Marketing Psychology & Data Science

Contents

• Executive Summary
• Maslow's Heirarchy of Needs
• Modern Marketing for Modern Business

Marketing is psychological...?Understanding why a customer wants and needs; and therefore makes a purchase toward that want or need even as a combination is an exploratory process of science and psychology.?

When you are first building your products and services you would have to first establish if there is a demand in the first place.?In fact, according to a recent study implemented by Zebra; over 42% of businesses in the US eventually fail because there wasn’t a demand for their products in the first place.??

This alone based on a personal hypothesis that I have is that most businesses may romanticize the concept of starting a business.?One that positions the glorification of an idea vs having a more realistic approach in seeing an idea to its full fruition.?

Businesses should first assess if there is a demand and build a business model around serving the demand.?We then can dive deeper into the psychology of how and why a consumer may want to buy or not to buy.?The goal would be to understand the influence of buyer behavior.?

Marketing is an art, however you need science and math to understand, measure and scale your results.?Especially in modern day marketing online and even offline.?Everything online is an exchange of data through algorithms.??You need models to not only measure performance but to implement what is called conversion rate optimization.?In Layman's terms you need enough data to exchange with online marketing platforms in order to optimize your ad delivery and acquisition costs.?The art of this is also bigger than creative advertising but psychology…

How can we tie in the influence of buyer behavior and create media to influence buyer behavior? Not only for just the immediate moment, how can we capture the consumer’s attention and scale up results while maximizing the lifetime value of a customer?

That my friends would be an art.?We can combine creativity, math, psychology, and other sciences including computer science such as machine learning and artificial intelligence to maintain and scale communications with customers as well as potential customers.?

In this article, we will go over how in theory you can potentially use machine learning models and AI to optimize and scale your marketing but from a psychological angle.

Maslow’s Hierarchy of Needs??

Maslow’s hierarchy of needs is a theory in psychology, the original was a five tier model and structure that emphasizes human need. ? This structure is often presented in the form of a pyramid.

The hierarchy from bottom to top are; physiological which includes things such as food and clothing.? Safety which could be anything from job security and overall safety of a human being.? Then we have love and belonging needs; which would be friendship and connection with different human beings within different types of relationships.? We also have what is called esteem and self actualization.

According to this theory, the needs that are at the bottom and lower part of the hierarchy should be satisfied before we can tend to the higher needs.? Essentially the goal of Maslow’s hierarchy of needs is a model that aims to understand human behavior from the perspective of need.? The pyramid maps diverse human needs and as mentioned covers physiological needs, safety, love and belonging, esteem and self actualization.

It's obvious that one has to be motivated to take certain actions.?Whether it be for survival or to make a purchase, or perhaps a combination of many things.?Maslow’s theory emphasizes not only on tension reduction and the mere actions of survival but also the growth and maximum development of a human being to their fullest potential.??

I would like to point out that the 1954 version proposes that?humans have two sets of needs.?This 5 stage model can be divided into groups of deficiency needs and growth needs.?It's actually interesting and helps me to want to explore myself more and how I can grow.?The first 4 levels are identified as (D Needs) which are our deficiency needs, and our top level which is growth would be classified under this theory as (B-Needs)?

Deficiency needs

Deficiency needs would fall under what is considered basic survival and would include physiological needs whether it be sleep, or some form of intimacy.? Our safety needs may include having a secure flow of money, job, security from any form of danger or instability.? Essentially it appears according to this theory our basic need for survival starts from a physical standpoint.

From a psychological perspective a consumer may feel motivated to purchase something from a deficiency need… whether it be a purchase that involves education, or how to make money, or products related to safety.? Such as mace and other unique technology to protect women.??

In some cases you may have those who take advantage of and sell from the perspective of playing into a person’s desire and need to have financial security and freedom.??

What are classified and needs that are deficient under this theory may come about due to some form of deprivation that would therefore motivate a person to take action due to this.? An example is someone who may not want to go hungry… the longer a person goes on without food the hungrier they may become and therefore more motivated to achieve the possession of food.??

Initially back in 1943 Maslow stated that individuals must undoubtedly satisfy the lower level deficit needs before moving upward toward higher levels into growth. ? Later on he did give clarification that satisfaction of a need isn’t an “all or none” situation. ? He seemingly was admitting that his prior statements may have given or presented a false impression that a need must be satisfied at 100% in order to progress higher in the hierarchy.

According to this theory a deficit need should be more or less satisfied, and once it has been it will then go away, that our activities would habitually and naturally be directed toward meeting the next set of goals in the hierarchy. Which would be our salient needs.? However the theory appears to indicate that growth needs to continue during the process and become stronger over time.

Growth needs

According to Maslow’s theory, when we are speaking of growth needs it appears to indicate that this is more of a psychological need, and is more so associated with a person’s potential and the need to self actualize.? These types of needs may be achieved through intellectual and creative behaviors.??

I myself feel like I haven’t reached my full potential and there are things I am attempting to look into and invest in so whatever is blocking me in life will be removed.? A Lot of it has to do with childhood trauma. So I invest in a cognitive therapist and other things that may help me to grow.? I also feel deprived intellectually when I’m not creative, playing my instruments; writing music, my visual arts and writing which is why in these sessions I make it creative to fulfill that need otherwise I wouldn't be here to be honest.??

Every person according to this theory is capable of moving upward in the pyramid toward self actualization.? Progress may be disrupted by failure to meet the lower needs according to this theory.? Anywhere from a divorce, losing a job, no stable income may cause an individual to fluctuate on the hierarchy.? A disruption of the balance of a human being, their peace and ability to evolve and grow upward.

As a brief overview...

1. Physiological needs- involves human biology and the physical need to survive such as air, food, drink, clothes on your back, warmth or being cool in hot weather, sleep and intimacy of some kind.

According to Maslow the human body would not be able to fully function and therefore disrupt the ability to reach higher needs.? In a non-controversial way, some who may not have the ability to survive may resort to violent behavior in order to achieve a need.? Which keeps them living at a basic human level.??

According to this theory once these needs are met to some degree we can move upward toward security and safety.??

2. Safety needs –? according to this theory people may want to have some form of control and some form of predictability.? Safety needs may be fulfilled via family, communities, having police, schools, healthcare and business perhaps.

One may need emotional security, financial security, feeling safe in your neighbor regarding laws.? For example I will never want to travel to a country where there aren’t fair laws for women.? To have security when it comes to our fears.? Even social stability even in Clubhouses where we want to be accepted and free from drama.???

Other products could be life insurance or accidental insurance to assure that we can have security in the event unexpected things happen.?

3. Love and belongingness needs – Belongingness would mean this emotional need to have relationships and to be connected even to be connected to groups.? Community. To feel loved and accepted in a group setting.? This could be friendship, intimacy, wanting to be accepted.? To trust…?

4.? Esteem Needs - would be related to one’s self worth, a sense of accomplishment and respect. ? Maslow’s categories include ; esteem for oneself (such as dignity, achievement, mastery and independence of some sort), and respect, the desire to have a reputation in your status or what you do.? I know I desire this to some degree.? We all may feel like we are contributing to society and that we matter.? This desire for acceptance and to be valued.

5. Self-actualization -? Would be the highest need and is related to a person realizing their full potential.? Self fulfillment where one is seeking to achieve personal growth.? The ability to reach one’s full potential.? To reach the highest you can reach in this world.?

Modern Marketing for Modern Businesses

We know longer live in a world of advertising similar to Don Draper and the Mad Men TV show…? Technology has truly evolved where marketers can use data in real time that is relevant to the communication between marketers and consumers.

Through technology and the implementation of machine learning and AI we can now personalize the user experience and create strategic gain through optimizing the user experience.

Through behavioral patterns of consumers we can stabilize and lower acquisition costs, we can scale results by finding opportunity in the data that we collect.

Data activated marketing based on the behavioral patterns and needs of a consumer represent a massive opportunity for growth? While back in the day consumers were confronted with a sales clerk, in modern day this would be machine learning and AI doing the work for us by delivering ad communication and messaging.??

Whether this be in our websites, apps, and in the future Metaverse environments.? Granted… how a Web3 Metaverse will work would differ from the way data is used in Web2 but that is an entirely different room.? Today’s focus is the proper use of data toward data driven marketing vs data ownership.

However true personalization doesn’t lie in basic list segmentation, or which ads perform well at a surface level.? There are several consumer signals that should be considered and properly modeled in real time in order to make use of it.? A common challenge with some modern marketers is their lack of understanding data and how to properly use it.? Even though many have access to and use tools such as; customer-relationship management (CRM), master-data management (MDM), and marketing-resource management (MRM).

For context a CRM - is technology that is used to manage all of the relationships between a company, their customers as well as their potential customers.??

MDM - would be tools and processes that an organization would use in order to establish a single source of truth for their data.? By doing so an organization can clearly identify and distribute data consistently, efficiently and accurately master data organization wide which is super important.??

MRM - can be described as software tools that would essentially support workflow, strategy and optimization for marketing within a company.? A single source of truth for marketing materials. Which overall if properly set up and used would give a marketer the ability to store, retrieve as well as organize marketing assets whether it be for approval or iteration.

Although these tools are extremely helpful there is a lack of understanding on how to properly collect data and use it toward useful systems. At some level even without adequate knowledge these tools do help to streamline data more so than if these tools weren’t used.? There is an ability to manage segmentation, design and measure workflows, and improve customer relationships.??

However these tools if not properly used and even if used at a great stage of development it may miss the mark as it relates to the overall signals that customers send.? In general there is a lack of automated decision making… There is a lack of adaptive modeling to learn from the customer in order to better serve them, and obviously many missed opportunities to scale at the level of personalization.??

We now have emerging technologies such as CDP’s that may solve these problems.? Ultimately CDP’s (customer data platform) would take consumer first party data from various sources and is tasked with building pretty much a 360 degree view of a customer.? It makes the data available to marketers in order to create targeted and more personalized campaigns.??

Its goal is to simplify and make more ready the concept of automated decision making, the ability to scale data based on customer interactions in real time.??

Data foundation - A CDP for example would take data a company already has and combine it to create profiles of your customers, and would make it easily accessible.? Ultimately feeding a CDP should be the process of combining data for it to build upon over time.? Obviously creating models that cluster customer profiles based on behavior required advanced analytics to process the data and machine learning to refine it.? The system will learn and create better customer segments and overall customer segments.??

Signals such as ; visiting a website, app behavior patterns such as those who purchase from a desktop website vs inside of your app,social media engagement as basic examples of signals.? Whatever the signal may be that I may not have mentioned, we can expand the data set and position the ability to respond to unique behaviors that are personalized in real time.????

2. Decisioning: Mine the data to act on the signals

The decisioning aspect and function of a CDP would give the ability to better decide content distribution to a given consumer profile at specific times and channels.? The customers would be scored based on their potential value and even the life cycle. ? We can create rules and regression models to match specific messages, offers and experiences based on how a customer would score.??

Marketing is a conversation… Having personalized content to provoke that conversation, especially from a psychological point of view based on the customer's behavioral patterns and signals can improve how you engage in a conversation with a customer.

It’s like having a conversation with a person without knowing them and either offending them or missing an opportunity because you didn’t know what to say.??

So therefore we can mine data through a CDP system in order to develop systems on how to act or respond to customer signals.

One example of customer signals and behaviors is a company that realized that most customers had a very low LTV and in fact that most customers only purchased 1 time per year… Deeper analysis provided insights that the customers that purchased only once per year would return to the website and browse days after making a purchase.? That would be an opportunity, as this signal can help create targeting messaging and even a Chatbot to communicate during that window of time to potentially increase the probability of another purchase and extend the lifetime value of a customer beyond the initial purchase.??

In order to develop effective decision making on automation it requires testing that validates and refines the hypotheses and outcomes.? Utilizing machine learning and AI and CDP tools can help to speed up this process in real time.? Where you can take advantage of opportunities vs missed opportunities such as the example given previously.??

3. Design: Understanding the psychology and behavioral patterns of a customer and creating profiles or clustering groups of consumers based on their similarities can help with an efficient design system.? Where content can be curated in order to create visuals, messaging and an overall experience from a psychological perspective.??

4. Distribution: Delivering experiences across platforms

Regarding distribution of your content, there should be distribution systems based on the groups and clusters of customers.? These are essentially pipes that should be designed to deliver ad content to the end user in a personalized way.? Usually this is done manually but with a CDP for example you can have predetermined triggers and tagged content to these distribution systems to automate these processes more specifically.??

To bring this full circle.? Modern marketing requires data and the proper use of that data. To listen to a LIVE discussion I had on Clubhouse that goes more into detail you can listen to the replay here.