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How marketers may use cognitive biases to influence customer decisions

Youre not rational and neither are your visitors. In order to make efficient decisions, the mind takes shortcuts. Therefore, your customers depend on a number of heuristics and cognitive biases to create decisions efficiently. Plus they dont even understand it.

The utilitarian theory of economic behavior, postulated by 19th-century philosopher John Stuart Mill, suggested that economic decisions were rational. It had been a rational thought at that time, but it didn’t consider the way the brain worked in real-world situations.

People, together with your customers, makes decisions that dont always seem sensible, often succumbing to the biases lurking below the top. As a marketer, it is possible to yield more influence by focusing on how your visitors behaviors are influenced by cognitive biases and psychological processes that result in better and sometimes worse decisions.

In this post, lets explore three cognitive biases you may use to shape how customers consider your service or product while getting together with your brand.

Cognitive bias 1: The framing effect

In this article, the researchers presented findings from the study where participants received a choice in regards to a life and death scenario.

Given the stakes, how did the researchers frame the various treatment options? The initial treatment was framed around saving 200 lives whereas the next treatment was framed around a 1/3 probability that 600 people will be saved plus a 2/3 probability that everyone will perish.

Which outcome can you prefer? If youre like the majority of people, you selected the procedure because the life-saving option, that is likely to bring about 200 saved lives. But can you see something unusual concerning the treatment options? No matter which treatment you selected, 200 folks are more likely to survive and 400 will probably perish (and only the initial treatment, the main one you selected, will surely bring about the death of 400 people).

Despite offering equal expected value based on the researchers, participants overwhelmingly selected the initial treatment (72% to 28%). The impact of the framing effect was beginning to enter into focus.

Today the framing effect is alive and well. And marketers are making good usage of it. In a global with COVID-19 concerns, household cleaning items are employing the framing effect. Within an industry with a projected global value of $46.9 billion by 2026, the Reckitt Benckiser Group, the maker of Lysol Disinfectant Max Cover Mist, claims that

the disinfectant kills 99.9% of viruses and bacteria. Can you become more or less inclined to choose the same product if it claimed to permit 1% of viruses to survive?

The nice times aren’t limited by cleaning products. Mission Foods, for instance, found success by labeling its large flour tortillas as 95% fat-free. That certainly sounds much better than supplying a tortilla thats packed with 5% fat. Think about Haleon, the maker of Sensodyne toothpaste? Utilizing a mix of three cognitive biases (social proof, authority, and the framing effect), Haleon claims that nine of 10 dentists recommend Sensodyne. Thats more desirable when compared to a message claiming that only 1 of 10 dentists dont like Sensodyne.

How are you currently communicating your service or product? Remember, your visitors unknowingly evaluate your value proposition predicated on the method that you frame it. And you also dont have to highlight statistics or numbers to take action. You may use the framing effect once you craft your message in accordance with whats vital that you your audience and you can view it take hold.

Read next: Using psychology and better data practices to obtain customers nearer to purchase

Cognitive bias 2: The decoy effect

The decoy is throughout you and you also probably dont even understand it. Whats a lot more interesting is that it could guide your visitors decision during purchase. Referred to as asymmetrical domination, the decoy effect concerns an intentionally placed offering designed to increase the possibility of selecting an alternative solution option.

The Economist, a British economic and world news publication used the decoy effect to operate a vehicle sales to its preferred subscription tier. Think about the following offers:

  • Digital-Only Subscription: $59
  • Digital and Print Subscription: $125

To nudge buyers towards the bigger price, the marketers at the Economist added another option:

  • Print-Only Subscription: $125

Yes, the brand new option was priced exactly like the digital and print version, nonetheless it didnt include usage of digital content. As you may imagine, the print-only option was never designed to solicit any real consideration. Instead, it had been a decoy.

Dan Ariely, a former professor of psychology and behavioral economics at MIT, learned all about the pricing strategy at the Economist and wished to understand how the decoy effect influenced behavior among his students. Utilizing the same pricing tiers because the Economist, Ariely surveyed his students to choose among the subscription options. What happened? An impressive 84% selected probably the most expensive option for the $125 bundle, whereas only 16% selected the digital-only offering at $59.

But did the decoy really play a large role in nudging students towards the $125 bundle? To discover, Ariely surveyed another band of students. After eliminating the decoy, the percentage of students who selected the $125 bundle dropped from 84% to 32%. Therefore, Ariely found that participants became a lot more likely to pick the higher-priced option in the current presence of a decoy.

How will you develop a decoy in your occupation? As you see leveraging the decoy effect, you need to remember that you need the cost of the decoy to be close enough to the most well-liked item and will be offering dramatically inferior features. Put simply, you need the decoy to be considerably less feature-rich compared to the preferred option but only slightly more feature-rich compared to the most affordable option.

Suppose you work with a streaming service thats considering a fresh pricing technique for usage of its content library. The audience to whom the service appeals enjoy consuming exclusive movies, documentaries and podcasts on the platform. And in accordance with new survey data, customers are prepared to pay around $10 monthly for usage of your content. However your business strategy requires one to nudge a share of one’s customers right into a higher price tier.

How will you utilize the decoy effect to improve the price your visitors are prepared to purchase a monthly membership? You can begin by creating an introductory tier that aligns with the survey data and provide access to a restricted library of movies at $9.99. Next, you would like to focus on the required price point, that is, say $14.99. As of this price,your visitors can access all movies, documentaries and podcasts.

Understanding that most customers prefer to consume each kind of content equally, it is possible to develop a decoy that provides usage of all movies for $13.99. In the end, this is actually the decoy. As you can plainly see, the decoy provides an expanded version of the initial offer but doesnt provide usage of the various forms of content your audience wants. Because of this, your customers begin to perceive the $14.99 option as a value choice though it represents the best price.

The target is to utilize the decoy effect to nudge your visitors towards a particular choice. After the decoy is set up, your visitors begin comparing the company-preferred option (the bundled option in the Economist example and the $14.99 option in the aforementioned scenario) contrary to the decoy. And when you develop a large enough gap in value while maintaining a little enough gap in cost, you will probably find yourself with an increase of high-paying customers.


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Cognitive bias 3: Frequency bias

Frequency bias is a thing that can transform perception as time passes. Whenever a person encounters something new, whether a fresh word, a slogan, a concept or perhaps a product, frequency bias posits that the individual perceives the brand new thing to seem more frequently. It could seem like the brand new item is everywhere. Maybe you have been introduced to a fresh product and noticed more of exactly the same advertisements at every turn?

In accordance with Anina Rich, a Professor in the institution of Psychological Sciences at Macquarie University in Sydney, Australia, frequency bias relates to working memory-driven attentional capture an activity where specific environmental stimuli attract your attention because its now occupying an area in your thoughts. Interestingly, the brand new word, phrase, idea, or product thats occupying your brain is probable occupying it below the amount of consciousness. As Rich puts it, everything you are considering unconsciously guides one to relevant information in the surroundings.2

Frequency bias is specially relevant in marketing within the context of a more substantial campaign. Are you experiencing one marketing channel by which you can easier capture your visitors attention and carefully place your message in the areas that may draw upon this subconscious phenomenon?

By knowing that people perceive repetitive information with greater frequency after initial exposure, you will be more diligent in the method that you build your multichannel online marketing strategy. Specifically, it is possible to create a strategy where you emphasize capturing attention across an extremely engaged channel, thus setting the stage for the message appearing everywhere during your campaign.

Read next: How anthropology can drive insights from your own customer data

Conclusion

Cognitive biases constantly pull the decision-making strings within your customers heads. Can you see yourself as a marketing puppeteer? As you try to create a rational online marketing strategy, you might like to understand that your visitors dont always make rational decisions. And that understanding must inform section of your online marketing strategy.

1Amos Tversky, Daniel Kahneman, The Framing of Decisions and the Psychology of preference, https://www.science.org/doi/10.1126/science.7455683

2Anina Rich, WHAT’S the Baader Meinhof Phenomenon?, https://lighthouse.mq.edu.au/article/july-2020/What-is-the-Baader-Meinhof-Phenomenon


Opinions expressed in this post are those of the guest author rather than necessarily MarTech. Staff authors are listed here.


CONCERNING THE Author

Jade Bunke may be the vice president of marketing at National Technical Systems and is really a leading authority in marketing science, messaging and demand generation. As a marketing scientist with expertise in buyer behavior, Bunke blends creative marketing with areas of cognitive neuroscience, social psychology and behavioral economics to yield optimal results.


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