By acknowledging the importance social media plays in our everyday lives, we can begin to understand how psychological marketing techniques that are used online influence our spending habits. Psychological marketing utilises well known behavioural techniques in order to drive sales and build a good brand image with both existing and potential customers.
The Different Types of Psychological Marketing Theories
Rational Marketing highlights the quality and utility of a product. Especially online, this may be communicated in the form of ‘How to’ or ‘First Impressions’ video that can be shared across many platforms. Often emphasising the benefits of a product or service, rational marketing aims to appeal to a logical consumer by appearing as an honest review.
Emotional Marketing aims to boost consumer loyalty to a product. It is often communicated in the form of personal stories or relatable issues to the mass consumer. Grounded Cognition Theory aids emotional marketing as it enables the consumer to experience a story and empathise as if it were their own. This is particularly useful for smaller businesses that may rely upon word of mouth and online reviews to boost their sales. Millennials particularly tend to research products before purchase, therefore online reviews are crucial to making a successful sale.
Influencer Marketing is perhaps the best way to market to a younger audience online. Through platforms such as Youtube and Facebook, influential individuals (both celebrities and relatable everyday figures) review products and services in order to recommend them. Brand deals and transparency of paid advertisement are becoming popular and are extremely effective as role models promote desirable goods and services.
Paradox of Choice Theory
Schwarz’s Paradox of Choice Theory is usually presented in the form of categorization. When products are put into categories such as ‘home’ or ‘kitchenware’ customers are far less likely to become overwhelmed with a wide range of products. This works especially well for larger businesses, for example, Zaful, that may choose to advertise ten or so products on Facebook, all with links back to their website in order to upsell later in the purchasing process. Schwarz argues that by limiting the range of choice for a consumer, their anxiety lowers, enabling a smoother purchase.
Loss Aversion Theory
Loss Aversion Theory is most famously discussed by Nobel Prize-winning psychologists Kahneman and Tversky. It suggests that people are more concerned with avoiding loss as opposed to gaining excess. Often used when marketing products such as Apple’s Iphone, certain phone companies may offer a free gift of airpods with purchase from their online website, in order to make extra sales. The customer feels as if they miss out on better value if they purchase elsewhere.
The Scarcity Theory focuses on the consumer desire for something that is in limited supply and therefore in demand. An example of a brand that utilises this theory effectively is Supreme. Supreme has limited edition merchandise that is only available for a limited time and in limited quantities. This makes the product desirable and therefore gives it a higher value.
The Mere-exposure Effect
The Mere-exposure Effect argues that people are drawn to familiarity. This is utilised in all areas of advertising, but most notably in recent years on social media. Online cookies can track what we research (when given permission) and suggest more personalised adverts online. For example, Youtube surveys and Amazon’s Alexa may link to Facebook and suggest an opportunity to buy an album that you persistently search for. This relies on the consumer increasing familiarity with a product, so that if they wish to purchase one, they are drawn to a familiar brand. See our other article ‘What is Branding and Why is it Important?’ for more information on why branding is an important marketing tool.
Social Proof Theory also lends itself to this effect, as we are more likely to purchase from a well known brand. Social Proof Theory suggests that we, as consumers trust certification over research when impulse-buying. This means that the blue tick on Instagram or brilliant TripAdvisor rating can make our decisions for us when we do not have the time to investigate further.
The Decoy Effect
The Decoy Effect is well explained in terms of buying ice cream. A large three-scoop ice cream will cost a lot more than a smaller one-scoop, but the large will only cost slightly more than a two-scoop medium-sized ice cream. This means that the medium is a decoy, as the customer will feel that the large is better value for money, and therefore spend more. The comparison of price disparity drives the sale in this instance.
Also, commonly seen in online sales, a business will display a sale price against the original price; therefore making the sale through the same principle of better value for money- this is known as anchoring. Sales are commonly advertised on social media sites, and are becoming more popular on Instagram’s stories feature that has a ‘swipe up’ option that often leads to an exclusive online sale.
The Four Us Formula
The Four Us Formula is often used in online advertising and marketing in order to create more online traffic. Simply put, more views means more sales, just as increased footfall would help grow a smaller business. This technique, also known online as ‘clickbaiting’ consists of these four rules for creating successful headlines: unique, useful, urgency and ultra-specific.
An online advertisement being unique creates attraction or buzz around a new product; filling a gap within the market. It is important that the product or service seems useful as this will create a sense of trust between the consumer and the brand. A how-to video advertised on a social media platform can enable a sense of trust to be built as it enables the customer to see for themselves how the product is useful.
Creating urgency through a limited sale or exclusive discount code that is only available on a social platform will inevitably drive sales. Ultra-Specific headlines will help highlight a niche product or small business as when it is searched for online it will appear first and create a demand.
It is clear that using psychology in digital marketing is an effective way of not only increasing sales, but also building a better brand.
Classic & Operant Conditioning
Both Classical and Operant Conditioning can be used in digital marketing. For example, receiving a free sample with purchase may lead to repeat sales, thus demonstrating operant conditioning through the typical Skinner’s Box principle of reward. Whereas an online video advertisement may include a jingle, thus increasing a consumer’s association with the brand and demonstrating classical conditioning. Kahneman and Tversky’s (1984) study showed that jingles create an effective learned association that may help induce sales. This was based on the well known study of Pavlov’s Dogs.