Psychology for Marketing: 8 Theories which will increase ROI

Knowing how your customers make decisions about their lifestyle, health and wealth is vital for you to understand how you can improve your target marketing to your chosen demographic. Therefore, getting inside the mind of your customer is a very good way to understand how to target your products or services.

1 | Nudge Theory

Nudge theory states that instead of forcing customers to make decisions, we should indirectly and subtly nudge them towards making the decision we want them to. All in their best interests of course!

One way of guiding the decision-making process is asking people open-ended questions, which make them think and arrive at a decision themselves. Posing open-ended questions make the recipient think ‘what if?’, and could positively influence their decision.

Marketing Takeaway – customers respond better to subtle sign posting and open-ended questions than they do to being directed or forced into making a decision. Let them think it’s their idea and that they’ve made the decision, when all the while you’ve been nudging them towards your solution!

2 | Cognitive Dissonance

We all like to convince ourselves we’ve made the right choice when we buy something. As a result we tend to increase the good qualities of, for example, the Samsung phone we’ve bought, and amplify the negative aspects of the Apple IPhone we didn’t buy. This is known as cognitive dissonance, where we feel that our phone might not be the best product on the market, so we try to reduce our pain by convincing ourselves we’ve made the best choice - even if we have doubts.

Marketing takeaway

We can help reduce cognitive dissonance by having sales agents who amplify the product’s desirability or exclusivity, and pointing out features which it has over the opposition.

Targeting marketing messages to customers which push them towards your product, by ensuring they can see clear advantages in buying your product or service over another one, reduces their cognitive dissonance and indecisiveness about their purchase.

Moreover, if they have a good aftersales experience, this also increases their confidence that they have bought the right product. This has a two-fold benefit: one, they’re more likely to buy your product, and two, they’re likely to be a great ambassador for it influencing others to buy it!

3 | Elaboration likelihood model

Some buying decisions are more difficult than others. Sometimes, choosing the right pasta sauce in a supermarket is more difficult than choosing the car you would like to drive. So it doesn’t always follow that expensive purchases are more difficult. Sometimes, it’s easier to make an expensive purchase because the features and benefits are more tangible.

This is useful information when products are being marketed, because we should be aware of how elaborate the decision-making process is for our type of product or service. If the decision-making process is quick, we should appeal to the senses and seek to instantly influence a customer in the right direction. For example, with shampoo, focusing on the scent of fresh luxurious orchids or forests will instantly appeal to an impulsive and instinctive buyer.

The length of the decision-making process can also influence packaging or presentation. Products which are bought on impulse need to stand out to the customer and look attractive. However, purchases where people invest more time in deciding to buy need to emphasise their features and USPs clearly, to persuade customers to buy them.

Marketing Takeaway

If your product is an impulse buy, make it stand out and make it look attractive to the target market.

If your product requires a lot of thought and decision-making, clearly set out the features, USPs and specification to help customers decide.

4 | Approach avoidance conflict

Want to sell a calorific sugar-laden snack, but know that half your customers are on a diet? You need to understand Approach Avoidance Conflict theory! This is a classic heaven and hell scenario, where you want to eat that chocolate éclair, but you know that even a bite of it will add inches to your waistline.

So how do we get people to buy things they shouldn’t? Marketers are very clued in to getting around the negative side of their products, by playing down negative connotations and emphasising the positives! So in the case of our éclair, we need to emphasise its delicious flavour, and play down its calorie count.

Marketing takeaway

Play down the negatives, accentuate the positives!

5 | Conversion theory

The minority in a group can influence the majority. Consistent minority voices can dramatically influence your target market. Consistently emphasise, with clarity and relevance, the key advantages and benefits of your product - quietly and consistently repeating the message that you want to get across – and you can have a dramatic effect on influencing customers to adopt or buy it. Reasoned and unbiased arguments as to why someone should buy your product are going to have more impact, because yours is the voice of reason and influence. What is your value proposition, or the perceived benefit of buying your product, and is this clear for customers? Does your website or email campaign call customers to act urgently before they miss out, e.g. “only available over the Bank Holiday Weekend”? Analysing your conversions will help you embark on a journey of continuous improvement.

Marketing takeaway

Ensuring that you consistently present and enforce an unbiased message means that you will have a greater opportunity to influence customers to adopt your product or service.

6 | Scarcity principle

Making a product more exclusive will increase its value and encourage people to think that if they don’t buy it now, they won’t be able to get it again. The principle of scarcity tells us that what we want what is in short supply. So, creating a product and limiting its availability, whilst ensuring you advertise this exclusivity, means that you will have a greater demand. We only have to look at how, once rationing petrol or bread begins, how quickly there is a rush to stockpile.

Marketing takeaway

Producing a limited number of your product will mean it is more in demand, by making people think that it is scarce, and therefore more inclined to rush out and buy it. This works well with event tickets with limited dates available.

7 | Social influence

We are dramatically influenced by our social circle. This means that their testimonials and recommendations can influence our confidence levels in the product we are considering buying. This is particularly true if that influence comes from authoritative sources that we can trust, such as our peers, or favourite celebrities. This also influences our decision to buy big brands.

Marketing takeaway

Using trusted celebrities to endorse your brand can pay huge dividends in influencing customers to buy your product. Investing in branding or piggybacking with another brand to sell a product or service can help to influence positive buying decisions, because people trust the big brands to deliver quality and reliability.

8 | Ultimate terms

Certain words carry greater influence than others. For example, the word “free” when used in “buy one get one free” is a powerful tool used by marketers to make us think we are getting something for nothing, when in actual fact, we are just buying two products for a potentially reduced price. Another powerful device is to offer a free sample with the product your customer is considering, to encourage them to overcome indecision and make the purchase.

Marketing takeaway

Never underestimate the power of words and advertising copy - it truly can influence your customer to buy. Invest in marketing copy that will accurately portray your product or service’s positive benefits and attributes accurately and succinctly, so that your customers can make an educated decision. Ensure that your sales agents are on message when it comes to knowing the product’s attributes and benefits.