The Psychology and Science of Good Marketing

If everyone in the world was a perfectly rational person, marketing would be the easiest thing in the world. We’d simply create marketing materials that explained what our product was for and how much it cost, and people would decide whether or not it met their needs.

But people aren’t perfectly rational. Navigating the way that people think is one of the most important aspects of any marketing strategy, and books have been written (lots of them) about the subject, so I’m clearly not going to cover everything in one little LinkedIn blog.

Luckily, people are (to some extent) predictably irrational, a phrase borrowed from Dan Ariely’s brilliant book. What that means is that people might not behave in completely logical ways, but a lot of the illogical things they do can be counted on to happen again and again, which means we can use them to our advantage in the marketing world.

Here are a few examples.

Priming

Priming is the idea that you’ll think differently if you’ve already been put in a particular frame of mind by an outside influence. If you’re in an empty room with yellow walls and I ask you to name any fruit, you’ll probably say “banana,” but if the walls are red, you might say “apple.”

It sounds a little weird, but it’s a well-studied phenomenon. Subtle cues like the colors on your website or the images at the top of your blog posts can put people in a certain mood, which affects the way they behave later on. Customers “primed” on money will focus more on price, while customers primed on convenience will think of price as a lesser priority.

Social Proof

The iPhone 11 must be a really good phone. 12 million people can’t be wrong, right? Well … they can, technically, but it’s really hard for us humans to wrap our heads around the idea that a massively popular item or idea might be a dud.

You see this play out in marketing all the time. Books brag about how they’re “bestsellers,” which doesn’t necessarily mean they’re any good, just that they’re popular. Cell phone companies quibble about how many subscribers they have. McDonald’s has signs bragging about “billions served.” Music albums get Gold or Platinum status based on popularity. Not many people want to be the first to try something, but once it becomes popular, we can’t get enough.

Decoys

This is one of the main takeaways from Dan Ariely’s book and his TED talk, “Are we in control of our own decisions?” If you haven’t read or watched those, I’d highly recommend them. Anyway, the decoy effect is a powerful phenomenon, even if it’s not strictly logical.

In Ariely’s talk, he describes a pricing model from The Economist. Subscribers have three options:

• Online subscription: $59 per year
• Print subscription: $125 per year
• Online and print subscriptions: $125 per year

This almost seems like a mistake. If the online subscription is worth $59, why would they offer it essentially for free in the third option? Ariely contacted The Economist and didn’t get a straight answer, so he presented these options to 100 students and asked them which one they’d pick. Most of them opted for option 3, the combo subscription. When he removed the print subscription option (number 2) from the list, the majority of students opted for option 1.

Why? Because the print subscription is a decoy. If you have the choice between the exact same articles in a magazine on your coffee table or an inline subscription that you can access anywhere for half the price, obviously the online one sounds better. But if you feel like you’re getting a $59 online subscription for free, you’ll jump at the chance for the bigger price tag.

You see this sort of false comparison everywhere. Imagine a company that makes four bottles of whisky: a red one for $35, a green one for $50, a black one for $100, and a blue one for $250. The process of making whisky hasn’t changed, so there’s no way it takes 2.5 times as much to make the blue one as to make the black one, but when they’re next to each other on the shelf, the black one looks like a much better deal when you could be paying more than twice as much for the blue.

Scarcity

“While supplies last!” “Limited time offer!” “Only 6 rooms left at this price!” These are all examples of scarcity messaging, and it’s based on a principle from Econ 101: supply and demand. If there’s less of something, the reasoning goes, people will want it more.

Scarcity has to be used carefully in marketing. People have come to realize that some marketers lie about scarcity to drum up business (like how mattress stores seem to have liquidation sales that go on for years), so they’re skeptical. They’ll also notice if your scarcity doesn’t make sense — if you say that the first hundred people to download your ebook will get it half price, they know you’re just being greedy, because the marginal cost of an ebook is zero.

Instead, scarcity should be framed as “there used to be a lot of these, but now they’re running out.” That’s a genuine use of scarcity, plus you’re leveraging social proof by pointing out that a lot of people already have the thing you’re selling, so it must be good.

Anchoring

In an episode of Friends, Rachel is trying to convince Ross to buy a sweater, but he balks at the $200 price tag. She points out that it’s $200, “down from $450,” so he’s saving money. It’s played for laughs, but this is a perfect example of anchoring.

Any time you’ve bought something with the original price crossed out and the new, lower price next to it, you’re seeing the anchoring effect. The initial price is the “anchor,” adding perspective and making the lower price seem more appealing than if the item simply cost that much in the first place.

It’s certainly possible to overdo it with anchoring, and J C Penney is the classic cautionary tale. Scrolling through their home page right now, I can see a Doorbuster sale for 60% off certain items, a Labor Day sale for 50% off others, 60% off mattresses and furniture (with an extra 10% with a coupon), 50% off sunny day staples, 40% off workday attire, 40% off dorm supplies, and seven other deep discount offers.

So why would I ever pay full price? That’s the problem with constantly using an anchoring strategy — if a given item is always marked as 50% off, I’ll start to see its value as half of what it used to be, which backs retailers into a corner. They can never go back to charging “full” price, because they’ve reset customer expectations. If you decide to use anchoring, use it sparingly.

Loss Aversion

Let’s say I offer you a choice. You flip a coin, and if it lands on heads, I'll give you $100. If it lands on tails, I’ll take $100 from you. Would you take the offer?

Most people would say no. Statistically, it’s a complete wash, but people are much more afraid of losing the $100 they already have than they are enticed by the $100 they don’t have yet. In surveys done on this offer, people want to win at least $150 for the coin landing on heads before they’ll consider it.

This is what people mean by “loss aversion,” and it’s a powerful phenomenon, but it’s tricky to work into a marketing strategy. You certainly don’t want to threaten to take anything away from someone, or they’ll think you’re mean and they won’t like you.

The freemium model is probably the best way to leverage loss aversion. Offer an introductory price that’s lower than your standard subscription, or let people try out your product for free for a limited time. At the end of the trial, remind them that the features they’ve been enjoying are about to go away. If you’re careful to avoid making it sound like a ransom demand, loss aversion can drive a lot of conversions.

The Bottom Line

All of these techniques (and lots more I didn’t explore) can be extremely useful to marketers, but tread carefully — one of the main reasons people don’t trust marketing is that they think it’s manipulative, and these techniques can easily feed into that impression. Marketing is a scalpel, not a sledgehammer. Use it wisely!