Using simple human truths to understand and affect consumer behavior
While it may sound obvious, marketing works best when it dovetails with how people naturally behave and make choices. This is important because all too often a marketer’s mindset is “brand out.” In other words, they’re passionately fixated on telling the story of their brand, products, benefits and offers. But they don’t always consider what people need most from the brand and the emotions that drive their choices.
Behavioral research tells us that that most choices people make are non-conscious or intuitive. After the fact, our rational brain simply justifies the choices our emotional brain has already made. When consumers are asked why they’ve purchased their car, toothpaste, brokerage service, etc., their self-reported list of logical reasons is just the tip of the iceberg. Understanding the emotional drivers of decision making – thinking “consumer in” – is critical to effective marketing.
This is where behavioral economics comes in. If you’re not familiar, it studies the effects of psychological, social, cognitive and emotional factors on our economic decisions (i.e. purchases). As it turns out, there are a considerable number of instinctual human behaviors – we call them simple human truths – that have implications for how we make decisions. They can be used to better understand your marketing challenges and inspire more effective solutions.
By following research on decision making, we’ve built a collection of these truths to serve as a resource in our work. We’ve included two here to help demonstrate the importance and value of thinking consumer in. As a disclaimer, it’s important to remember that context can influence behavior as much as instinct, so every situation is different. While these behavioral biases are well established by research, the application of them requires a combination of insight and judgement.
Truth #1: Loss Aversion
Emotionally, a loss hurts twice as much as a win feels good – which makes avoiding loss a powerful driver of behavior. Marketers often only consider what people will gain by purchasing their products (the win), without also considering that switching brands sometimes includes some form of loss. It might be the time or effort required to switch, the loss of a favorite product feature, or the losing the convenience of a closer retail location, etc. Taking some time to consider what consumers might lose by switching to your brand and acting to minimize that loss can improve a campaign’s effectiveness.
The power of loss aversion was evident when Kraft decided to remove all artificial ingredients from its iconic macaroni and cheese. Initial research showed that consumers cared less about the benefits they would gain from a healthier product than the potential loss of the taste they’d come to love. Kraft addressed this by releasing the new version without any marketing or change to the packaging. The launch campaign began months later when they revealed that everyone was already eating and loving the improved version and had just participated in “the world’s largest blind taste test.”
Brands can also use loss aversion to their benefit through fear of missing out, or FOMO. Convincing consumers that they are missing out on something they’re entitled to or that others are enjoying can often incentivize us to try a new product. Success here depends on providing credible proof that people are missing out. Allowing the consumer to come to that conclusion for themselves is much more powerful than the brand saying it’s so.
In addition, the power of loss aversion can be intensified through scarcity. We assign greater value to things when they are less available. This is why ecommerce sites sometimes include inventory information on a product (“only 2 left”), or why retailers like to remind us “sale ends soon!”
Truth #2: Comparison
People use comparisons as an intuitive form of navigation. When we compare our options relative to each other not only does it make choosing easier, it also influences our choices. Marketers can leverage this effect by controlling what is presented for comparison.
When a restaurant includes a handful of highly priced entrees on its menu (knowing few people will order them), it’s setting a high-end anchor point that will increase the average price of what diners select. The same effect happens when high-priced wines are added to a wine list. “Anchoring” involves artificially controlling the lowest and highest items on a scale (price, quality, features, etc.), knowing that people will typically choose something in the middle. Manipulating the top/bottom of the range, manipulates people’s choices.
This approach can also be useful when consumers have assigned a brand to an entrenched position in their minds (e.g. they are the…cheap brand…reliable brand, etc.). One of the ways to get consumers to break away default thinking is to provide a new frame of reference for comparison.
Dos Equis beer’s “most interesting man in the world” campaign is a good example. It was developed at a time when imported beer sales were down and the cocktail craze was just beginning. Rather than compare itself to other beers, the brand changed its frame of reference to being a beer for cocktail drinkers. The key line in every commercial was the man saying “I don’t always drink beer, but when I do, I prefer Dos Equis.”
Comparison can also be used to position a new or unknown brand. By referencing a established brand outside of their category as a frame of reference, a new brand can make it easy for consumers to quickly understand where the brand fits. For example, we are the Cadillac of lawn mowers.
The Bottom Line
Human beings are complex, and their purchasing decisions are no different. Rationality, emotion, context and unconscious drivers all factor into every choice we make. So by all means, tout your brand, its features and your offers. But make sure to also explore the consumer’s mindset and the many simple human truths that drive their behaviors and decisions.