Understanding Marketing Psychology

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In this hyper-competitive market, it’s safe to assume that in order for a marketer to successfully do their job – they need to understand:

  • Who their Customer is,
  • What they Want, and
  • What Drives Them to make a purchase

Be it Organizational behavior, Consumer Behaviour, or People Management – Psychological theories and principles are leveraged in each and every sphere of our lives – and Marketing is no exception to it.

Brands, or even Brick-and-Mortar Shop Owners have been leveraging concepts of Human Behavior since commerce existed. It’s even taught as a subject of ‘Consumer Behaviour’.

Does it sound a little like Psychology? Yes! And that’s because these strategies are based on some behavioral theories, and are also referred to as ‘Marketing Psychology’.

Having said that, Marketers are not Psychologists, although they use many psychologically-driven observations or theories about human behavior to talk effectively with their potential customers and increase conversions daily.

In this article, we explore the concept of marketing psychology and provide practical tips on how to use it effectively.

What is Marketing Psychology?

Defining loosely, Marketing psychology is “incorporating a range of psychological principles into your content, marketing, and sales strategy.” You can also think of it as a way to look for behavior patterns in your ideal consumers and assess how their behavior pattern relates to their purchase decisions.

5 most-commonly used marketing psychology principles are:

Why does eCommerce personalization work?

The Reciprocity Principle:

Give first-Expect later.

This is especially important for E-Marketers who are starting out and want to create a niche for their product or service.

It is based on the idea that if someone or a brand does something good for you, you are more likely to return the favor, and have increased cooperation in the future. Its human tendency to ‘Do unto others, as others do to them’.

It may be a blog that they would like to read, or a carefully curated newsletter that will resonate with their interest. Sometimes, even an inspirational quote that you like does the trick.

It’s that one nice thing a person says to you, that you’ll remember, even though it was your job. They’ll stay in your memory as a positive reference. 

A good example of this is Zomato, or Whole Truth Foods

Information-Gap Theory

This was coined by Mr George Loewenstein in the early 90s. He believed that curiosity was birthed when people feel like there is a gap between the information they know and what they want to know, especially for a topic that interests them. They will then take action, to find out more about it. And in this era of digital information, it is very easy to do that. A Brand should try to be that informant place that fills their gap and piques their interest further.

From a Marketing Psychology point of view, this started out as “The Secret to…” or “Hacks for…” which has been overdone to the extent of its perception coming off as a Click-bait, but irrespective people want to know Your Process, About your factory, or the effects of your Product. So try a more sincere tonality when using this principle like “Learn more about…”, or a direct one “Our Process”, etc

The Scarcity Theory

Oh! Aren’t we all subject to this!

Another Cialdini concept, this idea says that ‘We, as humans, place more value on the things that we believe to be rare and place a lower value on what can easily be accessed.”

The fear of missing out (FOMO) is a powerful motivator, and Marketers have been using this principle for the longest time. All Sales strategies are driven in one form or another on this principle. Be it the Black Friday Sale, Summer Sale, or Cartier’s falsely created rarity of Diamonds! 

By creating this sense of scarcity and urgency around a product or service, marketers can drive consumers to take immediate action. 

Limited-time offers, flash sales or exclusive deals emphasize Short Duration and limited availability… this in turn, prompts the consumer to seize the opportunity and avoid the regret of missing out, resulting in increased conversions and sales.

Social Proof Theory

Ever wondered before buying something online: “Has someone else tried it? What are they saying?”

Digital Communication is a One-sided communication, Brands anticipate the consumer’s needs and deck out their message! 

In such a communication pattern, the Social Proof theory is one of the most used principles. It relates to the fact that we, as humans, trust products more when we know others who can validate the product’s value.

We often look to others for guidance on what to buy or engage with. Thus, leveraging social proof is a powerful technique in marketing psychology. By showcasing positive reviews, testimonials, or user-generated content, businesses can establish trust and credibility, influencing potential customers to follow suit and make purchasing decisions

Loss Aversion Marketing

Just think of how many “last chance to buy” emails you have received in your inbox?

This theory points out that most people would prefer to avoid losses compared to acquiring gains.

Researched and propounded by Nobel prize winners Daniel Kahneman and Amos Tversk during their research on Prospect Theory, We learnt ‘People don’t like to lose what they’ve already gained’.

Digital Marketers use this ‘Loss Aversion Marketing’ on a regular basis.

Please Note: While this has proven to be an effective strategy, the internet has made many users get flooded with this style of marketing, and thus if not thought out judiciously, it can have a detrimental effect on your brand.

Some Loss Aversion Marketing strategies include:

Trial offers: The easiest example for this is the freemium model employed by so many SaaS based products. Research tells us that we assign more value to products we own more than those we don’t. So customers feel a loss when the trial period ends. A similar is created by giving out Samples. In a B2B setup, the conversion rate increases, if you ask people to return the Samples.

Creating a limited resource: This is very commonly used in E-Com businesses, brands often create a certain batch of stock that has unique, and has a separate marketing rollout, and also let the customer know about it. Add the Scarcity Principle we mentioned earlier, and viola! You have quicker conversions.

Offering a gift with purchase: The idea of losing a free gift can often serve as a strong incentive for convincing your customers to make a purchase

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