Participants were again asked to choose between the jars with 10 cookies and the one with only two remaining. Can you guess which jar participants chose more often? You guessed it right, the jar with only two cookies left.

Psychologists and researchers, over the years, have examined why scarcity attracts people: here are some of the findings:

• Powerful: the owner of a scarce item knows that he has access to something that people really desire making the owner feel more powerful.
• Exclusive: owning something that only a few have makes the owner feel exclusive, just like airport special membership lounges and VIP areas in a club.
• Valuable: Items that are low in supply are valued more; therefore, a person in possession of things with low supply has a higher status symbol.

7.The Baader-Meinhof Phenomenon

“Selective attention” and “confirmation bias” form the basis of the Baader-Meinhof phenomenon.  HubSpot brilliantly describes the phenomenon:

“The Baader-Meinhof Phenomenon, otherwise known as the frequency illusion or recency bias, is a situation where something you recently learned about suddenly seems to appear everywhere. There are two reasons for this phenomenon — first, selective attention, which means your brain is subconsciously seeking out more information on the subject. Second, confirmation bias, which means every time you see something related to the subject, your brain tells you that it’s proof the subject has gained popularity overnight.”

But how can this help in marketing?

Let’s try and understand this with an example, you click on an interesting looking website and spend some time there. You suddenly start seeing emails and news related to the website and if all goes well, you might even end up subscribing to their products or services. This is how the Baader-Meinhof Phenomenon works.

8. Verbatim effect

Simply put, the verbatim effect is people’s ability to retain only the gist of the information and not the complete detail.

If you attend a session on online advertising, you would probably remember things like “effective social media marketing” or “reach out to the target audience” or “make your content heading SEO friendly” 

This is known as the verbatim effect and is intelligently used by marketers.

According to a report by Chartbeat people spend less than 15 seconds on a website. What does this mean? How do marketers grab the attention of the people?

Well, the answer lies in the headlines. The headlines and other content in your website should be ‘share and search’ worthy. Once you understand how search works you will start creating share and search worthy content with compelling headlines. 

9. The gestalt theory

Developed in the 1920s by German psychologists, ‘gestalt’ is a visual perception theory. The theory suggests that the mind tends to see a unified whole rather than its parts. Visual marketers effectively use this theory to promote brands and their products and services. For example if a product is presented next to a Hollywood actor, the mind tends to see the two together.

The above is a great example of gestalt theory at work. The first thing you noticed was the Heinz Tomato Sauce bottle; but, once you take a closer look you notice that the bottle is made up of real sliced tomatoes.

Logo designers from around the world have used the gestalt theory to make memorable and timeless logos such as IBM and Unilever logos.

10. Clustering

Our memory can be divided into two groups, short-term and long-term. Long-term capacity of the brain is seemingly unlimited but the short-term memory is limited and brief. Clustering helps in retaining more information in the short-term memory portion of the brain by bunching similar pieces of information together.

Marketers use cluster analysis for market segmentation and positioning. Clustering analysis is also used to test markets for new products. 

11. Loss aversion

If I were to explain loss aversion in one line to you, I’d simply say, once you have something you like, you wouldn’t want to lose it.

Inspiring the fear of losing can be more powerful than the attraction of gain! A research conducted by Daugirdas Jankus at the ISM University of Management and Economics found that loss aversion outperformed every other cognitive biases on an e-commerce platform reaching the highest increase in conversions.

Following are some ways loss aversion is used by marketers:

• Offers framed in terms of loss
• Made to look risky
• Inspire fear of losing
• Setting definitive time frames
• Being specific about the loss

The psychology of marketing may be tricky but can have a huge impact on branding. Marketers use these subtle psychological theories to create the maximum impact on people. So, if you are looking to take your brand to the next level, psychology of marketing will definitely go a long, long way!