Brainy Brands … how businesses can embrace behavioural science to transform their marketing, innovation and growth
December 27, 2024
Walking into Starbucks is more than asking for a tall skinny latte. It’s an immersive lesson in brand psychology.
From the size of cups (why is Tall the smallest size?), to the structure of its pricing menu (which size seems best value?), to the handwritten name and emoji written on your cup. There is fascinating science to each of these seemingly unimportant factors.
Behavioural sciences explores the psychological, emotional, and cognitive factors that influence human behaviour, and these principles have found wide applications in marketing, customer experience, and business strategy. Below is a summary of 25 of the most impactful behavioral science concepts, particularly in relation to customer behavior, along with examples of how brands have successfully applied them.
1. Loss Aversion
Loss aversion, a principle from Prospect Theory, suggests that people are more motivated by the fear of losing something than by the desire to gain something of equivalent value. In a marketing context, this is used to push customers toward action by emphasizing what they stand to lose.
- Example: Airlines and hotels often use limited-time offers and emphasize the idea that a price or discount is “disappearing soon” to encourage customers to book immediately, highlighting the potential loss of the deal.
2. Scarcity
Scarcity occurs when something is perceived as limited in availability, which increases its value and desirability. This taps into the human tendency to want things we can’t easily get.
- Example: Fashion brands like Supreme and Nike use limited-edition products and “drops” to create urgency and increase demand.
3. Anchoring
Anchoring refers to the human tendency to rely heavily on the first piece of information offered (the “anchor”) when making decisions. In sales, the initial price or offer can dramatically influence how customers perceive the value of a product.
- Example: Many retailers display a high-priced item first, followed by a mid-range price. The high price serves as an anchor, making the second item seem like a better deal.
4. Framing Effect
The framing effect refers to how information is presented, which can significantly influence decision-making and judgment. Positive framing tends to produce more favorable outcomes.
- Example: A restaurant might describe a dish as “80% lean” rather than “20% fat” to make it sound healthier and more appealing.
5. Social Proof
Social proof refers to the idea that people are more likely to engage in a behavior if they see others doing it. This is often used in marketing to increase credibility and desirability.
- Example: Amazon uses customer reviews and ratings to provide social proof. Consumers are more likely to purchase items that have high ratings and positive feedback from others.
6. Reciprocity
The reciprocity principle states that people feel a psychological obligation to return favors. Brands leverage this by offering free gifts, samples, or services with the expectation that customers will reciprocate by making a purchase.
- Example: Online retailers often offer free samples or discounts on the next purchase to encourage return business.
7. Commitment and Consistency
Once a person commits to something, they are more likely to stick to it due to a desire for consistency. Brands can use this principle by getting customers to make small commitments that lead to larger actions.
- Example: Subscription services like Netflix or Spotify offer free trials to get customers to commit to a service, which increases the likelihood of them continuing the service once they’ve already made a commitment.
8. Endowment Effect
The endowment effect suggests that people tend to assign more value to things they own compared to things they don’t. This can be leveraged by brands offering free trials or samples.
- Example: Apple’s free trial of its ecosystem (iCloud, Apple Music) makes customers more attached to the products, increasing the likelihood of continued use or purchasing.
9. Default Bias
People tend to stick with pre-set options rather than making a choice. Marketers often exploit this by setting beneficial defaults, leading customers to make decisions that they might not otherwise.
- Example: Many subscription services set auto-renewal as the default, leading customers to continue the service without actively opting out.
10. Overchoice (Paradox of Choice)
The paradox of choice suggests that offering too many options can overwhelm customers and result in decision paralysis. Brands can use this insight by limiting options or simplifying choices.
- Example: Apple offers a limited selection of products, which makes decision-making easier for customers compared to tech companies with a wide range of options.
11. Urgency
Creating a sense of urgency by highlighting time-sensitive deals or limited-time offers motivates customers to act quickly rather than delay their purchase.
- Example: Websites often use countdown timers for flash sales or “only X items left in stock” to prompt customers to make immediate decisions.
12. The Power of ‘Free’
Offering something for free taps into a deep-seated psychological response. Free items, even if of low value, can spur higher conversion rates or engagement.
- Example: Dropbox’s free storage offer significantly contributed to its growth by encouraging users to try the service and refer friends.
13. Trust and Authority
People are more likely to follow advice or recommendations from perceived authorities or experts. Brands use endorsements, certifications, or influential figures to leverage this bias.
- Example: Brands like L’Oréal use dermatologist endorsements or celebrity influencers to gain trust and increase sales.
14. Cognitive Dissonance
Cognitive dissonance occurs when people experience discomfort from holding conflicting beliefs or behaviors. Brands can reduce this discomfort by providing reassurance or confirming customers’ decisions.
- Example: After a purchase, brands like Apple often send thank-you notes and customer satisfaction surveys, reinforcing the consumer’s decision.
15. Paradox of Familiarity
Humans tend to gravitate toward what’s familiar, even if it’s not necessarily the best option. Brands use this to make customers more comfortable and increase repeat business.
- Example: Coca-Cola and McDonald’s maintain consistent branding and messaging, which creates familiarity and comfort for their consumers.
16. Emotional Appeal
Emotional connection is a powerful motivator. Brands often tap into emotions like happiness, fear, or nostalgia to build strong relationships with customers.
- Example: Coca-Cola’s “Share a Coke” campaign tapped into personal connections and happiness by using customer names on bottles.
17. Visual Cues
Humans are highly influenced by visual stimuli. Brands use design, color, and imagery to guide customers’ decisions.
- Example: Companies like McDonald’s use red and yellow in their branding, as these colors are associated with energy and hunger.
18. Frugality Bias
People tend to value things that seem like a good deal. The perception of getting value for money can be a strong motivator.
- Example: Costco’s bulk-buying model creates the illusion of getting more for less, which appeals to customers’ desire for savings.
19. The Mere Exposure Effect
This principle suggests that people tend to develop a preference for things simply because they are familiar with them.
- Example: Advertising heavily, like Nike’s continuous brand exposure, leads to greater consumer familiarity, which in turn boosts brand preference.
20. Nudging
Nudging is subtly guiding people toward a desired behavior without restricting their choices. It’s an ethical way of influencing behavior.
- Example: Supermarkets often place healthier foods at eye level to nudge customers toward healthier choices.
21. Conformity
People often align their behavior with that of others in order to fit in. Brands can use group-based appeals to encourage customers to act a certain way.
- Example: Social media platforms like Instagram use likes, shares, and comments to encourage conformity to trends and behaviors.
22. Intermittent Reinforcement
Intermittent reinforcement occurs when rewards are given at unpredictable intervals. This unpredictability can increase the likelihood of a behavior being repeated.
- Example: Loyalty programs that offer occasional unexpected rewards (such as a surprise discount) motivate customers to keep returning.
23. Time Discounting
People tend to devalue rewards the further away they are in time. Brands can exploit this by offering immediate rewards or discounts.
- Example: Credit card companies often offer immediate cashback or sign-up bonuses to encourage consumers to choose their cards over others.
24. Self-Perception Theory
People form their attitudes and beliefs based on their own behavior. If a customer behaves in a certain way, they may justify it by changing their attitudes or beliefs to align with their actions.
- Example: After purchasing an eco-friendly product, customers may develop more pro-environmental attitudes, reinforcing their purchase decision.
25. Priming
Priming occurs when exposure to a certain stimulus influences how a person responds to a subsequent stimulus. Brands can prime consumers’ minds to think positively about their products.
- Example: Luxury brands like Rolex prime consumers by showcasing high-end, aspirational imagery in their marketing materials, leading to increased desire for their products.
Behavioral sciences provide critical insights into customer behavior, and brands that apply these principles effectively can create more engaging, persuasive, and successful marketing strategies. By understanding and leveraging concepts like loss aversion, scarcity, social proof, and reciprocity, companies can better influence consumer decisions, enhance customer satisfaction, and drive loyalty. Whether through framing choices, nudging behavior, or creating emotional connections, these psychological insights allow brands to craft experiences that resonate deeply with customers and improve long-term business performance.
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