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Marketing Psychology; Influence Consumer Behavior to Benefit Your Small Business

Written by on September 04, 2017

A lot of marketing involves, dare I say – psychological manipulation. Let’s define ‘psychology’. Psychology is the study of the human mind and how it functions as well as what influences behavior.

Influencing behavior is what the focus is here. Ability to guide consumers to you – makes marketing a worthwhile endeavor in a business environment.

Today, marketers are faced with many challenges – and most important of them all is standing out from the crowd.

New York Time Square advertisements.

Think about this – an average person living in the city today sees a whopping 5000 advertisements a day! If you are not memorable, influential; your marketing efforts are squandered.

‘Come look at this’ and ‘here, check this out’ are the messages most ads are trying to convey to potential and already existing customers.

Marketing psychology comes into play when trying to convince you that what I am selling is better and will suit your needs the best – unlike those other guys.

Aristotle and Marketing – How is He Relevant?

aristotle-marketing

I am sure most of you have heard of Aristotle, and if by some miracle you haven’t, he was an ancient Greek philosopher who lived around 360BC.

Now you are probably wondering why I am bringing up this Greek philosopher in a post about marketing psychology?

Well the reason is he came up with the ‘ingredients of persuasion’ or the ‘appeals’ known as ethos, pathos, and logos. These are the cornerstones of marketing.

Let’s break down each of these things –

  • Ethos – the appeal to ethics. We establish credibility with our audience/customer. In marketing terms, companies could rely on testimonials and endorsements from celebrities and other famous people. Some examples include Shaquille O’neal for IcyHot and Nike Air Jordans. “Wow! One of the greatest athletes that ever lived has his name on these shoes. Must be a phenomenal product, am I right?”
  • Pathos – the appeal to emotion. In this case using a marketing strategy that invokes emotion in your audience. It can be positive emotion such as joy and excitement or negative such as fear, hatred or sadness. Have you ever seen that SPCA Sarah McLahlan commercial about? Those puppies still haunt my dreams.
  • Logos – the appeal to logic. The use of statistics, numbers, and facts to show that the customer is choosing the right product or a service. Many marketers choose to embed some buzzwords that assert their quality. Ever hear advertisers exclaim “100% natural! Pure!”? Technically insects are natural, but if you find some in your juice, as a customer you wouldn’t be too happy.

Heuristics – Mental Shortcuts We Can Take Advantage Of

heuristics implemented into marketing strategy

For some of you this may be a new word. Heuristics are simple mental shortcuts that you may use to base your decisions on. Truth is, most if not all of us use heuristics in our everyday life, although we may not realize it.

When trying to influence customer behavior, incorporating heuristics can positively impact your marketing efforts.

Let’s take a look at some of these heuristics that can greatly benefit you small business.

Scarcity – Is There Enough Left for You?

Things sometimes seem more appealing when the demand exceeds the supply. A simple way to alter consumer behavior is through scarcity heuristic. Finite availability creates exclusivity and alters the perception of value.

‘Limited edition’, ‘while supplies last’, those are some of the words you may use to force action in a potential customer.

Creating urgency to act is the key. It might be harder for some to “sleep on it” and avoid waiting to go through with swiping their credit card.

1. Attribution Bias

With the attribution bias heuristic, we simply creates attributes about things, people or places that may not be entirely justified.

There are these ridiculous body deodorant Axe commercials that aired in the US. Let me set up the scene for you. A nerdy guy who you would never expect to pick up girls uses this body spray Axe™. And what do you know? In the next scene all the hottest models flock in droves to him.

This advertisement wants us to believe and attribute the guys’ success in scooping up fine woman to the deodorant he purchased.

What can we take away from this?

How you present the product or a service you offer is key to attracting customers. As a marketer, learn to incorporate elements in advertising that not only show the appeals of the product, but also the benefit it will have on the consumers lifestyle.

2. Affect Heuristic

The way we feel and our mood is proved to affect how we view situations and decision making. Did you ever base your decision on a gut feeling? Well, you incorporated the affect heuristic to help you make a choice.

Emotional Response

Playing with peoples feelings may not always be a good thing. Careful implementation in marketing can create phenomenal results.

Garnering emotional response from consumer can speed up the consumers buyer’s journey, closing a sale much faster.

Research has shown that when we feel good we tend to overlook the negative aspects; we weigh the benefits as high and risks as low and (vice versa).

Giving and Receiving

reciprocity-marketing

Let’s imagine someone does you a favor. Couple days go by, and that person is asking you for help. It would make it harder to deny aid to the same person that was so keen on helping you before.

We would be more psychologically inclined to help someone that we know has helped us before.

Dennis T. Regan with the Cornell University did research regarding reciprocity and its effects in a social setting. He staged an experiment with individuals who received a soft drink from their colleague and some didn’t get anything.

Individuals that ended up getting drinks from their colleague (who was actually a researcher) were more inclined to do them a favor; in this case buy raffle tickets.

Try this! Risk free!

I am sure most us have encountered free software trials, ‘buy one get one free’ signs and the like. Those things are aimed at customers so that they take care of us, after we have taken care of them.

Take all this into account when interacting with new and existing customers. Reciprocity can be powerful tool in any marketers toolbox and should be utilized strategically.

15 Pricing Strategies to Boost Your Small Business We will explore the 15 most effective ways that you can set your small business pricing strategies to ensure competitiveness and profitability. READ MORE

Pricing – Hard to Resist This Deal

Deciding on a price for your product or a service depends on a lot of things –

  • R&D
  • Cost of inputs;
  • Cost of manufacturing;
  • Logistics and transportation;
  • Advertisement costs;

The list of things that impact the price can go on for a while.

Well of course, as an enterprise, we want to turn a sizeable profit too. Lets try and avoid pricing our items too low if clients see a lot of value in your goods.

There are ways of listing prices that make them that much more irresistible to the consumer. You will be bewildered to see what simple pricing strategies can do for you small business.

1. Charm Pricing

price-charming
Example of charm pricing.

 

This is technique to stimulate buyers is as old as time itself. The whole point of price charming is to entice the consumer to make a purchase based on how the brain interprets numbers.

If you have something that retails at $10, to make that more appealing, reduce the price by 1 cent. Now the item costs $9.99. “Wow, now we got ourselves a deal!”

A trial was conducted a few years back by MIT and University of Chicago tested the effects of price charming on women’s clothing. Prices were listed at 34, 39, and 44 dollars. You may think that clothing that sold the most was listed at $34 but you are wrong.

The best-selling piece of clothing was actually listed at $39.

Take price charming into consideration when coming up with price points for your product. Simple technique that can really go a long way.

2. Power of Sale

sale sign to market small business
Powerful words to entice the customer.

Word ‘Sale’ is all too powerful. Typically adorned with bright colors, large letters and flashing lights; ‘sale’ pulls customers like a bees honey.

Clearances, sales, and discounts are all very pleasing to the consumers eye. Utilizing this can attract a lot of new potential customers without spending a whole lot on a marketing campaign.

Reference Pricing – Augmented Perceived Value

“$2000 MSRP, but our price is only $1499”. This is an example of reference pricing. As a customer, it’s so satisfying seeing what the item presumably costs and what you end up paying at the cashiers.

Article “Pricing Practices: Their Effects on Consumer Behavior and Welfare” published in 2010 states that “ARPs (advertised reference prices) work, a lot of research shows they do, and retailer practice and returns show that they do. This is not new – it is widely known. If I advertise a sale price of, say $29.95 and accompany it with an ARP of, say $39.95, in most contexts, sales will increase relative to a no ARP present situation. Sales will increase as I increase my ARP to $49.95, to 59.95, to 69.95″

reference_pricing
Example of reference pricing on an anti-virus software.

Inform the Customer of Their Potential Loss

Customers are not aware of true costs of goods and services. A price is given – you can take it or leave it. When you present a reference point for them to look at; hence the word ‘reference pricing’, customer now has the ability to compare.

Incorporating this strategy, you have a chance to make the consumer feel like a winner. As a marketer, you create a higher customer base, customer retention goes up and so does the potential revenue.

So… Now what?

I have covered some important aspects in consumer behavior and marketing psychology. Not all tools are created equal, some might prove to be more useful than others.

Taylor these tools to best suit your business needs. I recommend you try everything at least once and give it time to settle in to see what sticks

Developing marketing campaigns is a never ending process; trends shift and demographics change. Customers and their needs are dynamic and so should your marketing efforts be.

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