Psychological Marketing: How to Incorporate Psychological Principles into Business and Marketing

The majority of marketers aren’t psychologists, but many successful marketers regularly employ psychology in appealing to consumers. Psychology in marketing is learning on why people make purchases and how to attract the customer to choose and buy products using psychology theory on how people think, act, or what driven them. 

Here are some of the strategies of psychological marketing:

  1. Reciprocity Principle. This principle is based on the idea that if a brand does something good for the customers (give something to them first), they are more likely to return the favor, and have increased cooperation in the future (more likely to return the favor). For example, Spotify offers a 30-days free trial for Ad-free music streaming with offline mobile access as a premium membership which can be canceled at any time at no cost. This “hook” makes it hard for people to stop the payment when the free trial ends, especially when it only costs $8/month. 
  2. Anchoring Bias Theory. This theory stated that our decision-making is heavily influenced by the first piece of information we get that’s related to that decision. In terms of marketing, the anchoring bias means that customers evaluate prices and products based on the first information they receive. This method practically applied by displaying original prices alongside reduced rates during sales. The original price becomes a reference point (an anchor) for the customer, making the sale seem like a better deal than if the low price were shown by itself.
  3. The Scarcity Theory. This idea suggests that humans place more value on the things that they believe to be rare and place a lower value on what can easily be accessed. This theory makes people to think that the offer given by the brands are one-in-a-lifetime and they couldn’t miss the chance created a sense of urgency which can drive a reactionary impulse buy. The examples are limited offer (sales or discounts), ‘30pcs left’, ‘available only for 100 pcs’, and exclusive access to VIP members.
  4. Social Proof Theory. This theory relates to the fact that humans trust products more when they know others who can validate their value. The example is positive user reviews or a celebrity using the product. Examples of how to do marketing using this theory is Lush, a cosmetics company, uses the hashtag #LushShowAndTell to encourage customers to post pictures of themselves using their products. These companies often feature posts with the hashtag on its Instagram account.
  5. Loss Aversion Marketing. This theory points out that most people would prefer to avoid losses compared to acquiring gains. For example, we are more upset over losing $20 than we are happy about finding $20. Why do we act this way? Possibly because strong anxiety and fear are associated with loss, and negative emotions are shown to have a stronger, more lasting impact on people than positive ones. The loss aversion and scarcity principles seem similar, but the focus is different for each. With scarcity, you are emphasizing that there is a limited supply of an item, but with loss aversion, there is no concern with supply. To invoke loss aversion, you are letting consumers know they might lose something they already have. For example, a brand only gives free shipping to orders over $250, so if the shoppers don’t meet the minimum, they lose out on free shipping. Offering gift with minimum purchase is also one example of this theory.

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