News article

5 important marketing concepts that are based on psychology

Ever since the concept of marketing has existed it has always been intertwined with psychology, whether consciously or sub-consciously. Now, neuromarketing is on the rise in the UK with psychology being the basis of any marketing tool and strategy.

So, if you want to become an armchair psychology expert like many of us aspired to be when we were a child, dive in and learn something about psychology, marketing and the inner machinations of capitalism.

1. Personification/anthropomorphism

If you’ve ever worked on a computer, you’d know that it hates you. Occasionally. When it freezes in the middle of an important task, or simply is unresponsive, it may seem like the machine simply doesn’t like the cut of your jib.

In psychology, this is referred to as anthropomorphisation – the act of attributing human-like characteristics to animals, objects, and intangible entities. And in normal-person speak – personification.

Of course, as marketers, we constantly try to turn psychological concepts into marketing tools for us to better engage our target audience – whether knowingly or subconsciously.

One company has perfected the personification of a Twitter account – Wendy’s.

By engaging customers not through media and adverts but by sometimes insulting them outright (for their pleasure – no, not in the weird sense), they started a Twitter trend amongst companies. There’s a simple reason why others are adopting this marketing strategy – it works.

Wendy’s has pulled in an additional $64 million that year, thought to be because of their aggressive social media presence. It means that if your customers can see a relatable individual behind a logo they’re more likely to engage and interact.

2. Chunking and brand personality/colour association

What’s your phone number? Usually, the response is something along the lines of 05538-98-4351 or split up into several groups of numbers.

By grouping numbers, or “chunking” them, it is far easier to remember information regarding complex topics and number strings. But we can actually go beyond this concept and dip our toes into the vast ocean of knowledge that lies within our own subconscious.

Chunking goes beyond simply numbers – the way we remember brands is also the exact same way we remember people.

If you think of a popular luxury brand such as Gucci, you might think that it’s rather refined, high class and expensive. However, while this ideally would be the target demographic of a brand such as Burberry, this is not always the case. Anytime I see anyone on the street dressed in any Burberry clothing, I find myself clutching my phone (and the wallet held within it) a little bit tighter than usual.

But what does this have to do with chunking? Well, if I told you to think of a brand that is red and makes soft drinks – the immediate thought should be Coca-Cola. Blue soft drink? That’s Pepsi. Therefore, it’s easy to see just how large a part colour coding plays in branding.

What do luxury brands have to do with this? Well, in the same fashion we link colours to brands, we also link company personalities to brands.

For example, when someone mentions cheap airlines, your mind might immediately snap to Ryanair. A more commonly known example might be alcohol – specifically vodka. If you’re thinking of top-shelf vodka, it’s Grey Goose. In this manner, brands are associated (chunked) with pricing and reputation rather than colours.

3. Context dependent memory recall

If you enjoyed reading about chunking as part of memory encoding, then you might also be interested in the context in which we learn information. After all, returning to the same external environment may help us remember things we’ve forgotten a short while (or even long) ago.

This is referred to as context-dependent memory. It’s also the reason why others, rather unhelpfully, ask “where did you last see it?” – it referring to the belonging you lost just half an hour ago. And annoyingly enough, returning to the same environment where you had last seen it can help enhance your recall.

Of course, beaming advertisements in the brain of unsuspecting customers is the marketer’s dream, but how do they make practical use of context-dependent recall?

The answer is rather complex, and this knowledge can either be used to:

  • Enhance brand recall, such as when brands use mascots like Quicky (the Nesquik bunny) on both their adverts and packaging.
  • Decrease the effectiveness of the advertisements of their competitors through proactive interference. By placing ads next to each other in the same product category, recall is significantly diminished.

The implications of this are that, if a product leader wants to retain market dominance, it can match the advertisements of competitors to ensure that up-and-coming companies stand even less of a chance.

4. Risk-avoidance/perceived risk

Risk-avoidance is a psychological concept that can be summarised as “self-explanatory”. Normally, people tend to avoid high risks, unless those people are categorised as risk-seeking.

For financial advisers and planners, many clients can be categorised as “risk-averse”, as the prospect of potentially losing savings or one’s pension is rather unpleasant. This risk avoidance can be categorised as mitigating financial risk – but marketers have at least four more to consider when it comes to consumer decision-making purchases:

  • Financial risk – what are the chances that you lose money?
  • Performance risk – what are the chances that there’ll be something wrong with a product/service?
  • Physical risk – what are the chances this product/service will hurt you?
  • Psychological risk – what are the chances that this product/service hurts you psychologically?
  • Social risk – what are the chances this product will harm my social standing?

Doctors may consider the physical risk if they fly with United Airlines – although, if they do mandatorily volunteer to exit the aircraft with most of their teeth intact, they may not be concerned about the financial risk for the rest of their lives – as Dr Dao was rumoured to have received a settlement of $140 million.

5. Tribalism and segmentation

When I first moved to the UK, I was under the assumption that the Grand Canyon was only in the US. To my surprise, however, the cultural split of the North and the South of England could put Arizona to shame.

In psychology, this concept would be defined as tribalism – a societal system whereby larger groups are divided into subgroups. In school, they might be called cliques.

For any marketer, this translates into segmentation – the concept of splitting up larger groups into smaller ones to cater to a specific niche or interest. Marketers base everything on niches and tribalism, from the company’s own brand to specific target audience adverts and promotions.

It is ingrained into our soul much the same way the pronunciation of “scone” is ingrained into every individual in the UK.

Tribalism doesn’t only apply to marketers; however, it also applies to customers. Customer loyalty being a key concept of purchases, it’s no wonder there’s the long-established Pareto principle – 80% of your sales comes from 20% of your customers.

This means that tribalism can be a good thing – a way to promote sales, increase customer retention and align your marketing towards a niche through segmentation.

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