How to Use Psych Principles and Marketing Psychology to Grow Your Business
The World Wide Web is huge and filled with different types of players. Big and small, old and new, competitive and passive, it is where people converge to offer different services, products, and everything in between. And it is always a tough competition trying to get a bigger share of the pie or audience. Different organizations and companies employ unique strategies to lure customers and make a sale. From colors to layouts, there are so many ways to grow your business. But among the most important concepts that a lot of marketers use is psych principles.
Before digital marketing was born and words like ‘consumer behavior’ and ‘customer-centric’ were coined, marketing psychology or psychological marketing was little talked about if not totally empty. But today, it has become the cornerstone of any given company, regardless of size and the industry where they operate in. In fact, it’s already safe to say that every marketing department will have already hired, consulted, and designed a team that carries out marketing psychology research.
In this blog, we will be discussing various topics on how psych principles affect marketing as well as:
- What is marketing psychology?
- The importance of consumer behavior and psychology to marketing
- Commonly used psychology principles that are used in marketing
- How to use the liking principle to grow your business
What is marketing psychology?
Marketing psychology uses psych principles that help anticipate buyer behavior by understanding people’s cognitive biases. It is these innate biases that drive decision making, especially because people are naturally irrational as consumers. Therefore, marketing psychology employs theoretical knowledge to the marketing field, allowing digital marketing to use this and apply psychological insights and psych principles to drive purchase behavior and optimize campaign ads.
The importance of consumer behavior and psychology to marketing
First, let’s define buyer or consumer behavior as the study of customers and their behavior while making a decision to buy a product that satisfies their needs. It looks into the actions of consumers that drive them to purchase a certain product.
Being able to use psych principles on consumer behavior through marketing psychology has a lot of advantages. These include the following:
1. Consumer differentiation
Consumer differentiation, which can also be achieved through consumer research, helps distinguish a single consumer from other consumers to target a specific group that has similar behaviors. This is different from a targeted consumer demographic because you can still make further variations between individual consumers. As each group has different likes and preferences as other groups, a good marketer can design separate marketing programs for each. Therefore, you can tailor your marketing strategies to meet the specific needs of every consumer group.
2. Customer retention
Consumer behavior is not just about attracting new customers because it is as much about retaining old ones. A happy and satisfied customer will always want to come back and repurchase your product. With marketing psychology, you can market a product in a way that can convince your buyer to purchase it again.
3. Market trends prediction
By doing a consumer behavior analysis, businesses can determine if there is a shift in market trends. Say, for example, there is a visible change in people’s preferences for healthy food. If fast-food chains like Burger King and McDonald’s pick this up, they will make a change in their menu and perhaps include a little bit of healthy food.
Another example would be people’s preferences changing towards environment-friendly things. Almost every single business will change their packaging to make it recyclable or environment friendly.
4. Information on the competition
Consumer behavior doesn’t only help businesses with marketing but also in answering questions such as:
- Are customers purchasing from your competitors?
- Why are they buying from them?
- What attracts customers to their products?
- What benefits does your product lack in comparison to those of your competitors?
5. Product innovation
Innovating new products is a fun yet challenging endeavor for any business. Sadly, not all new products emerge winners. Most of them fail. In fact, new product failures range from 33% to 90% depending on their industry.
For example, the popular clothing store Zara that failed three consecutive quality control tests on their garments. They were further accused by Greenpeace of selling contaminated clothing.
So what is missing or causing the failure, especially on the problem with Greenpeace? We can attribute that to the lack of consumer behavior analysis and neglecting the fact that buyers don’t just want your products, but they also care about what you put on them. Find out what your customers are looking for and what their sentiments are and from this data, design a suitable marketing plan.
6. Improved customer service
Great customer service leads to a positive customer experience. And to be able to provide it, you need to understand that consumers require various levels of service. And knowing these differences and levels can help you provide the appropriate service for them.
Say, for example, helping two different customers at a clothing store. One is a husband who is thinking of buying a pair of lingerie for his wife, while the other one is a career woman in her 30’s who's looking to buy a new pair of lingerie. They will definitely need different levels of customer service that can satisfy their needs. The first customer will need a lot of introduction to styles, sizes, and colors, while the second one will need less help as she is more knowledgeable on the range of products.
Commonly-used psych principles that are used in marketing
Now, let’s look at the commonly-used psych principles that marketers use for their campaigns.
1. Reciprocity Principle
This principle believes that if a brand does something good for you or has offered something positive, you will likely return the favor and foster future cooperation. This means that in order to make a sale, you should first give to your consumers. In marketing psychology, a consumer feels indebted to your brand if you give him or her a free product.
How can you use this? It’s actually effective for email marketing, wherein you send out freebies in exchange for your prospect’s email information. Of course, to make it work, the customers should first see the freebie and that if they agree to receive it, you will then ask for their contact information.
2. The Scarcity Theory
Another psych principle used in marketing is the scarcity theory, which is anchored on the belief that people will want or value an object that is hard to obtain. In marketing psychology, consumers have this fear that they will miss out on a limited offer. Why? It is because scarcity instills the feeling of urgency. If there is scarcity, it is deemed as a threat and people would want to preserve whatever they need.
One type of scarcity is Exclusivity Scarcity, which appeals to individuals who want to establish their uniqueness or seek status. When people take the bait because of this psych principle, they feel like they are seen to be of higher value.
For example, you can send exclusive updates to your mailing list, highlight products that are considered one-of-a-kind, and tag your products as ‘limited edition’ or ‘exclusive’.
H&M and Forever21 always have a ‘special edition’ shoe or top collection for specific seasons, right?
3. The Social Proof
The social proof principle believes that people make decisions based on what other people are doing. Thus, you often notice sitcoms that play the laughter track because it leads people to laugh along. When people see other people using and enjoying a new product, they tend to want to have that thing too. This kind of response can be achieved in marketing psychology through the use of customer reviews, high numbers of users, celebrity endorsements, best-sellers, and influencer marketing.
Social proof fosters the ‘we mentality’ that emphasizes consumers to be ‘one of the few’ or members of an exclusive group.
4. The Anchoring Bias Effect
In marketing psychology, the Anchoring Bias Effect is based on the belief that customers evaluate the value of products based on the information that they received first. The first information then becomes their anchor.
Say, for example, you enter a store and see that their hydrating lotion is worth $20 but when you go to the next one, they are selling theirs for only $15. You will most likely see the second one as a better deal even if you don’t normally buy a lotion for that price.
Use this psych principle during a sale, where you place the product’s original price next to the reduced price. This way, your customer will use the original price as an anchor and realize how much they are able to save on their purchase.
Many retail stores have seen the impact of using this principle rather than simply putting the reduced price without placing anything to compare it with.
5. The Decoy Effect
Remember that it is human nature to always want a good deal, and the Decoy Effect helps your business fulfill this. In a series of options, adding a third option that’s less attractive can make the more expensive option a better deal.
What happens when there are only two options is that customers can easily compare their quality. But putting a third one can change their mental picture of the products and drive them to choose the more expensive one. You often encounter this in bundle offerings where two options are individual products while a third one is a bundle, which is more expensive than the other two. But seeing it as a bundle, it becomes a better deal.
6. The Paradox of Choice
This psych principle anchors on the belief that having too many options is stressful. Normally, we think that the more choices we have, the more freedom there is and the happier we are. To some degree this is true. However, in marketing psychology, having too many options gets people overwhelmed, leading them to freeze and end up doing nothing.
Instead, you can reduce your customers’ choices to the bare minimum or segment your lists. Make sure not to make too many group options or your customers won’t pick up any of them.
You can also provide bundle offers instead of presenting them as individual choices. Then, bring together several bundle options into a single offer.
7. The Herd Mentality
The Herb Mentality is a psych principle that works almost the same way as Social Proof. It is based on the nature of humans to conform and follow the lead of other humans. So, how can you maximize the benefits of this principle?
- If you have a website, show how many downloads your content has had. But this only works if you have a really high download volume.
- Show your site’s traffic numbers.
- Display your customers’ testimonials on your site. Post them around your lead-generation asset. People who will see this will more likely respond positively and join the bandwagon.
8. Information Gap Theory
We need to understand that the human brain loves wholeness, and any disruption to this can drive it to find the missing piece.
In marketing psychology, you can take advantage of this psych principle by doing the following:
- Create thought-evoking headlines. Ever wonder why most content titles start with ‘the secrets to’, ‘little-known ways to’, and ‘how to’? It’s because they evoke curiosity and attempt to fill an information gap in your head.
- Let them wait for the big reveal. The longer you hold their interest, the more interested they become. Instead of immediately revealing what you want them to know, use drip content.
How to use the liking principle to grow your business
Did you know that understanding and using the liking principle the right way can give your business an unfair advantage over other businesses?
But what is the liking principle? It is another psych principle that says we like the people who compliment us, who cooperate with us, and who are similar to us. This principle believes that we are likely to be persuaded by people we like and that the more you like a person, the more you are inclined to say yes to them.
In marketing psychology, there are three factors that influence consumer behavior and liking: similarity, physical attractiveness, and compliments.
In similarity, we trust those who are like us. You need to improve your clients’ trust by removing any walls that divide you. Say, for example, Nike. We know that it’s a high-end, social status-bearing brand. But their sales representatives simply wear a shirt, shorts, and rubber instead of suits and ties. This makes them more relatable to the customers aside from the fact that they are a sporting goods brand.
Physical attractiveness is another way to get your customers to like your brand. This is especially applicable to your business website. Since it’s your storefront, it should be designed in a way that can have an impact on your customers. This means that you and your website developer should work together to choose every element with deliberate intention. The graphics, color, and layout should speak about the brand, while the lines and shapes should speak volumes of brand information.
Remember, 75% of judgments made about a website are based on aesthetics.
Compliments are flattering, and we like people who like us, especially those who go out of their way to compliment us. Also, on a professional level, it has many benefits as far as the principle of persuasion is concerned.
But how do you use compliments to grow your business?
Encourage your audience by complimenting them on your blog posts, newsletter, or website. If you’ve been sent a badge for following a brand on social media, you can do the same thing to your own followers.
Truly, you cannot underestimate the power of the human mind, which is why you shouldn’t ignore the psych principles we’ve mentioned above to leverage your chances of growing your business through marketing psychology.
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Writer, blogger, software reviewer.