From logic to psycho-logic

You've probably heard of marketing psychology before. But what does it mean? Marketing psychology fills the gap between, you guessed it, marketing and psychology. It's a field that gets more and more attention, and rightly so: psychology has a huge impact on how we buy, and so on how we should talk to and deal with prospects and customers.

Companies often think everyone acts like a homo economicus: we all make well thought-out decisions about what we buy, based on the right financial incentives. But is that true?

Our choices are usually influenced by cognitive biases. Many companies focus on logic and on making sense, and forget a crucial factor: people often act irrationally. By trying to create rational value (faster, cheaper, better, more useful), we ignore psychological value. The context or story around a product can affect its success in ways a price change never could.

A well-known example from Rory Sutherland's book Alchemy. Some facts about Red Bull:

• its products are relatively expensive;
• its taste is very particular, and many people don't like it;
• Red Bull sponsors all kinds of extreme sports.

So how did they manage to sell Red Bull all over the world? Where's the logic? Instead of treating customers as homo economicus, Red Bull plays the psychological value card.

Sutherland explains: everything about the product, from the price to the taste, triggers a placebo effect in our minds that makes us see it as medicine. It's expensive, so it must contain something special. The taste is sickly sweet, which makes it… medicinal. And linking the brand to extreme sports triggers another bias: we drink it, so we take on the same image, cool and daring. See how cognitive biases trick our minds, and how Red Bull uses them to sell? Very clever.

Red Bull isn't the only brand that uses psychology to market smarter. Many brands play with cognitive biases online. Some well-known ones:

Anchoring (Tversky & Kahneman)
Anchoring is the bias that makes us rely too much on the first piece of information we get when we decide. We all do it, mostly without noticing, and it's very hard to switch off. That's why marketers use it: when goods are on sale, we rarely judge their value on its own, we compare offers with each other.

Cognitive dissonance (Festinger)
Cognitive dissonance is the discomfort you feel when you hold two conflicting beliefs, values or attitudes. We don't like that feeling, so we try to relieve it, by ignoring conflicting information or explaining it away. Clever marketing shows how a product relieves that dissonance.

Scarcity and urgency (Cialdini)
When there are fewer opportunities, we feel our freedom is threatened, and that can push us to decide faster. In your marketing, you can add a deadline or show how many products are left. But only when it's true: fake deadlines or fake stock levels mislead customers, and EU consumer law forbids them.

Loss aversion (Tversky & Kahneman)
We fear losing something more than we enjoy winning something of the same value. So we go to great lengths to avoid losing or missing out, and a message about what you might miss can weigh more than one about what you gain.

This article was inspired by some of our favourite books on marketing psychology: Buyology: Truth and Lies About Why We Buy (Martin Lindstrom), Invisible Influence: The Hidden Forces That Shape Behavior (Jonah Berger) and my personal favourite, Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life (Rory Sutherland).

Which books on marketing psychology changed the way you market your products or services? Let us know on LinkedIn.